For every society, what works are not lofty dreams and visions. What works are principles rightly applied to life’s challenges. The motor industry the world over has been the pillar upon which many countries built their technology. It was not only a take off point for some; it was a means for constant development.
The Nigerian motor industry was born with great potentials and resounding expectations. Finally, Nigeria could become the Japan of Africa, compete globally and hold her head high, walking tall! But it was not to be. From performing well initially, the Industry fell into a quagmire of decay.
This work is an attempt to review the Nigerian motor industry, its history, and the problems that have bedeviled it, making it impossible for it to attain its full height. It also proffers solution to this problems, which if applied would see not only the Nigerian motor industry on the path to greatness, there would also technological advancement; we would achieve the much anticipated technological transfer.
CHAPTER ONE
1.1 INTRODUCTION
According to an assessment carried out by the National Automotive Council, (NAC), the automotive industry is generally regarded as an engine of growth whose establishment serves as an important stimulus to other types of manufacturing activities.
The council noted that the industry has capabilities to create many job opportunities; encourage the growth of other satellite industries and generate acquisition of technology. The industry could also serve as a stimulus to the development of other basic industries such as machine tool, iron and steel, petro-chemical, rubber, etc., with far reaching and significant implications for the performance of various activities such as movement of people, goods and services.
All this benefits have accrued to other nations that have a vibrant automotive industry sector, but so far, it hasn’t worked so well for Nigerians. The questions that run through my mind are various. Are we a cursed nation? Why can’t it work in Nigeria if it worked elsewhere? Can we still revamp this sector and what are the implications for us as a nation economically, politically, and financially? Obviously, the answers to this questions are clearly dependent on several factors, which when taken care of would put this nation on the path to a competitive automotive sector.
1.2 DEFININITION OF TERMS
Automotive: - means connected with or having something to do with motor vehicle
Embryonic: - means an early stage of a development
Scooter: - a light motorcycle, usually with small wheels and a curved metal cover at the front to protect the rider’s legs
Liberalization: - the act of making a law or rule less strict
Gazette: - an official newspaper published by a particular organization containing important information about decisions that have been made and people that have been employed
Ancillary: - providing necessary support to the main work or activities of an organization
Proliferation: - to increase rapidly in number or amount or type
1.3 HISTORY OF THE NIGERIAN MOTOR INDUSTRY
The automotive industry in Nigeria dates back to the early 1960’s when private companies, including UAC, Leventis, SCOA, BEWAC and R.T. Briscoe, pioneered the establishment of Auto assembly plants that used completely knocked down (CKD) or semi knocked down (SKD) parts.
However this was on a very limited scale. With government involvement in the 70’s and 80’s, a broader platform was made available for negotiation with a number of automotive plants in Europe to set up two car and four truck plants using completely knocked down parts.
During this period, the Nigerian automotive industry had the capacity to produce 108,000 cars, 56,000 commercial vehicles and 6,000 tractors annually. However, from the 1980’s, the industry shrunk from 90 percent capacity utilization to 10 percent capacity utilization.
In 2009, the National Automotive Council (NAC), an agency charged with the responsibility of supervising policies and programs for locally assembled vehicles and components brought the attention of stakeholders on the need to revive the industry.
CHAPTER TWO
2.1 NIGERIAN MOTOR INDUSTRY; 1960-1990
Federal government involvement in the automotive industry began or kick-started under the Second National Development Plan spanning 1970-1974. Prior to that time, all we had were sales outlets. If there was any room at all for growth, it was rubbished by the protracted civil war that plunged this nation into darkness and set us back by many decades. In the Second National Development Plan, two passenger car assembly plants were established. As an impetus to this Second plan, the Third National Development Plan was initiated in 1975, and was expected to last till 1980, i.e. 1975-1980. Under this plan, four commercial and truck plants came into the fray. These included the following:-
· Volkswagen of Nigeria limited (VWON) at Lagos
· Peugeot Automobile Nigeria limited (PAN) at Kaduna
· Anambra Motor Manufacturing Company (ANNAMCO) at Enugu
· Styer Nigeria limited at Bauchi
· National Truck Manufacturers (NMT) at Kano
· Leyland Nisara Limited at Ibadan, Oyo
The Federal government had declared that it was entering the automotive industry to aid the quick integrated development of the industry by exercising some measures of control over both the passenger cars, and commercial vehicles arms of the industry. It further stated the need to accelerate the pace of local parts incorporation by halting the trend towards a proliferation of makes and models, thereby ensuring that parts can be locally manufactured in commercial quantities. This was to be done in other to stimulate the growth of indigenous automotive component manufacturing and ancillary industries. This would ensure greater standardization of technology and a more efficient utilization of costly equipment in the industry. Had the Federal government pursued these objectives vigorously, it is assumed that a hundred percent local content or component incorporation could have been achieved by now.
