South Africa Magazine's Ian Armitage talks to Nissan South Africa MD Mike Whitfield and Gilles Normand, corporate vice president, Nissan Motor Co.

By Ian Armitage

South Africa’s auto industry is on the rebound. The local automotive industry last year managed to claw back some of the ground lost during the global recession. New-vehicle sales figures released by the National Association of Automobile Manufacturers (Naamsa) show that 2010’s new-vehicle sales jumped by almost 100,000 units, compared with sales for 2009.
Nissan is well placed to play a significant role in South Africa’s auto market and is expected to produce around 44,000 vehicles this year. It is certainly upping the ante and targeting higher output, increasing its capacity to meet requirements under the new Automotive Production and Development Programme (APDP).
Nissan South Africa MD Mike Whitfield (pictured) and Gilles Normand, corporate vice president, Nissan Motor Co., tell us more…

South Africa Magazine (SA Mag): First off, how is the business performing?
Mike Whitfield (MW): Despite a challenging 2010 - on account of industry strikes, which affected our production schedule, Nissan SA had a successful year that would have been even better if supply constraints were not present.

SA Mag: I’m glad you mentioned supply constraints; I wanted to ask you about the recent earthquake in Japan, subsequent tsunami and damage to the Fukushima Daiichi nuclear power plant. How has it impacted operations in South Africa? How have you weathered the storm, so to speak?
MW: There was an impact on supply, however we do believe that the strong market growth, which we forecast at 12 percent over last year, will enable us to recover lost sale opportunities as a result of the Japan earthquake. This year marks a key milestone in our growth strategy as we enter an area of the market with Micra, where we have not been strong players in recent years. It also set the platform for our drive to increase domestic production by 2014/5 to 100 000 units primarily off the base of the one-ton pick up and NP200 platform.
Giles Normand (GN): To build on what Mike says, the March 11 earthquake and subsequent tsunami -- a natural disaster that no one could have predicted -- was a major blow. As a Japanese company with its head office and several plants based in Japan, Nissan along with the entire Japanese economy, has been dealing with severe challenges following the events of that day. An immediate concern was for the safety and well being of our employees, as well as our dealer and supplier networks. Several of our plants suspended operations temporarily. However, I am pleased to report that all our plants in Japan are now fully operational.
Our 2011 global outlook is one of optimism. In South Africa, the objective is to increase our current market share of 8.2 percent to above 12 percent by 2015. Africa is a key market in our expansion strategy. With a population of 900 million (according to the census report there are 45 million in SA; 900 million in Africa), it is one of the last untapped frontiers and we are keen to exploit the opportunities that exist, both in established markets and new ones. Nissan currently plays in 32 of the 44 Sub Sahara Africa countries where it is a market leader in Mauritius and Mozambique.
South Africa, of course, is our largest African market.

SA Mag: Those are some ambitious production targets, how will you achieve them?
MW: To successfully achieve these targets, we have embarked on what we call the Shift_NSA campaign, key elements of which are top-level quality of build and investment in people at all levels of our business, from shop floor to sales floor. Improving the capacity and productivity of our people is especially crucial to successfully build volume to the levels we anticipate.
During the recent December shutdown we implemented a totally new production control system, which has enabled us to align our production process to that of our European operations. This has enabled us to increase flexibility and reduce lead-time, a key requirement for future export production. We are now currently exporting the one-ton pickup NP300 Hardbody to all markets in Africa, Europe and will from July this year also be exporting to Russia and Turkey.
Coupled with this is the need of building the necessary skills base for sustained growth in the automotive industry. The automotive sector has a vested interest in ensuring availability and accessibility of critical skills development and training whether at artisan, specialist or leadership level. A lack of skills development and training has been identified as key constraints in the development of the sector in South Africa, especially in manufacturing competencies like science and technology. Significant investment is, therefore, required at all levels - from the workshop floor right up to top management. I am pleased to say that this is an area that Nissan SA is already addressing under the Shift_NSA people development programme, which is intended to increase the capability of employees through job-specific training in conjunction with Nissan’s UK Sunderland plant - on which our new production system is also based.

SA Mag: What other challenges do you face? Are the low levels of local content in the automotive value chain a challenge?
MW: They are. It is a challenge.

SA Mag: What could be done?
MW: As the largest industry in the manufacturing sector in South Africa - with linkages to other sectors including steel, metal, plastic and leather products - there must be accelerated growth of the local components industry to ensure sustainability. This means a commitment to increased local content levels to above 70 percent; I am pleased to say that we have already reached this target on the NP 300 Hardbody. The local supply industry, however, will only be boosted if suppliers become globally competitive in terms of cost, quality and delivery. South African suppliers are being challenged by low-cost producing countries like China, India and Mexico, and even Western Europe, so the challenge in the next few years will be to close this gap. Government’s industrialisation strategy - formulated under the Industrial Policy Action Plan (IPAP) and supported by the APDP and Industrial Development Corporation - will be instrumental in improving the supplier competitiveness in South Africa and increasing the manufacturing depth of the industry in all three tiers: complete and sub components and raw materials.
As we move to build plant and people capacity, we will be looking at scaling down our current platforms in order to derive economies of scale.

SA Mag: What, then, are you focusing on?
MW: A key focus will be on the one-ton NP 300 Hardbody and its successor to accommodate sales into Europe, North Africa and the Mediterranean as well as Sub Sahara Africa. Another will on the half-ton NP 200 pickup, which, with our LCV range. This sentence does not make complete sense
While continuing to grow our LCV sales, we also aim to double passenger sales. This, we believe, is achievable through firstly the introduction of the new entry-level Micra, Nissan’s answer to a growing trend towards more affordable vehicles - driven largely in South Africa by factors including more stringent credit requirements, rising fuel costs and the introduction of toll fees on our upgraded road network. We have no doubt that the Micra’s fuel efficiency and innovative technology will have widespread appeal and that it will play a critical role in our passenger line-up as the entry point for customers joining our brand as well as providing a platform for future models aimed at providing affordable total cost of ownership vehicles.

SA Mag: Is this an exciting time for the SA operations, then?
GN: It is. This is an exciting time in the history of our South African operations, and Nissan is committed to its investment in the country and to its role in ensuring the success of the South African manufacturing industry.
We are confident in growing our share of the South African market with a number of new passenger entrants into the local market. As Nissan’s first global affordable compact car built on the newly developed V-Platform, the Micra forms part of a key Nissan growth strategy, targeting a very significant part of the market.
In the past, Nissan had a minimal presence in the compact segment because we did not have a specific platform suited for those customers’ needs.

SA Mag: How will the Micra change things?
GN: This new platform changes everything. Now we will be able to compete… and at the highest level. Our investments in the new platform, new powertrain, new manufacturing footprint and a family of products reflect our commitment to meeting growing customer needs for appealing compact cars.

Nissan SA’s growth is spectacular by any measure: new models have boosted output, and it is - despite the economic problems, natural disasters and general lower demand for vehicles – increasing output.

Image: Supplied by Nissan South Africa