As we come to the end of September, a month in which South Africa celebrates its rich heritage and diverse make up, one can reflect on a trait that is found in abundance in our country. Resilience. 

Resilience is what often sees us through challenging times, and economically and socially speaking there haven’t been too many worse than the COVID-19 pandemic affected 2020. Yet our sector, has found ways to deal with the situation and seems to be emerging slightly better than initially expected in the early days of South Africa’s lockdown.

Results of the fifth iteration from a rolling survey conducted into a sample of NAACAM members on the impact of COVID-19 on the automotive components sector is seemingly pointing to resilience. 

The report reflects the continuing easing of the lockdown, with companies on average increasing their production to within 60 to 80% of their pre-COVID influenced forecasts for August 2020. Most companies are anticipating that by the end of the calendar year, they will have produced 70% of their pre-COVID forecast for 2020. Additionally, at least 40% of respondents have resumed normal operational patterns, with the balance operating reduced days or shifts to account for reduced demand. 

The percentage of employees used between June and August has increased from May. There are employees who are still laid off and a greater proportion continue to work short-time, and we are aware of members who have unfortunately already had to implement restructuring processes. And while more are likely to have to do so in future, our recent research suggests there is some increased optimism across respondents that COVID-19 will not have a long-term impact on employee count and production. Most notably, there has been a large increase in the number of respondents that do not anticipate a long-term employee reduction – at the end of May, just 12% of respondents did not anticipate an employee reduction yet at the end of August, 48% of respondents do not expect retrenchment.

OEM demand stability and cash flow remain key challenges for respondents, as well as staff morale and supply chain management, particularly in relation to the logistics chain. Steel availability is increasingly being reflected as a raw material challenge. 

So, challenges remain, and at NAACAM we continue to try and find ways of supporting our membership. Coupled with the resilient trait we all have observed in daily life this year, let’s hope we continue to see more green shoots coming through into the last quarter of this year.

Renai Moothilal
Executive Director