Home FleetWatch-2013 Motor industry loses R20-billion , and could rise further as result of...

Motor industry loses R20-billion , and could rise further as result of strikes

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Aggregate production losses to date at vehicle manufacturing level as a result of the three week strike by the National Union of Metal Workers of South Africa had amounted to over 45 000 vehicles which translated into a production revenue loss of about R20-billion.

This is according to Dr Johan van Zyl, president of the National Association of Automobile Manufacturers of South Africa (NAAMSA), who states that production resumed earlier this week at the seven major vehicle manufacturing plants affected by the strike.

The plants affected were: BMW South Africa, Ford Motor Company SA, General Motors South Africa, Mercedes-Benz South Africa, Nissan South Africa, Toyota SA Motors and Volkswagen Group South Africa. Two manufacturers had endured a four week stoppage.

Dr Van Zyl warned, however, that these figures would rise further as a result of the current strike in the automotive component manufacturing industry which started last Monday.

“By the end of this week, all the major vehicle producers will again be unable to operate as a result of the unavailability of locally produced original equipment components. In fact, the Mercedes-Benz South Africa plant in East London already had to stop production at midday on Monday this week due to strike action at its suppliers,’ he said.

Commenting on the wider effects of the strike action, Dr Van Zyl said that with the vehicle and automotive component manufacturing sectors accounting for approximately 30% of South Africa’s manufacturing output, the strike would inevitably result in lower economic growth, lower domestic and export production and sales, reduced industry profitability, loss of income to workers, loss of revenue to the fiscus, lower foreign direct investment into South Africa and ultimately, less employment as producers opted for higher levels of mechanisation/automation.

As pointed out by NAAMSA in a previous statement, the strike action had served to damage South Africa’s status as a reliable supplier to international export markets and could well negatively affect future export contracts being awarded to South African automotive manufacturers.

“Labour stability is one of the most important considerations in the decisions by multinational corporations to allocate vehicles for production in South Africa.  Frequent and prolonged industrial action portrayed South Africa as an unreliable base for manufacturing of vehicles for the world market,’ said Van Zyl.

NAAMSA was aware that various European and Asian automotive manufacturers were currently undertaking feasibility studies into the possibility of establishing vehicle manufacturing operations in South Africa to supply the South African and African markets.

“The rising incidence of strike action in South Africa was likely to impact the ultimate decision whether or not to invest. At the same time, African countries such as Morocco, Kenya and Nigeria are aggressively competing for new automotive investments,’ he pointed out, adding that as a result of the counterproductive and unnecessary strike actions, South Africa’s increasingly politicised and militant trade union movement was undermining the country’s official industrial policy objectives of facilitating investment, encouraging growth and employment creation.

Before the current wave of automotive industry strikes, total aggregate industry exports and domestic production had been on target to reach record levels of 336 000 and 610 000 respectively. According to NAAMSA, these figures were no longer attainable and the 2013 projections would be revised downwards.

Dr van Zyl added that the current model of industry level bargaining – based on a one size fits all approach – was clearly not delivering the labour stability and productivity so essential to ensure continued international investment and industry competitiveness.

Moreover, the current situation, where different sectors in the automotive manufacturing value chain bargained at different times, would also have to be reviewed as it was not conducive to fostering a stable industrial relations environment so necessary to support the realisation of the official vision for the industry, namely, the annual production of 1.2 million vehicles by 2020.

“Ultimately,’ he said, “the industry’s trade union would have to accept responsibility for any lasting negative consequences from the prolonged strike. South Africa’s turbulent industrial relations environment is undermining the interests of the country, the automotive industry and official industrial policy.’

Unless the strike action in the component industry was settled in the next few days, the damage to the prospects of the automotive industry and on foreign investment sentiment would be immeasurable and would take years to re-address.

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