2.2 NIGERIAN MOTOR INDUSTRY; 1990 TILL DATE
Many years after, the modern Nigerian automotive industry is yet to take off. The pace of development has been rather protracted and slow, particularly in the area of local content. During this period, Nigeria has acquired the knowledge for the assembly and maintenance of passenger cars and trucks, especially brand models assembled in Nigeria. The country still lacks a lot of infrastructure synonymous with engineering industries. This combined with the importation of fairly used cars at massive rates didn’t augur well with the sector. To discourage this importation of cars, a two percent levy charged on all imported vehicles into the country, christened the National Automotive Funds, were set up. This was meant to support the industry. But, it has not proved quite effective, what with our corrupt officers and porous borders. This has led to under collection of the levy. For instance, in ten years, from 1999 to 2009, available records show that over five million cars were imported into the country. Yet for the same corresponding period, auto levy collection was for only two million cars.
The advent of democracy has brought promises of revival of the auto industry. There are plans on ground to revive our steel rolling mills thereby providing ample raw materials for the industry.
CHAPTER THREE
3.1 PROBLEMS FACING THE NIGERIAN MOTOR INDUSTRY
The Nigerian auto industry is literally under fire. It is bedeviled by a lot of factors. One of such is the issue of collapsed capacity utilization. Most of the plants are operating below capacity. This under utilization came as a result of shrunken market, high production cost, stunted growth of the industry and uncontrolled or unchecked competition of new fully built units and used vehicles.
As a result of this, the market share level of the domestic plants shrunk from sixty-six percent in 1988 to thirty percent in 1991, even though there was a decline in the supply of new vehicles of all types in 1982 as a result on account of adverse economic condition. The two passenger car makers have installed capacities of 104,200 units annually, while the commercial vehicle plants post a combined capacity of 128, 000 units per annum. Yet, at present, they don’t produce at up to thirty percent of these capacities.
Other issues that have limited this include lack of patronage both from Nigerians and the government, poor and non conducive operating environment, poor capital base, poor performance of local content suppliers, as well as obsolete technology.
Finally, another major factor is the lack of political will by the nation’s administrators to develop the auto industry
3.2 PROSPECTS FOR THE NIGERIAN MOTOR INDUSTRY
At present, it appears that the government is playing politics and considering which tribe would benefit more, before it pursues vigorously the revival of the auto industry. That is the only explanation for their continued inaction. Look at the issue of import duties differential between completely knocked down vehicles and fully built ones. The government has reduced the import duty on fully built vehicles, instead of increasing it like other nations to discourage importation. Stakeholders agree that inadequate tariff protection remains a thorny issue.
Apart from low patronage, local producers cannot compete favorably with others because they lack economy of scale, trained and experienced manpower and basic infrastructure such as electricity, good transportation system and access to cheap loans.
Without meaning to sound like a prophet of doom, I wish to work within the scope of available data, and in doing that, I wish to categorically state that the future of the Nigerian motor industry is indeed bleak except these are fixed; except where the nation is contented to be proficient in vehicle and parts maintenance alone. However, if all these are addressed, the automotive industry would indeed contribute to the much needed Industrial growth in Nigeria.
CHAPTER FOUR
THE WAY FORWARD (A CASE STUDY OF THE INDIAN MOTOR INDUSTRY
Principles are universal; they work whenever and where ever they are rightly applied. That being the case, we want to examine the Indian Automotive industry, where they are currently, how they got there as well as the principles they have applied over the years; with a view to learning from it and applying it in our own Industry. All things being equal, it will elicit the same response as it did for the Indians.
The Automotive Industry in India is the seventh largest in the world with an annual production of over 2.6 million units in 2009. That same year, India emerged as Asia’s fourth largest exporter of automobiles, behind Japan, South Korea and Thailand. By the year 2050, the country is expected to top the world in car volumes with approximately 6.11 million vehicles on the nation’s road. How did that happen? How did they get there? How did they manage this incredible feat?
It is really an incredible feat, especially for a country that was as backward as India in times past. In 1947, India gained Independence from Britain, one of the poorest nations on earth, with no infrastructure, poor road networks, few industries, high rate of unemployment. Today, they have performed a near miracle; defeating the hydra headed monsters that plagued them and taking their country from third world to first world. If they did it is no longer an issue, it is how they did it that is a lingering question.
