By Nangamso Mabindla
21 November 2006

EXPANDING the East London port will cost R5-billion. Leaving it as is, however, will also be costly, resulting in disinvestment and job losses.

These were the findings of a detailed study on the likely impact of an expansion on the economy of the city and the rest of the Eastern Cape. The study was handed over to Buffalo City.

Co-ordinated by the Eastern Cape Development Corporation on behalf of the East London Industrial Development Zone (IDZ), motor manufacturer DaimlerChrysler South Africa, auditing firm KPMG and shipping group Safmarine, the study says that the deepening and enlarging of the port will cost the city R5-billion.

DaimlerChrysler's production manager, Niels Anderson, said it was important for the City and its partners to look into expanding the port. "The East London plant will now produce the W204 Mercedes Benz C-Class model and we will be exporting to United States," he said. "We really need to have a port that will be able to cater for that and for future exporting of DaimlerChrysler products."

The study warned that a lack of expansion would likely result in potential disinvestment of companies in the automotive sector and various other importers and exporters. "For instance, DaimlerChrysler would not continue with current growth and would probably revert to manufacturing components for the local market," Anderson said.

At 10,5 metres, the port's draft was too shallow and it had no dockside gantries; this, in turn, restricted handling space. "Modern ships, fourth generation, are becoming larger and heavier and require drafts of at least 12 metres. The turning circle is too small for larger vessels," Anderson explained.

Because of these restrictions containers from Europe had to be taken to the neighbouring harbour in Port Elizabeth and this was expensive for Buffalo City businesses.

An expanded harbour would not only be beneficial for DaimlerChrysler, which accounts for 40 percent of the port's throughput, but also for other manufacturers, like BMW, which used the Durban harbour.

"The growth of Toyota and the investment it has made into that harbour will now make it difficult for BMW to export its cars to Europe. And with the Port Elizabeth harbour already exporting General Motors and Volkswagen products, East London will be an option - so this will be very good for the city's economy," Anderson said.

However, the automotive industry would not be the only industry to benefit. The agro-processing and manufacturing industries would also benefit from an expanded port. Looking further at other opportunities, Anderson said that the IDZ would benefit from a world-class port.

The consequences of not investing in the port's expansion, according to the study, was that 16 000 jobs would be lost, investment opportunities would be threatened and the city would lose its ability to create wealth.

On the other hand, the benefits of investing in the expansion of the port included the creation of at least 58 000 jobs.

IDZ chief executive Simphiwe Kondlo reiterated that the zone would benefit from a well-functioning, world-class port. "We have lots of competition from other IDZs around the world in countries like Hong Kong and Egypt, and without a well-functioning port we will not be able to compete with those counties. This project cannot fail - it has to succeed and we will make sure it does."

Francois Meyer, a representative from Transnet, said the transport parastatal supported the expansion of the harbour. "We are excited that the City and its partners are looking to expand the port. Please make this work; we really would love to see this becoming a success. I would also like to pledge our support should you need it," he said.