Occupational skills gaps in the automotive sector: A key barrier to localisation

The nature of automotive manufacturing is changing at a rapid pace – fundamental changes in manufacturing processes and methodologies, quality management, materials management and supply chain logistics have created increasing pressure for automotive component suppliers to rapidly identify and embed critical skills to secure their global competitiveness. High Gear’s second Quarterly Skills Survey sought to understand the nature of occupational skills gaps in the component sector and determine the potential impact on the supply base and the overall competitiveness of the sector.

‘Hard-to-fill’ vacancies (HTFVs) are prevalent in the supply base, with 90% of respondents reporting at least one occurrence of these vacancies in the last six months. The survey found that whilst respondents anticipate changes in what the merSETA reports as critical occupations in the future, toolmakers are ranked the top critical hard-to-fill occupation based on current vacancies in the sector,  and it is likely that this will endure into the future. Component suppliers note the lack of right experience and skills as the main drivers behind the numerous hard-to-fill vacancies in the sector. Additionally, component manufacturers on average have a low staff turnover rate, which implies a less ‘fluid’ pool of potential new candidates and contributes to the shortage of experienced individuals available in the market.

A lack of adequate skills supply is also creating a bottleneck to companies’ transformation and localisation objectives. Respondents noted the need for greater representation of employment equity candidates, especially youth and women, across all occupation levels. A skilled pipeline of candidates is, however, limited partially due to the quality of education, and remuneration offered in the sector which often see high calibre individuals entering other industrial sectors.

High Gear’s Programme Director, Colin Hagans, emphasises that TVET colleges have an important role in reducing hard-to-fill vacancies: “Through industry partnerships facilitated by High Gear, the TVET college system is well-placed to develop a more reliable pipeline of graduates with the key foundational technical and life skills required by industry. This can be an effective strategy for addressing scarce skills and advancing transformation—including at more advanced occupational levels—as a pipeline of highly-competent and motivated young people are better positioned to advance through the ranks.”

Positively, recognising the South African Automotive Masterplan (SAAM2035) objective of 60% local content by 2035, just under 90% of NAACAM members have identified localisation priorities which they seek to support. Whilst many companies have localisation objectives and leverage multiple avenues of support, including industry-lead initiatives, tangibly there has been minimal improvement seen in the overall percentage of local content in recent years (some of this may be attributed to the previous incentive framework). NAACAM members agree that the lack of appropriate skills, technical competencies and access to proprietary global technology as their most significant hinderances to deeper localisation amongst their tier 2 and 3 supplier base.

“From NAACAM’s activities in the localisation space, it is clear that skills are a cross-cutting barrier to localisation. Should a South African component supplier be able to navigate the other discreet barriers, they will always be constrained by a lack of appropriate skills to embed technology, develop local capacity to supply sophisticated grades of raw materials and implement OEM-endorsed testing frameworks, and thereby prevent localisation from occurring.” says NAACAM Commercial Director, Shivani Singh. “By utilising a platform such as High Gear, which operates at the coal face of developing industry-relevant and validated course content, the component supply base will be able to proactively unlock new localisation and leverage their position in domestic and global markets”, she says.

Respondents have overwhelmingly pointed to the need to tackle skills development and experience in potential candidates looking to fill critical roles, as well as promote the attractiveness of the industry to encourage skilled individuals to enter the component sector. The prominence of toolmaking as a critical occupation both currently and in the future provides a clear directive that interventions need to place some focus on developing the pipeline of skilled toolmakers entering the sector.

To this end, High Gear is taking the following steps to create a demand-driven TVET system that offers quality courses that are aligned with industry:

  1. Develop an enhanced demand-driven TVET system through industry-informed course upgrades, lecturer training and expanded workplace exposure for both students and lecturers.
  2. Creation of an online ‘career experience platform’ to provide students with sound career guidance regarding jobs in the industry and promote ‘attractiveness’ of the component sector

In alignment with the findings of the HTFVs in the sector, High Gear is focusing on profiling numerous HTFVs on the online careers experience platform, so that young jobseekers may have a more robust understanding of the opportunities pathways in the sector and the key competencies required to access and succeed in these rolesThe High Gear quarterly survey was administered by NAACAM, the National Association of Automotive Component and Allied Manufacturers, which has a membership base that spans production locations, tiers, sub-sectors, sizes and ownership structures across South Africa. The quarterly survey is supported by the three High Gear initiative funders: the UK Government’s Skills for Prosperity Programme, the United States Agency for International Development (USAID), and the Michael & Susan Dell Foundation, and by the implementing partner IYF.

About NAACAM

NAACAM is recognised as the voice of the South African automotive component industry both domestically and internationally. As a member driven organisation we are at the forefront of industry leadership, representation and stakeholder engagement for automotive component manufacturers. NAACAM devotes many resources towards positively impacting the localisation, transformation and supplier development environment in SA.

About High Gear:

NAACAM and the Department of Higher Education and Training (DHET) are the lead national partners of High Gear, an exciting initiative managed by IYF that is advancing South Africa’s public TVET college system.

High Gear draws on industry knowledge and skills imperatives—along with IYF curricula enhancement tools—to strengthen the market relevance of select public TVET college courses. Ultimately, High Gear aims to demonstrate a model for greater industry involvement in TVET course design and delivery that generates enthusiasm from TVET educators and industry, while also generating positive returns for young people and employers.

The UK Government’s Skills for Prosperity Programme is funding High Gear implementation in KwaZulu-Natal Province, and the United States Agency for International Development (USAID) and the Michael & Susan Dell Foundation are funding project implementation in Eastern Cape Province. All three funding partners are supporting High Gear’s national stakeholder engagement and learning efforts.

Download HG survey here: Download

and High Gear Report here: Download