India was blessed to have visionary leaders right after her independence. They had a national developmental plan, set goals for themselves and worked doggedly to achieve it. First of all having realized that there was need to have local skilled personnel, they embarked on mass training campaigns in specialized fields like engineering. They did this so that when they started the actual work, they would have the necessary workforce to back them up. Next, they strategically began a series of technology transfer in other to have her indigenes acquire the technical know-how. They achieved this by embarking on the building of three steel rolling mills. In building the first, they had seventy-five percent expatriates working with twenty five percent indigenous labors. While building the second one, they reversed the order, this time having only twenty-five percent foreigners involved in the job. By the time they were ready to build the third mill, they built it completely with indigenous labor. In that manner, they achieved technology transfer which provided them with personnel highly equipped to handle other manufacturing sectors such as the automotive industry.
Following economic liberalization in India in 1991, the Indian Automotive has demonstrated sustained growth as a result of increased competitiveness and relaxed restrictions. Several Indian automotive manufacturers such as Tata motors, Maruti Suzuki, and Mahindra and Mahindra, expanded their domestic and international operations. India’s robust economic growth led to further expansion of its domestic automobile market which attracted significant India-specific investment by multinational automobile manufacturers.
In February 2009, monthly sales of passenger cars exceeded hundred thousand units. But back in the 1940’s this was a sector that was just embryonic. In fact, following independence in 1947, the government of India and the Private sector launched efforts to create an automotive component manufacturing industry to supply to the automobile industry when it kick starts. That is vision! However, its growth was relatively slow in the 1950’s and 60’s. This was mainly due to nationalization and license raj which hampered the Indian private sector. After 1970, the automotive industry started to grow. The growth was mainly driven by SUV’s, tractors, commercial vehicles and scooters. In the 1980’s, a number of Japanese manufacturers launched joint ventures for building motorcycles and light commercial vehicles. The Indian government chose Suzuki for its joint venture to manufacture small cars. Today, India has emerged as one of the world’s largest manufacturers of small cars. The Indian miracle was made possible by some of these factors: -
1. Strong Engineering base: - India first built for herself a strong engineering base with expertise, especially in the manufacture of low cost fuel efficient cars. Because of this, they had an abundance of cheap labor. This inadvertently led to reduced manufacturing cost. This reduced the sales price. It was only natural then for demand to swing to lower priced vehicles.
2. Expansion of manufacturing facilities of several automobile components.
3. Continuous research and innovation: - the Indian automotive industry is powered by research and innovation. Experiments are continually been made round the clock to produce better cars with great fuel economy. The Indian automotive Industry is ahead on several counts. It plans to launch electric cars later in 2010.
4. Pre-establishment of car component factories and steel rolling mills: - By establishing this factories prior to the inauguration of her automotive industry, India ensured that raw materials would always available and at lowered cost, hence, it tended to also reduce total manufacturing costs.
5. Creation of enabling environment: - India created the right environment for the automotive industry to thrive. This was in the form of availability of cheap labor, relaxed anti-foreign laws, effective power supply, and availability of cheap raw materials. This attracted the attention of multinational companies to invest in their automotive industry.
6. Good governance and governing policies: - As earlier stated, India was opportune to be blessed with visionaries as leaders. They were blessed with people who embraced sacrifice no matter the cost, in other to achieve any set goal. Yes! Sacrifice! That was how the first all made in India car was built. The Indian president and his entire cabinet declared they would walk on foot till the first Indian car was produced. They carried out their public statement, and in no distant time, Indian engineers came out with an answer-the first all made in India vehicle.
The Nigerian automotive industry can move forward this same way. Like her counterpart the Indians, the Nigerian government should implement her policies to the letter. They shouldn’t just make policies like the amended gazette of 2005 which made it mandatory for the government and its agencies to patronize locally made/ assembled cars, they should enforce it.
They should also review the age of vehicles brought into the country by plugging our ever selectively porous border. Finally, they should stimulate more private sector participation in manufacturing, especially the banks. They, the banks should especially be encouraged to step up from auto buying financing to auto manufacturing. This coupled with good leadership would revamp the Nigerian Motor Industry.
CONCLUSION
The Nigerian Automotive industry was established at a time when it was very much needed, a time when there was a lot of emphasis on technology transfer and development. It has come a long way; back to the times when what was the industry was simply half assembly by few companies. Since then, it still hasn’t come of age. It has every potential to be a key player in Africa, nay the world, but it can’t except the issues that have hitherto retarded its growth are addressed. If Nigerians can begin to patronize them and be proud of made in Nigeria products, then and only then would the industry live up to its full potentials. If not, chances are that the industry would go into extinction and become once upon a time. Something has to be done and fast to resurrect this sector and guide her to the path to development. Till then, all our lofty dreams of technological development would continually remain at best a mirage-a midsummer’s night dream!
REFRENCE
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