Ford Plans to Invest $1 Billion in South African Plant

When Ford Motor Co. announced last month it was pulling back from South America, some analysts suggested it meant the company was in retreat while grappling with a faltering share price and a need to make huge investments in new technology.

But this week bring a new perspective as Ford revealed plans to invest $1.05 billion in its manufacturing operations in the South Africa to build a new small truck, which will carry the Ranger nameplate.

It is the largest investment in Ford’s 97-year history in South Africa and also represents one of the largest-ever investments in the South African automotive industry. The investment will boost Ford’s production capability and creating new jobs, Ford said in a statement.

Modernizing Ford’s South African manufacturing operations

“This investment will further modernize our South African operations, helping them to play an even more important role in the turnaround and growth of our global automotive operations, as well as our strategic alliance with Volkswagen,” said Dianne Craig, president, Ford’s International Markets Group.

“Ranger is one of our highest volume, most successful global vehicles. This investment will equip our team with the tools and facilities to deliver the best Ford Ranger ever, in higher numbers and with superior quality.”

Ford announced the investment at a media briefing attended by South African President Cyril Ramaphosa and several key government leaders. With this investment, Ford’s Silverton Assembly Plant is expected to generate revenues exceeding 1.1% of South Africa’s gross domestic product.

It stands in stark contrast to the company’s aforementioned shuttering of its Brazilian operations at a cost of $4.1 billion. The company said in early January it planned to close three plants that were underutilized. The pandemic only exacerbated the problem, causing the sites to sit idle adding to the “years of significant losses.”

Investment in South Africa’s auto industry created a major controversy in the 1980s as activists attempted to choke off the country’s apartheid system, which limited the political and civil rights of the country’s majority Black population.

Apartheid is gone and Ramaphosa now leads the political party once led by Nelson Mandela, South Africa’s legendary leader, who visited Detroit after he was released from prison to thank the United Auto Workers for its support for the anti-apartheid effort.

Ford adding production and jobs at Silverton

Mineral-rich South Africa is now an emerging economic powerhouse with a growing middle glass and is an enticing target for automakers from all over the globe, including those based in India and China.

With the new investment, Ford said the annual installed capacity at the Silverton plant will increase to 200,000 vehicles from 168,000. The investment will support production of the all-new Ford Ranger pickup truck for the domestic market and export to more than 100 global markets.

The plant also will manufacture Volkswagen pickups trucks as part of the Ford-VW strategic alliance, Ford said.

The expanded production will help create 1,200 incremental Ford jobs in South Africa, increasing the local workforce to 5,500 employees, and adding an estimated 10,000 new jobs across Ford’s local supplier network, bringing the total to 60,000.

The overall investment includes a new body shop, stamping plant, and vehicle modification and training centers. The new investment program builds on the recently announced Project Blue Oval renewable energy project, which aligns with the company’s global target of using 1005 locally sourced renewable energy for all its manufacturing plants by 2035 and achieving carbon neutrality by 2050.

New plant should become an island

“Our aim is to achieve ‘Island Mode,’ taking the Silverton Assembly Plant completely off the grid, becoming entirely energy self-sufficient and carbon neutral by 2024,” Cavallaro said. “It will be one of the very first Ford plants anywhere in the world to achieve this status.”