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South Africa secures new Benz contract

7 December 2010

Mercedes-Benz South Africa has announced that it will be one of the manufacturers of the next generation C-Class, and will invest a further R2-billion in its East London plant in order to produce the luxury sedan, which will hit global markets in 2014.

"Daimler AG is delighted to include South Africa among the four manufacturing locations around the world to build the next-generation C-Class – the most popular model within the Mercedes-Benz passenger cars range," Wolfgang Bernhard, board member of Daimler AG, the parent company of Mercedes-Benz South Africa (MBSA), said in a statement this week.

"This success is not least due to the great efforts of the East London plant's team and its stringent application of the Mercedes-Benz production system with its robust processes and rigorous quality standards."

The Mercedes-Benz plant in East London has repeatedly been recognised for its excellent production quality by JD Power and Associates, and is one of the best manufacturing plants in the industry.

"MBSA has also managed to provide us with a business and production plan that is competitive globally," said Bernhard. "Hence, our decision to also build the next-generation of our C-Class at the East London plant is a logical step.

"This new, additional investment follows numerous significant investments, totalling over R5-billion that Daimler AG has made in South Africa over the past 10 years."

Vote of confidence

The three other Mercedes-Benz plants selected to produce the next-generation C-Class are located in Germany, China and the USA. MBSA's future export programme will include building both left- and right-hand drive C-Class models for export to markets in Africa and the Asia Pacific region.

"We have had immense success in South Africa with the C-Class, and we have exported to left-hand drive markets since 1998 and to right-hand drive markets since 2000," MBSA chief executive Hansgeorg Niefer said, adding that he was delighted with the announcement and the "vote of confidence" in the local operations.

"Today is very special, as we can now go full steam ahead with our preparations to build the next generation of this successful Mercedes-Benz model."

Global processes and standards

Niefer said the Mercedes-Benz plant in East London followed global processes and standards outlined in the Mercedes-Benz production system for all Mercedes-Benz passenger cars plants.

"Our employees and their unwavering dedication and passion for the product, their commitment to quality work and their loyalty to the company contribute tremendously to its key strengths," he said.

Niefer pointed out that the company recently exported the 100 000th C-Class built in East London, adding that the company should also reach the half-a-million mark of C-Class vehicles produced locally since 1994, which marked the model's start of production in South Africa in the first quarter of 2011.

Skills development and training

The R2-billion investment is expected to further enhance the positive economic impact of Mercedes-Benz's activities in South Africa, both directly through its own operations as well as indirectly through component suppliers.

The investment also provides for extensive skills development and training locally and in Germany, as well as for new plant and equipment, and the introduction of some of the very latest manufacturing technology.

"We will bring more than a dozen new technologies to South Africa in the car and production processes," Niefer said. "MBSA will localise more than 40% of the components for this new vehicle."

He said the automaker expected to see more investors and new suppliers, all with the latest technologies coming to the country, a move which will strengthen the entire automotive value chain.

"With the pledged support of the South African government, MBSA plans to make optimum use of the South African regulatory environment and leverage the advantages presented through the government's Industrial Policy Action Programme, as well as the Automotive Investment Scheme and the future Automotive Production Development Programme," Niefer said.

Working with unions

The adaptations for the next-generation C-Class in the plant will take place in a phased manner along with the continued production of the highly successful current C-Class right up to run-out.

This will require a significant expansion of the technical capacity of the plant to 65 000 units per year.

"The plant has the capacity to add a third shift, which means it will be able to run 24 hours per working day depending on market demand," said Niefer. "We have a flexibility agreement with the union which will help to achieve high output and maintain stringent quality standards at the same time."

"This working arrangement with [the National Union of Metalworkers of SA] and our shop stewards is testimony to the high level of maturity in our relationship with the union."

SAinfo reporter