The Ford Motor Company of Southern Africa (FMCSA) has announced plans to invest more than R1,5 billion in order to expand operations for the production of its next-generation compact pick-up truck and Puma diesel engine.

The investment is set to commence in 2009 and encompasses a new manufacturing contract that will enhance South Africa's significance as a strategic export base for vehicles, engines and components for Ford Motor Company. The investment will be split between the company's engine plant in Struandale, Port Elizabeth and its assembly plant in Silverton, Pretoria.

Production of the new Puma common-rail turbodiesel engine is set to commence in 2010, while the Silverton plant will make a transition from its current production, to a high-volume, flexible single platform line that will accommodate the new pickup which will be produced in 2011.

The result of this investment will be an increase in the total annual capacity at the Silverton plant to 110 000 units, with approximately three-quarters of the vehicles being produced for export, primarily to markets in Africa and Europe. The Struandale Engine Plant will increase annual production for the Puma diesel and components to approximately 180 000 units, with the majority being exported.

FMCA president an CEO, Hal Feder stated, "Winning this investment is a major achievement for everyone at FMCSA, as well as our partners in government, NUMSA, and our local suppliers, and highlights our strategic position within the future global footprint of Ford Motor Company…It also underscores Ford's ongoing commitment to expanding our operations in South Africa."

An integral part of the investment will involve FMSCA working closely with the South African government to improve human resources training and supply base capabilities, accelerate the transformation of black economic empowerment and strengthen the development of the auto industry's current and future workforce to ensure that the necessary skills required to support the launch will be in place.

"It's critical for the South African government to continue to support initiatives that help foster a strong and globally competitive auto industry - one that is prepared to capitalize on future opportunities and realize the potential for growth and success," stated Feder. "We'll also continue to work closely with NUMSA to ensure there is total alignment and commitment to deliver the cost competitiveness and world-class quality and safety standards that have attracted this investment."

Although the transition of FMCSA operations over the next few years will have no immediate impact on the workforce size, which currently totals nearly 4,500 employees, FMCSA expects to hire up to 500 additional employees by 2011.

According to FMCSA, the company's local suppliers stand to benefit from the expanded capacity, as increased production and output will, inevitably require the increased sourcing of local content. FMCSA's operations currently utilize 35 per cent local content. Thanks to the investment, this figure is expected to top 60 per cent once production begins, with spending on local content forecasted to increase from R411 million annually to around R2,9 billion from its 110 local suppliers.

"The magnitude of this project is indicative of how South Africa can benefit from having a globally competitive auto industry. In addition to the direct implications to FMCSA, this investment will have a multiplier effect with indirect job creation for local suppliers, and overall economic benefits from increased demand of locally produced content," said Feder.

To view Ford Motor Company President and CEO Hal Feder's presentation on new R1,5-billion export programme, click here.