Industry leaders have warned that East London could be reduced to a ‘ghost town’ if it’s principal industry shuts its doors.
Mikel Mabasa, CEO of the National Association of Automobile Manufacturers of South Africa (Naamsa), was speaking at the DealerCon summit in Sandton this week.
He told delegates that the Eastern Cape city is heavily reliant on the German carmaker.
For many years, both right- and left-hand versions of the Mercedes-Benz C-class sedan have been built at its assembly plant, which is located in East London.
Mercedes-Benz the ‘anchor’ of East London economy
With the US levying a 30% duty on South African vehicle exports, shipments to that market have slowed dramatically.
“The Mercedes-Benz plant is the anchor of East London’s economy,” Mabasa cautioned.
“If it grinds to a halt, the city risks being reduced to a ghost town.”
While he stressed that the industry is resilient, Mabasa noted that MBSA is uniquely exposed because other local automakers have diversified away from the US.
BMW, for example, has diversified its market and no longer exports significant volumes from SA.
Job losses in the Eastern Cape
The warning comes amid wider strain in the province’s manufacturing sector.
Ford recently cut 470 jobs, and tyre giant Goodyear shuttered its Nelson Mandela Bay plant, affecting more than 900 workers.
Trade Minister Parks Tau is in Washington this week in an effort to negotiate relief from the tariffs, which follow campaign pledges by US President Donald Trump.
Mabasa expressed hope that talks could secure a reprieve before the end of September, when the African Growth and Opportunity Act (Agoa) expires.
In the meantime, Naamsa and MBSA are exploring new export markets, particularly within Africa, to reduce reliance on the US.
“Diversification is essential if we want to safeguard jobs and the survival of towns like East London,” Mabasa added.
