Globalization and the death of the local firm? The automobile components sector in south Africa

As in the case of many developing countries, South African industry is faci ng a new competitive environment as trade barriers fall. This involves both the need to enter external markets and to cope with new entrants in the do mestic market. In the case of the South African automobile assembly industr y, responding to this new global environment has increasingly meant that do mestic subsidiaries are being integrated into the global strategic operatio ns of their parent companies. This is increasingly leading them to the fore ign sourcing of components, in part because of perverse and unintended cons equences of the Motor Industry Development Plan. Where local production of components is involved, there is decreasing space for locally-owned compone nt suppliers and almost no space for component suppliers using local techno logy. South African component suppliers are thus increasingly being relegat ed to highly competitive niches in mature technologies in external after-ma rkets, making them vulnerable to exchange rates.