Economic crunch hits Mazda Motors

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THE 162 000 square-metre stand at the Willowvale industrial area in which Willowvale Mazda Motor Industries (WMMI) is located in Harare about 11km southwest of the city centre appears semi-deserted with most offices unoccupied and only a few people milling around the premises.

Fidelity Mhlanga

“We used to assemble about 40 vehicles a day, but now we hardly assemble even a single car,” said an employee. “Currently we are not manufacturing vehicles, but import these cars from Mazda South Africa.”

“I think the last time we assembled vehicles was in 2010,” said the employee. He portrayed a bleak picture of the state of affairs at the company reeling from serious viability problems due to the harsh economic environment.

For a car assembly plant, the place is eerily quiet. On arrival at the blue wrought-iron gates at the premises, one could be forgiven for assuming that the premises house a service business like an auditing or consultancy firm on account of the quietness.

For a short while the Zimbabwe Independent crew thought they might be at the wrong address but a signpost on the security wall 30 metres from the gate loudly proclaimed this was indeed “Willowvale Motor Industries — Home of Mazda in Zimbabwe”.

A security guard opened the gate after asking a few routine questions concerning their nature of our visit, to which we responded we wanted to purchase a vehicle. As we drove into the premises the only discernible activity was that of a groundsman mowing the lawn.

mazda-bt-50

Upon entering the main office building, heaps of old dusty files, furniture and other gadgets could be seen in abandoned, partitioned offices.

The sales department operates with three people, while the workshop has just four people whose duty is to do minor touch-ups on the vehicles in stock, all imported. There were only seven BT50 Mazda double cab vehicles in a huge bonded warehouse with a capacity to accommodate 25 vehicles.

An employee explained that vehicles were imported upon demand, with 16 vehicles currently expected from South Africa. We failed to gain access to the manufacturing plant as it is currently closed.

WMMI, which used to employ more than 800 employees during its peak in the 1990s, is now a pale shadow of its former self as its staffing level is down to about 30 people.

It would be quite a task to revive the manufacturing unit, which has been idle for about three years,to supply government and parastatals with vehicles in line with a recent government directive.

Through cabinet circular number 16 of 2011, government sanctioned WMMI and Quest Motors in Mutare to be the sole suppliers of vehicles to parastatals, government ministries and other state enterprises.

However, it is envisaged that the government directive will have a huge negative impact on the automobile industry as it directly threatens 13 648 jobs held by workers employed by 1 751 registered players in the sector such as Croco Motors.

WMMI was established in 1961 when Ford Motor Corporation of Canada imported a complete assembly plant to assemble the Ford range for the then Federation of Rhodesia and Nyasaland.

After the Unilateral Declaration of Independence in 1965 it closed shop before the Industrial Development Corporation bought the company in 1967 for contractual assembly.

In 1986 government modified the operations of the company to become a distributor of passenger and commercial vehicles under government direction. But due to foreign currency shortages, production tumbled, prompting the company to partner Mazda Motor Corporation of Japan as a technical partner.

A joint venture agreement was signed in 1989.

Currently, Willowvale is 60% owned by Motec Holdings which in turn is 75% controlled by the state-owned Industrial Development Corporation of Zimbabwe, and 25% by Itochu of Japan.

Research done in 2010 by Japan’s Manufacturing Management Research Centre says WMMI in 1997 boasted 800 employees, but production started decreasing after 2000 as a result of the deterioration of the economy.

According to the report, WMMI invested in the assembly of engines, began their in–house production, installed welding and painting equipment, and developed into a plant capable of assembling a maximum of 10 000 units per year. In the 1990s it produced 18 000 units annually.

After the new millennium the company was crippled by a huge unsold stock, with car components unobtainable due to unavailable foreign currency.

Unless there is a capital injection of about US$20 million to refurbish the manufacturing assembly according to industry sources, WMMI will be unable to supply government and parastatals with vehicles as stipulated by the government directive.

Economist John Robertson slammed the directive saying the initiative could cripple the viability of the automobile industry.

“It sounds restrictive. There is need to let market forces come to play and not force people to buy from specific players. Government interference has side- effects in the future,” he said.

However, economist Godfrey Kanyenze said the move could mitigate underhand dealings associated with the supply of vehicles to government ministries.

“It is a positive development in that it is better to use quasi-government companies to reduce corruption and rent seeking. This may not be adequate, but it’s a good starting point,” Kanyenze said.

“They (WMMI) did extremely well in the past but now they are a pale shadow of their former self. In any event, the current government procurement of vehicles must be limited. They must stop buying expensive vehicles when they cannot provide basic services. In fact, proper procurement policies must be adhered to.”

But Head of Research Econometer Global Capital, Takunda Mugaga, said it is economically imperative for WMMI to import other brands instead of sticking to assembling Mazda vehicles only.

“Who can assemble a car in Zimbabwe where there are electricity shortages? Who wants to drive a Willowvale brand when borders are opening everyday? For every five cars moving on the road, you will find that four of them are second hand from Japan,” Mugaga said.

“Who will buy a car for US$45 000 when you can get a cheaper one? I think it is better for the company to import other brands than assemble the Mazda brand only.”

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3 thoughts on “Economic crunch hits Mazda Motors”

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