New jobs at car firms signal rebound

Last year, car makers shed more than 4000 jobs in response to a reduction in production and a slump in sales. In 2008, the vehicle industry shed 2566 jobs.

In its quarterly report, Naamsa yesterday, 19 April 2010, said the motor industry created 1196 jobs to raise the total to 31357 in the first quarter of this year from 30161 by the end of the last quarter last year.

“The increase in head count is attributable to additional recruitment at three of the industry's major employers, whilst employment levels at other manufacturing plants remained stable during the quarter,” Naamsa said.

Danelee van Dyk, economist at Standard Bank, said she was encouraged by the signs of an improvement in employment.

But she added it might take time for the industry to recoup the jobs shed during the recession, especially if the production, sales and export forecasts prove to be over optimistic.

“At the current rate of job creation in the industry, it could take around a year and a half to reverse the impact that the recession had on the industry's job levels,” she said.

Revised sales expectations

Naamsa revised its projection of new vehicle sales for this year upwards to 14% - to 451 500 units - from 7% following “exceptional gains” in vehicle sales during the last quarter.

For the first quarter of the year, passenger car sales surged 21,4% to 81450 compared to 67079 in the first quarter last year. Over the same period, commercial vehicle sales rose 9.6% to 39446, indicating that the recovery was broad-based.

“New vehicle sales, in all segments, showed exceptional growth — albeit relative to the low base last year,” Naamsa said. The resurgence in new car sales growth during the first quarter represented one of the best on record.

But Naamsa warned that the improvement in domestic sales should be seen in the context of the historically low base in the first quarter last year, when sales were particularly depressed as a result of the uncertainty arising from the global financial and economic crisis.

More shifts; more work

Naamsa also said an increasing number of manufacturers now operated double shifts in selected areas such as machining, press shops, paint shop operations and body shop. Signalling the increase in demand, one vehicle manufacturer operated on a three-shift basis.

Vehicle manufacturers resorted to a single production shift at the height of the economic crisis.

“During the quarter, vehicle manufacturers' operations reverted, by and large, to a normal production week,” said Naamsa.

Vehicle assembly industry capacity utilisation levels had recovered to 69.6% for the first quarter this year at passenger car plants, after last year's 59.4%. In 2006 this was 80.1%.

Van Dyk said the confirmation that the industry's operating times were normalising was good news for the overall recovery in household income and economic growth.

“These signs are critical insofar as providing a foundation for a sustainable economic recovery,” Van Dyk said.

On target for improvement

The local vehicle sector was on target for improved domestic sales during the year, and she noted that export sales were also projected to grow “substantially” in line with the recovery in the global economy.

Expected improved economic activity, the benefit of lower interest rates on declining inflationary pressures and an improvement in the financial position of consumers bode well for new vehicle sales this year, Naamsa said.

Source: Business Day