JOHANNESBURG -- Sweden's Volvo, the world's second-biggest truck maker, said on Tuesday it would spend $7.2 million (48 million rand) opening a new factory in South Africa, while closing operations in Botswana.
Volvo said the move would lead to "substantial" savings on freight costs and cut delivery times, as the 1,000 truck kits it assembles each year in Botswana are mainly sold in neighboring South Africa, the continent's biggest economy.
Glen Owen -- the general manager for Volvo's industrial division in South Africa -- told Reuters the new assembly plant in the east coast city of Durban would have a capacity of 1,600 trucks a year, which would start rolling out in December.
It would also assemble the chassis for Volvo's B7R bus early next year, with a capacity of 60 to 100 a year.
"We may also look at producing the MACK truck here but that will hinge on costs," he told Reuters.
"South Africa is going through a major growth period. We will make a decision on that in the first quarter of 2006," he added.
The country's economy expanded by 3.7 percent in 2004, up from 2.8 percent in 2003, and the government is spending billions of rand on infrastructure -- particularly transport -- in an effort to boost growth and cut unemployment.
Owen said work on the Volvo assembly plant in Durban had already begun and would create 82 jobs -- the same number being shed in Botswana.
"We will make substantial savings," he said. The cost of shipping truck parts from Port Elizabeth in South Africa to the Botswana capital of Gaborone was about 60 percent of the cost of transport from Gothenburg, Sweden, he added.
Volvo has assembled truck kits in Botswana since 2000.
Officials in Botswana had no comment on the move.