Toyota announced this week that it has invested more than R6.1 billion to produce its popular Hilux bakkie and Fortuner SUV at its Prospecton plant in Durban.

Toyota South Africa Motors (TSAM) is responsible for manufacturing no less than five models in South Africa, including the Hilux, Fortuner, Corolla, Corolla Quest and Quantum as well as certain Dyna and Hino models. Hilux and Fortuner production, however, represents 80% of TSAM’s total production volume for both the local and export market, with exports accounting for more than 50% of production in 2016. Toyota says that more than 55000 Hilux and Fortuners will be exported to 74 countries in Africa, Europe and Latin America this year alone.

The investment includes supplier tooling (R1.9 billion), in-house tooling (1.4 billion) and in-house facilities and buildings (R2.9 billion). In addition to this investment, Toyota’s suppliers have invested over R1.7 billion resulting in growth in its supply chain and creating at least 2000 new jobs. As a result, production capacity at Prospecton has increased from 120000 to 140000 vehicles per annum.

Apart from producing and supplying light-commercial vehicles to international markets, TSAM will also export new components to production facilities in Thailand where the Hilux and Fortuner are built too, further solidifying export growth.

TSAM President and CEO Andrew Kirby said, “This latest announcement gives evidence of a company that is defiantly committed to South Africa by strategically investing in the people, tools and equipment to produce cars and commercial vehicles of world-class standard that are not only destined for the domestic market, but will also fly our flag high on the international stage thanks to a robust export plan. But it is in fact more than that – it’s also a celebration of the pivotal role that both Hilux and Fortuner play in the overall development of the South African motor industry”. TSAM President and CEO Andrew Kirby at Toyota’s Prospecton Plant.

Toyota isn’t the only car manufacturer to invest in production operations in South Africa. Ford recently announced an investment of R2.5 billion that will see the new Ford Everest produced on local soil at its Silverton production facility in Gauteng, creating an additional 1200 jobs. Similarly, BMW also recently announced a R6-billion investment to build the new X3 SUV by 2019 at its Rosslyn assembly plant, where production of the popular 3 Series sedan will come to an end.

The importance of labour stability

While the news is certainly positive and can easily be regarded as a vote of confidence in South Africa, one needs to realise that major investment decisions such as these are made many years in advance. Maintaining this level of investment (and attracting new ones) will require South Africa to continue to demonstrate labour stability.

Dr Johan van Zyl, Chairman of Toyota South Africa and Chief managing Officer of Toyota Motors Europe reiterated the importance of stability on the production line: “Although we are justifiably proud of the achievements of the motor industry in growing production and especially exports post-1994, we must remember that South Africa currently produces less than 1% of the 90-million vehicles made worldwide each year.

“We have to remain world competitive not only in terms of wages and productivity, but also regarding labour stability. I cannot stress enough the importance of engagement – engage, engage and engage again – the need to employ dispute resolution as the first and ultimately only line of defense rather than resorting to strike action as the solution.

“Nevertheless I am confident that a fair and equitable labour agreement can be reached and rest assured, that no matter what, Toyota will do its utmost to continue to put its customers and South Africa first.”

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