Carmakers including BMW, GM, Ford, Mercedes-Benz, Nissan, Toyota and Volkswagen are still struggling to regain production levels following a four-week strike by members of the National Union of the Metalworkers of South Africa (NUMSA) that affected component suppliers across the country. The strike ran alongside a three-week strike by union members employed at the carmakers’ plants, which was resolved in early September.
The combined impact of both strikes has been felt across the supply chain and has led to substantial losses in production for all of the major carmakers in the country. The strikes have raised fears that South Africa’s reputation as a manufacturing centre has been damaged.
According to a representative from BMW, the carmaker maintained production during the strike but was reduced to one shift per day instead of three and lost a further 5,000 units of production on top of daily losses of 345 units between August and September. The spokesperson said that as the factory runs 24-hours a day, there is no possibility of making up the lost units. The NUMSA dispute among component suppliers, which started on August 19th, compounded problems for the German carmaker, which had already been hit by strike action the previous fortnight when 2,000 workers walked out over a shift allowance dispute.
A spokesperson from Ford said that the carmaker had also been working at a reduced rate at its assembly plant in Silverton and Struandale engine plant but was now back to full production.
GM South Africa, meanwhile, resumed normal production on October 3rd, but said it had lost three weeks of production during the strike at the plants. “Additionally, we were unable to continue with production operations at our Struandale assembly plant from 16 September to 2 October as a result of the lack of local components supply,” said a spokesperson for the company.
VW South Africa said that it resumed full production on October 8 and “anticipate[d] that there will be no further disruptions in the foreseeable future”.
Bad reputation
According to the African Manufacturers’ Employer Organisation (AMEO), the strike action cost the industry up to R600m ($60m) a day. Thapelo Molapo, chairmain of AMEO, recognised the impact on the inbound supply chain of the action affecting the component industry, which came on tope of the walkout at the assembly plants. He said that the damage to South Africa’s reputation for automotive manufacturing would be something from which it would take a long time to recover.
“If not properly managed, this can compromise the industry’s future growth prospects, with the resultant consequences to the country’s broader economy,” warned Molapo.
With vehicle and component production accounting for around 30% of South Africa’s manufacturing output, the strike would inevitably have a damaging economic impact, agreed Dr Johan Van Zyl, president of the National Association of the Automobile Manufacturers of South Africa (NAAMSA). The association said that the strike action had damaged the country’s status as a reliable supplier to international export markets and could negatively affect future exports contracts being awarded.
The fear that repeated strike action is a threat to the country’s reputation was backed up by a number of the carmakers individually.
“The challenge for the South African automotive assembly industry is to remain competitive versus a growing number of high volume and low cost countries,” said a spokesperson for GMSA. “The lack of labour stability is a major deterrent to investment and growth in this country.”
BMW is quoted elsewhere as stating that it has ceased all future plans to expand in South Africa because of the strike action.
Blackmail vs bargaining
Countering these views, NUMSA said the strike was drawn out because employers had threatened the centralised bargaining process, with individual manufacturers having offered unilateral increases (and higher plant level increases), which amounted to bribing workers not to participate in the national protected industry strike.
“We shall, after the strike, assess and examine the motor industry collective bargaining regime and take the fight back to employers,” said the union in a statement.
NUMSA went on to state that it refused “to be blackmailed by BMW, NAAMSA or any other neo-liberal analyst/economists for our right to strike”, a reference to the reiterated points concerning the threat to the economy and investment decisions going forward. It accused the carmakers’ CEOs of showing no leadership during the walkout.
“The likes of BMW must remember that it is taxpayer's money that subsidises the profit they so generously make in South Africa,” the statement added.
Workers in the OEM dispute accepted a 11.5% increase in wages for this year and two subsequent rises of 10% each to 2015. Pay at small-to-medium sized parts suppliers will only increase by 9% this year, followed by 8% in the subsequent two years.
One of the demands made by the union was that workers received a 100% payment for temporary lay-offs (or short-time working) that come as a product of logistics problems to the supply of components to assembly plants. When disruptions to supply occur, workers can be laid off for periods without pay, according to NUMSA. Under the final settlement workers will now be paid 30% of their basic wage when short-time work is imposed.
