Why is Car Manufacturing Becoming a Key Industry in Morocco? – Jean R. AbiNader

Focus on Market Access and Quality Jobs is Crucial

Jean R. AbiNader, MATIC
April 12, 2016

Jean R. AbiNader, Exec. Dir., Moroccan American Trade and Investment Center

Jean R. AbiNader, Exec. Dir., Moroccan American Trade and Investment Center

With the announcement last week of Renault’s project to develop a more than $ 1 billion investment project in Morocco to build an “eco-system” for its automobile plants in Tangier and Casablanca, the country took another giant step forward in dealing with two key goals: developing a strong industrial manufacturing base and creating quality jobs to meet the demands of its young and growing workforce.

Given Morocco’s traditional economic base in commodities – phosphates and agriculture – moving into industrial sectors, from call centers and small electronics to automobile and aeronautics parts manufacturing, was a necessary step. With 50 percent of the under the age of 30 and with a high unemployment rate among college graduates, King Mohammed VI moved early in his reign to develop a series of national plans to identify and incentivize key sectors for growth. The “Emergence Plan,” now in its second iteration, focused on manufacturing and other key sectors. After a slow start due to the downturn in the Euro zone, it is now reaping significant benefits.

As importantly, these industrial plans target places like the north of Morocco and vital urban areas throughout the country that have not previously benefited from broad economic investments. Now, from Rabat north to Kenitra and Tangier and south to Agadir and Dakhla, new techno-centers, industrial estates, and incentives in public-private partnerships are encouraging international investors to do business in Morocco.

When is a Car “Made in Morocco”

A clear sign of the vitality of the new investment is that it will increase the proportion of Moroccan-made parts in a Renault from 32% today to 65% by 2020. This alone will create an internal market of $2 billion for suppliers and manufacturers. Renault Chairman for Africa-Middle East-India Region Bernard Cambier noted that 15 component manufacturers have committed to the “eco-system” project. Also last week, more than 600 representatives of the suppliers met with Renault in Tangier Automotive City to develop the project’s action plan.

When the Tangiers facility reaches full annual production of 400,000 vehicles in the coming years, more than 50,000 new permanent jobs will be created, resulting in 160,000 Renault employees . This does not include the results of Peugeot’s investment scheduled to be completed by 2020 , which will establish a plant for exports to Africa with a target capacity of 200,000 vehicles a year, valued at some $10 billion annually.

Mr. Cambier also noted that two of the three agreements included in the project focus on generating much needed jobs. The second agreement reflects the continued expansion of “education and training notably in the automobile sector via the creation, for example, of institutes for training on automobile-related jobs.” He went on to say, “These assets place Morocco among countries that made progress in the field of industrial manufacturing quality. The quality of “Made in Morocco” products is recognized by our group. One of the challenges facing the ecosystem is to continue progress in this area and ensure excellence,” he added.

Thus the third agreement deals with management training for both plant and vocational school administrators to ensure a continuous stream of qualified managers, technicians, operators, and assembly workers across a variety of skills common in the industry.

Considering that five years ago, Morocco had no automobile exports and by 2020 will be exporting more than a half million vehicles a year, not to mention similar tremendous growth in the aeronautics manufacturing sector, the country is doing lots of things right and is committed to doing more.

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