The latest South African industrial action to hit the country’s automotive industry has finally come to an end after 15 days of talks, with the National Union of Metalworkers of South Africa (NUMSA) accepting a deal that will see the wages of component workers in the manufacturing sector increase by 9% in the first year. The effects on carmakers and suppliers in the country, however, are likely to be felt for some time to come, with exports badly affected and the region’s reputation for global competition severely dented.
The strike action, which saw 70,000 workers stop work, hit supplies in a number of areas, including components, tyres and garages, leading to assembly stoppages at plants across the country. Despite an agreement being reached last Thursday, in which the 9% increase will be followed by 8% increases in each of the following two years, there are outstanding issues still affecting the return to full production.
“We are currently producing cars and will run both shifts today,” said BMW SA spokesman Gary Kilfoil on Monday. “We also managed to produce both shifts on Friday but only with a great deal of special effort on the part of our suppliers and special task teams to get the parts in that we needed. We were hoping a return to complete normalcy by today but there have still been some issues that our suppliers have worked very hard to overcome.”
BMW is having to have parts delivered on a more regular basis than normal in smaller batches in order to meet its production needs, according to Kilfoil.
While the Retail Motor Industry Organisation hopes the resolution to the strike will restore levels of confidence across the industry, the long-term damage to the region’s automotive reputation may not be easy to mend. South Africa is the largest car producer on the African continent and manufactures around 400,000 units per year, across 60 brands and more than 1,100 models.
GM South Africa spokesperson Denise van Huyssten said: “Industrial action like this affects the viability of the industry and sends a negative message regarding labour cost and flexibility in South Africa, and in so doing we risk becoming a less attractive destination for future investment.”
Those concerns were echoed by BMW’s Kilfoil: “Unfortunately, the strikes certainly will make it much more difficult to get the necessary support from our parent company in the future when it comes to production allocation and volume,” he told Automotive Logistics News. “The length of the two strikes combined, thanks to the staggering of the two strikes, was not a good reflection of the labour relations maturity required for South Africa to compete globally.”
As a consequence of the strike BMW lost 4,000 units of production, mostly for export markets, and while it said it could recover a small percentage of the lost volume over the remainder of the year (providing there are no further stoppages) Kilfoil said there was “absolutely no way” it could now make up the entire loss.
“In other words, the strikes have ultimately resulted in an overall loss of export volume from South Africa and the strike interruptions now make it impossible for us to meet our annual commitment.”
Similarly, Toyota South Africa, said it had lost 10,000 units in production because of the strike and said it would not be able to clear its backlog of orders for new vehicles and components until the first quarter next year.
Strike action by NUMSA hit South Africa’s automotive region last month over demands for a 15% wage increase (read more here) and the dispute flared up again at the beginning of September when talks aimed at a resolution once again broke down.
The action also follows a strike taken by the South African Transport and Allied Workers Union (Satawu) and the United Transport and Allied Trade Union (Utatu) in May, which also hit the car industry (read more here).