Some nine months ago, the Federal Government announced the launching (or is it relaunching) of an Industrial Revolution strategy or master plan. This has understandably received mixed reviews. What I am putting forward here has been in form of a draft for the over the 9months that I have been tinkering with it.
What do I include? What do I leave out, for now? What do I elaborate on? How do I hold it down so that it does not end up being a book? With the benefit of recent experience, is anybody, any adult at home? With the attention span of most people reduced to a few microseconds in this election year, will anyone be in the mood to read hard stuff? Finally, will this effort ever be published? It has been quite a dilemma.
I have to confess however that what follows is but a feeble effort to highlight just a few of the very many issues concerning industrialisation about which there is currently so much disinformation. So much needs to be done, conceptualising, comparing and contrasting, copying, modifying and implementing. No newspaper article or contribution to a scholarly journal, not even a book can cover all that. But try we must. We owe that much to our grandchildren.
The editorial by The Punch newspaper in its issue of Thursday, Feb 27, 2014 is representative of the range of opinions and expectations of all Nigerians, expressed forcefully on this issue through the media. I have chosen to refer extensively to this editorial in making my not so humble contribution.
THE AUTOMOBILE INDUSTRY The following excerpt from the editorial does NOT represent the truth:
“There are no made-in-Nigeria vehicles; only a few assemblers of completely knocked down components are available!”
The above statement indicates a clear lack of understanding of the nature and structure of the global automobile sector in this day and age, in contrast with the early days of Henry Ford, and others over a century ago.
Today most automakers make as little input into their models as they can possibly get away with while striving to retain whatever distinctiveness that survives by the time the vehicle gets to the showroom. That way they keep down long term capital costs. For more than a quarter century now, the average mid-size car or van looks exactly alike from 50metres away. The reason is that everybody uses more or less the same design software and experimental data. In short, sooner or later everyone gets the same answer by hook or by crook! For example the relationships between vehicle shape and drag coefficients are essentially natural laws. Any deviation from the optimal shape, the wedge, is punished by unacceptable loss in fuel efficiency. Hence everyone toes the line and all cars look alike! The variations in grill aesthetics do not count for much.
Moreover there are a multitude of independent auto design studios nowadays ready to develop new concepts or optimise old ones for both new and aspiring automakers.
The world of engine and gearbox developers is still growing as we speak. Hence even major automakers are ever willing to source items as critical as the engine from the minors so long as it makes engineering and economic sense. At one point General Motors was filling a few of the vast array of its engine requirements from virtual unknowns from Brazil. Similarly over a decade ago, the UK group Rover gave up some of its engine development programme altogether and filled the gap with engines by Kia of Korea. It has thus come to the point where governments go out of their way to encourage local automakers to domesticate and retain certain capabilities because of the long term strategic significance, as in military. Russia is a case in point. So is Turkey on the other side of the great divide.
It should be pointed out at this stage that since most major and minor automakers source their inputs from the same vast pool of component manufacturers and makers of sub-assemblies, it is only the efficiency of the often wide-flung auto assembly operations, local labour laws and cost of labour, together with marketing and pricing saavy, that separate the winners from the also-ran. Therefore anyone who sneers at the auto assembly process as “just assembly” obviously does not know what he or she is talking about.
NIGERIANS NOT CONVINCED, GOVT SHOULD TRY HARDER I have observed that a whole lot of snerring is going is going on here right now, especially by people who have never MADE anything of value in their lives. I was shocked when I read two years ago that a delegation from the Nigerian Society of Engineers visited the INNOSON auto plant in Nnewi to (wait for it) confirm if actually the company manufactures cars and other vehicles and NOT JUST ASSEMBLY. For goodness sake, what exactly is Peugeot Automobiles doing in Kaduna? If these engineers don’t get it, how can the man in the street?
It is most unfortunate that the Nigerian public has no faith in this evolving process in the auto industry. As an added illustration, readers are referred to this story “Kia Takes Nigeria-made Vehicles to Motor Show” carried by all major newspapers on Wednesday, Nov 5, 2014. The comment by one Mr(?) Idoni George in The Punch clearly illustrates the general perception. The public, whom an enhanced automotive policy is meant to serve, is not being carried along.
Idoni George wrote “Who are these people deceiving? Made in Nigeria cars indeed. Its very unfortunate that even the government can actually be part of the deceptive game against its own people all in the name of politics. The question is, where are the assembly plants located that manufactured these so called made in Nigeria cars? . . . Since when do complete knock(ed) down vehicles that are only coupled in their warehouse in Volks – Ojo become made in Nigeria cars? There cannot be any made in Nigeria car, at least not in the next 5 years all things being equal.”
Obviously we still have a big problem on our hands. It is one thing for our policy makers to fail to make adequate effort to move the nation forward, but it is another thing altogether not being able to convince our people that progress is being made even if belatedly. The government just has to find a way to sell its programmes on this score.
One thing for sure, the sheer size of the big automakers gives them an added advantage. They have a leg up as regards the negotiated purchase price of their inputs and always a place ahead in the queue in matters of procurement. The current scramble in India between established leaders like Suzuki-Maruti and others which include outsiders like big Toyota shows that with strategic planning most players can get a foot in the door. It should be no different for Nigeria.
