GOVERNMENT’S ROLE IN DIVERSIFYING THE EAST LONDON AUTOMOTIVE MANUFACTURING INDUSTRY TO ENHANCE JOB CREATION

Abstract

This study examines government‘s role in diversifying the East London automotive manufacturing industry, (ELAMI) to increase job creation to benefit masses of unemployed people in the Buffalo City Municipality, (BCM). It draws on principles of the protectionist and interventionist theoretical perspectives. The study focuses on the automotive manufacturing industry, as it is the sole economic development lifeline for BCM whose other manufacturing industries are either dead or barely surviving due to structural changes, lack of skills and poor economic growth. Mercedes Benz South Africa (MBSA) is one of world‘s biggest automobile exporters. It contributes an estimated 15% of the National Gross Domestic Product (GDP) of South Africa. A wholly owned Daimler Chrysler subsidiary, MBSA gets accolades as the world‘s biggest profit generator for Daimler Chrysler Germany, the parent Original Equipment Manufacturer, (OEM). On the other hand Buffalo City‘s population of 880 000 confront a poverty rate of 61% and 40% unemployment. Unrivalled illiteracy and limited skills compound the challenge in the hands of the Eastern Cape government. Thus, ELAMI remains the only sector with a potential to enhance the Municipality‘s labour market. It becomes prudent for the Eastern Cape government to unconventionally optimize the limited economic opportunities available to the largely rural province and find means of enhancing job creation. To this end, this study identifies opportunities for diversifying ELAMI. These include interventions for attraction of Foreign Direct Investments, (FDIs) into the Buffalo City Municipality, (BCM). These opportunities also include the development of indigenous Small and Medium Enterprises (SMEs) to form part of the industry‘s supply chain, as well as integration of local SMEs into the global trade networks. Results of this study outline the role of government in the diversification of the automotive industry as well as the role of the automotive industry in enhancing job creation in the BCM.