Volkswagen’s top executive overseeing global passenger car operations, Thomas Schäfer, has raised serious concerns regarding the sustainability of the German automaker’s presence in South Africa.
The CEO highlighted that while the South African factory was once a top performer for Volkswagen globally due to competitive labour costs, various challenges now jeopardize its future.
Schäfer emphasised that issues such as load-shedding, escalating labour expenses, delays in rail transportation, and bottlenecks at South African ports have eroded the advantages the factory once held. Expressing worry about continuing production in a less competitive location distant from major consumer markets, he stated firmly, “We’re not in the business of charity.”
Schäfer acknowledged the efforts of Volkswagen South Africa employees in mitigating these problems but stressed the need for the South African government to step up and resolve these issues.
Last year, the Eastern Cape plant manufactured over 132 000 Polo models, primarily for export to 38 international markets. VWSA directly employs nearly 4 000 South Africans and supports around 50 000 more throughout the value chain.
Despite implementing measures to tackle the country’s power crisis, such as real-time load management and investing in 2.3 MW of solar capacity, challenges persist, including water scarcity. VWSA attempted to address this by installing a 200-kilolitre rainwater capturing system for the engine plant.
In a pointed comment directed at the government, Schäfer remarked, “There’s a realistic chance that South Africa, with enough focus, with all the raw materials in the neighbourhood, they could be a champion.”
The potential closure or scaling down of Volkswagen’s operations in South Africa would represent a significant loss for the country. The VW Kariega plant, operating for over 70 years, holds historical significance and contributes substantially to the economy by providing employment and supporting numerous individuals within the broader supply chain.
Schäfer’s concerns underscore the urgent need for resolving critical infrastructure challenges facing South Africa. The outcome of these issues could determine whether the country continues to remain an attractive hub for global manufacturing or risks losing crucial investments and employment opportunities.
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