“We live in a kind of new era of protectionism,” Mezzour says. This makes the situation more difficult for countries like Morocco, “which have invested massively in open, free and fair trade”.
Less than twenty years ago, there was practically no automobile industry in Morocco. Today it is the largest in Africa. But the era of electric cars is now coming – with new competitors.
Three times a day, a freight train brings hundreds of cars from rural areas of northern Morocco to a port on the Mediterranean. They come from a Renault factory near Tangier and are sent to car dealerships in Europe. Business incentives and infrastructure investments like this freight rail line have helped the country grow its auto industry from virtually non-existent to Africa’s largest in less than two decades. The North African kingdom supplies more vehicles to Europe than China, India, or Japan and can produce 700,000 cars a year.
The government is determined to maintain the country’s position as a heavyweight automaker in the future by enthusiastically applying for electric car projects. However, it remains an open question to what extent it can remain globally competitive in this new era of vehicles with increasing manufacturing automation.
There are currently more than 250 companies operating in Morocco that produce vehicles or vehicle parts. The automotive industry now represents 22 percent of gross domestic product and the equivalent of 12.9 billion euros in exports. French automaker Renault, Morocco’s largest private employer, produces almost all of its Dacia Sandero small cars, hugely popular in Europe, in the North African country. Freed from the many checks and balances of a democratic separation of powers, the government tells companies that want to outsource production to cheaper areas that they could get approval for new factories and complete construction within a short period. time – perhaps as little as five months.
“15 years ago, we didn’t export a single car. Today, it is the country’s leading export sector,” declared the Minister of Industry and Commerce, Ryad Mezzour. He pointed out that Morocco has developed its ports and highways and that the government is offering producers subsidies of up to 35 percent to build factories in rural areas outside Tangier – where Renault now makes Clios and Dacia Sanderos.
Lower wages
Chinese, Japanese, American, and Korean factories make seats, engines, shock absorbers, and wheels in Tangier Automotive City, a large industrial park housing auto parts producers. Stellantis manufactures Peugeot, Opel, and Fiat at its Kenitra factory.
Investing huge resources into developing and sustaining an automotive sector was part of a 2014 industrialization plan that aimed to create jobs for a young and growing workforce at a time when Foreign automakers are looking for new places to produce vehicles and parts.
Major car manufacturers pay unionized workers less in Morocco than in Europe. But even with a salary that is equivalent to a quarter of the French minimum wage of 1,766.92 euros per month, the salary is higher than the average income in Morocco. The industry employs 220,000 people.
As in many African countries, the domestic market for new cars in Morocco is limited. Fewer than 162,000 vehicles were sold there last year. But the government’s success in building an auto industry has nonetheless made the auto sector a spearhead in Morocco’s efforts to transform its largely agriculture-based economy. “I have a simple priority: not to export or be competitive. My job is to create jobs,” says Mezzour.
“Skilled automotive workers”
Abdelmonim Amachraa is a Moroccan supply chain expert. He says spending on infrastructure and training skilled workers has put the industry in a good position to attract investment from automakers looking to expand their electric vehicle supply chains. Morocco is seeking investment from both the East and the West, trying to attract industrial players from China, Europe, and the United States. They all want to produce affordable electric cars quickly and on a large scale.
China’s BYD, the world’s largest electric vehicle manufacturer, has announced plans to build factories in Morocco at least twice, but this has not yet been implemented.
As Europe prepares to phase out internal combustion engines over the next decade, automakers like Renault are preparing to adapt to the Moroccan process. Mohamed Bachiri, director of operations for the French manufacturer in the North African country, said the company’s success there also makes the kingdom an attractive location for investments from other producers, particularly in the field of electric cars. The industry will likely continue to grow as manufacturers can source a large portion of their auto parts – currently more than 65 percent – directly from Morocco. The country also has the advantage of having experienced and skilled automotive workers, which other outsourcing destinations lack.
But while the United States and European countries are encouraging their automakers to produce electric cars “onshore,” it’s unclear how well Morocco will be able to compete. The country has always proudly declared that it is a free market without tariffs or trade barriers. But it now faces other countries taking steps to protect their domestic auto industries to secure advantages in electric vehicle production.
Last year, for example, France and the United States adopted tax credits and other incentives for consumers who buy electric cars made in Europe and the United States, respectively. “We live in a kind of new era of protectionism,” Mezzour says. This makes the situation more difficult for countries like Morocco, “which have invested massively in open, free and fair trade”.
