Ford to Spend $1 Billion in Biggest South Africa Investment

The move comes after Ford announced last month that it will cease production in Brazil after a century of building cars there, closing three factories and retrenching 5,000 workers

American multinational automaker Ford Motor Company has announced that it will invest $1.05 billion into the Silverton plant in Pretoria, South Africa, which is its biggest-ever investment in the country as the company cuts back in other regions including Brazil and Europe.

The upgrades to the Silverton plant in Pretoria will boost the site’s annual capacity by almost a fifth to 200,000 units and will create about 1,200 direct jobs, according to a statement issued by the company. The outlay will also support the production of a new Ranger pick-up truck, starting in 2022, for both domestic and export sales.

The move comes after Ford announced last month that it will cease production in Brazil after a century of building cars there, closing three factories and retrenching 5,000 workers. The Automaker Company has also eliminated thousands of positions in Europe as part of a sweeping $11 billion global reorganization and culled about 1,400 salaried employees in the United States in 2020.

In a speech at the Silverton site, South African President Cyril Ramaphosa said: “This will help to expand and transform our country’s manufacturing base.” The plan is “a clear statement of the company’s confidence in this development and its ambitions for its South African business.”

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In an interview, the director of operations at the carmaker’s International Markets Group, Andrea Cavallaro said “Ford’s investment is tied to prospects for the Ranger, one of the top three light commercial vehicles sold in South Africa last year.

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He further said “the country’s trade agreements and the government’s willingness to listen to infrastructure requirements also factored into the move.”

In addition, Cavallaro said “the transformation here in South Africa is not just about the next model.” “We want it to be a huge hub for the export of this product; it is a global product and is hugely successful. It was an easy decision.”

Ford’s fresh investment and jobs will come as a welcome boost to Africa’s most industrialized economy, where almost a third of the workforce is unemployed.

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The country has been hit hard by the coronavirus pandemic, with lockdowns and a resurgence of infections weighing on activity, and 2020 economic output probably contracted the most in at least nine decades, ultimately plunging the country into recession.

Yet, the auto industry has been one success story, with international carmakers including Toyota Motor Corp., Volkswagen AG, and BMW AG operating plants in the country. The companies are also benefitting from a manufacturing-incentive plan that runs through 2035, and Nissan Motor Co. and Daimler AG’s Mercedes-Benz are among those to have announced additional local investment in recent years.

South African government is helping Ford to strengthen its supply and logistics chain, according to Cavallaro. That could include a means to transport finished vehicles from outside Pretoria by rail to the coastal town of Port Elizabeth for export, according to President Ramaphosa.

Production at the Silverton plant, which also makes the Everest SUV, will include VW pick-ups as part of a strategic alliance between the carmakers. VW’s Amarok will be the first vehicle produced in South Africa under the deal.

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The partnership agreement was signed in June, almost two years after it was first announced, and was eventually expanded to include electric and self-driving cars.

Updates to the Silverton factory will turn it into a “backbone plant” with the ability to attract future models, according to Cavallaro. Ford also said Silverton will operate entirely off the grid by 2024, thereby protecting it from South Africa’s regular power outages.

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