At a recent presentation of KPMG's global automotive survey results, Dr. Johan van Zyl, president of NAAMSA and president and CEO of Toyota SA expressed his views on the global motor industry, and the position that South Africa finds itself in, in this industry.

Excerpts from his speech:

The global automotive industry is currently again in a state of flux, but this time it is more so than at any time in its history, which stretches back more than 100 years. The major upheaval is that the "old order changeth". Probably forever.

The United States, and other countries in Western Europe such as Germany, England, France and Italy that were, for decades the focal point of the global industry are rapidly being usurped by expanding operations in Asia, India and Eastern Europe.

The balance of power is moving quickly.

China's manufacturing output and vehicle sales are growing at an exponential rate, and countries such as Brazil, Russia and India have suddenly popped up as major growth areas for both production and sales. Collectively known as BRICS, these countries are now a major focus of the automotive industry for future growth and expansion.

The world is placing more emphasis on environmental sustainability, safety of consumers and energy conservation.

Where does this leave the South African motor industry, situated as we are at the tip of the African continent and many thousands of kilometres away from the world's major markets?

Ideally, South Africa would become the "S" in the "BRICs" acronym - a major player in the global plans of the automotive giants - to make the letters stand for Brazil, Russia, India, China and South Africa. But to achieve this is not going to be easy.

As a country we have immense strides with regards to local vehicle and component manufacturers over the past few years, and it is something to be proud of. The local manufacturers' resilience in times of adversity has been legend and they are proving this again now.

After the introduction of the MIDP in 1995 there has been a ramp up in sales and production virtually unequalled anywhere in the world. South Africa does not only have a much improved local industry making quality vehicles and components, but we are also a rapidly growing automotive exporter - in fact one of the largest in the southern hemisphere.

Despite these gains we are not globally competitive yet and a huge effort will be required to achieve the stated industry vision of producing a million vehicles in SA by 2020. To achieve this vision, there seems to be five visible distinct challenges for the local industry when looking at it in a global context.

The first one concerns the regulatory environment in which we operate. Besides the various ISO norms, environmental requirements and local planning and operating permissions, EE, BEE and BBBEE targets, we are, to a large degree, controlled by the Motor Industry Development Programme, which, in its present form, is due to run until 2012.

The long delay in the announcement of final details of a revised support programme for the motor industry, going forward to 2020, has been well documented. A very broad outline of the future programme has been made available, but only on August will finer details be available.

The future industry support measures play a major role in a company's decision to build vehicles locally or to import them. This information is also cardinal to decisions regarding future export programmes and investment.

There is hope that the programme will be structured in such a way that it will support the future growth of the industry.

The second challenge facing the local motor industry, as players in the global supply network, is that of developing our supplier network. These companies are the key to a manufacturer's success in both the local and export markets.

It can be said that, generally the suppliers have made big advances in terms of upping the supply rate, meeting timing and delivery deadlines, providing products that meet international quality standards and being dependable.

However, the supplier base needs ongoing development. Fortunately, many of the South African suppliers are linked to overseas companies that can provide the latest technologies and training methods. The fact that all manufacturers have slimmed down the number of suppliers they use is helping improve these operations. We need more support in the future MIDP for the leaner supplier base to be able to invest in the latest technology and equipment.

The third challenge is that of people development. Not only do we need formalised and on-the-job training, but it is vital that we all build motivated workforces. We also need to develop managers that have the skills, capabilities and understanding of world class business practices.

This is one area where many of our new competitors from China, India and Eastern Europe have an advantage. They have managers and workers that are very motivated to uplift their living standards with higher education levels and they know this change can occur only if their company is successful. This gives them an almost fanatical fervour to do well.

We must use the growing importance of South Africa as a global automotive supply base to inspire our workers. If necessary this must involve a total mindset change.

Management and employees must feel proud to be part of an economic miracle, but must also realise that the situation can change virtually overnight if they do not meet international standards in everything they do - including being good timekeepers and only staying away from work when it is totally unavoidable.

It is South Africa's responsibility as leaders in the industry to create an industry climate and culture that will foster a safe and positive work environment for team members and management. A true partnership between labour, management and shareholders will be an absolute requirement for future success.

The fourth challenge is another area that is of the utmost importance if we are to be globally competitive. This is the realm of logistics and cost competitiveness.

It is known that most of us have the benefit of source companies with advanced logistical technologies and systems, but being located as we are, at the tip of Africa means we have to try and be even sharper in reducing and controlling costs. Savings made in manufacturing vehicles and components can easily be negated by inefficient logistics systems.

Here in South Africa we not only have long distances between some of our suppliers and our production plants, but also long distances between plant and port for some companies, such as those located in Gauteng.

Traffic congestion, rising fuel costs and inefficient rail transport are other factors that impact on local manufacturers' cost structures.

We have to spend enormous amounts of money on security in all its aspects. This is an inordinate cost burden way above what our competitors in other parts of the world have to bear. The total cost for vehicle manufacturers alone is estimated to be in the region of R200-million.

Add in the component suppliers, vehicle distributors and dealers and we are probably approaching half a billion rand a year - all because the authorities seem unable to bring down the crime rate markedly.

The fifth challenge facing the automotive industry in the global context is that of softer issues. This means that we must all play a role in ensuring we are meaningful members of the South African society, making a contribution towards development of the society in which we operate and the protection of the environment.

We all have social investment programmes of some kind and we should make our investments in this area more visible to the public. Surveys on corporate social investment seldom identify a motor company as a leading light on this front.

We also have the challenge - and opportunity - of growing SME's into meaningful suppliers and thereby uplifting their employees and dependants. In addition we must highlight the advances we are making in terms of employment equity, Black Economic Empowerment and Broad-Based Black Economic Empowerment.

The automotive industry must take the lead regarding environmental issues. We should accelerate and introduce - as soon as possible - the Euro phase 4 emission control regulations in South Africa. To do so the fuel supply industry will have to support this action.

The South African automotive industry is an important part of the SA economy. To advance economic growth we need to create a culture of manufacturing and value adding in South Africa. We cannot forever rely on the availability and export of resources.

We have no time to lose in the rapidly changing environment in which we are operating. If we want the "S" in "BRICs" to stand for "South Africa" then strategy meetings, seminars, conferences and conventions must be replaced by concrete action. Now.