THE JAPANESE AMBASSADOR OFFERS HIS ADVICE The editorial continues, “Japan’s ambassador to Nigeria, recently reminded us that it could take up to 10years to build up a truly viable local auto industry. . .”
So? The tragedy is that nobody here has challenged or tried to qualify that assertion. What a pity!
When do we start counting? 1972, 1975, 1985, or is it 2005? . It has been 10years many times over. We simply got distracted and missed our way on the journey. Nigeria needs to retrace its steps and go back, even if belatedly, to the fundamentals that have been known to work in other climes.
CARROT AND STICK No major automobile manufacturer will step in to assemble (yes, assemble) cars in a relatively small-to-medium sized market like Nigeria unless there is a clear incentive to do so. The other side of the coin is that no major manufacturer will willingly freeze itself out of the Nigerian market if the policy is consistently and unapologetically lopsided in favour of locally manufactured vehicles. The “Buy Local” policy, that is routinely announced by our government and as quickly forgotten, is not supposed to represent a PR posture, but a matter of economic life and death.
THE BRAZILIAN EXPERIENCE I will refer our policy makers at Abuja and any interested reader to the early Brazilian experience as reported in The Harvard Business School Bulletin of June 1994.
In a story written by Gary Emmons, researcher Helen Shapiro (PhD Economics, Yale; then an assistant professor at HBS), details how Brazilian policy makers in the late 1950s up to the 60s, “in effect created an automobile industry – relying predominantly on foreign capital – by successfully wooing and CAJOLING foreign automakers to set up factories there. While the state indeed closed its domestic market to competitors, the market’s relatively small size was a modest inducement – the only real payoff for the transnationals would come sometime in a nebulous future, with heightened access to an expanded population and market and whatever other rewards might derive from the firms’ status as early entrants.” As it turned out, that future came sooner rather than later.
It would be an interesting exercise to track Nigeria’s demographics, especially the growth of the middle class these past fifty years. The Brazilian template and others have always been available to be copied. There is every indication that the Brazilian model would have fit Nigeria with very minor panel-beating. If I could ferret out this body of information, so also could others for whom such activity defines their job description. That is unless they were or are still sleeping on duty!
I had actually made full colour copies of the article cited above just about the time former President Obasanjo came into office in 2001. The idea was to draw the new government’s attention to the renewed possibilities in the auto industry. However in a very short while I concluded, based on subsequent pronouncements, body language and actions, that the government of the day was clueless and essentially impervious to the kind of external influence ordinary folks like me could reasonably exert. Readers will have noticed quite early that my name does not exactly ring a bell. Hence I threw in the towel then. You can term this essay as my Second Missionary Journey!
I hate to imagine that I, of all people, would be teaching anything to the proud Asiodus, Ciromas, Allison Ayidas, Ahmed Jodas, Muhamadu Buharis and Ibrahim Babangidas, etc, of this world. But let the truth be told, they missed the road with us in tow. We all got lost with them.
Among the class of the so-called Super Perm-Secs, nobody for example lost his job for opposing the cancellation of the Lagos Metroline. A book on Catholic religious doctrine states that excessive obsession with one’s personal survival in an environment where principled opposition is the right thing to do, (with an attendant cost; even one’s life) is actually sinful. With everyone playing safe, is it then any wonder that we are where we are? Can we find our way back to the right path?
It is on record that during the watch of these gentlemen and others, we were importing the many variants of Volkswagen, the beetle then discontinued in Europe and the Igala fastback from Brazil. As bus and coach builders – Marcopolo, Vanhool, Autobus, Jimbuss etc – trooped down to set up shop in Brazil, the Nigerian people and government followed suit but with order book and cheque book in hand. How we love to shop!
I like to talk of specifics. In the early 1980s I was pained and dismayed when our military (read government) took delivery of Land Rovers from their factory in Spain, and operational trucks from Tata in India while ignoring our very own MB-ANAMCO in Enugu, Leyland in Ibadan and Steyr in Bauchi, not to mention the Fiat plant in Kano. In India the Maruti 800 was launched in 1983 two years after the Suziki-Maruti joint venture was incorporated in 1981. Please note the date. Two years later the Maruti Gypsy was launched and soon became the primary operational vehicle of the Indian military and police. The success of their topline model, the Grand Vitara, which features prominently on Nigerian roads, is an established fact.
It does not take the mathematics of late Prof Chike Obi or a Nobel laureate in economics to deduce the likely impact of a policy whereby the Federal Government of Nigeria and the various State governments (the largest purchasing bloc) bought all cars from the then Volkwagen of Nigeria or Peugeot Automobile of Nigeria. Toyota, Honda and a host of other Japanese and Korean newcomers would not have had to be wooed. They would have come on their own.
The economic spin-offs and other add-on effects derivable from a vibrant automobile manufacturing industry go without saying. The Toyota and Honda operations in Thailand were probably set up years after the five vehicle assembly plants in Nigeria went comatose or more correctly killed very dead by our very own hands. In effect, what we are talking about now is certainly not revival but an actual resurrection from the dead of the Nigerian automobile industry, almost 45years after the major plants were set up. Right now Nigeria imports from just about any other source without any sense of shame. I will not be surprised to see a shipment coming in soon from North Korea.
So much for our on again, off again Automotive Policy.
In subsequent writing, I will address the railways and other aspects of heavy lift transportation.
Engr Oduche Azih, (oducheazih@yahoo.com)
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