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Vehicle manufacturer General Motors (GM) said on Friday that South Africa's recent sovereign downgrade to junk status has not influenced its decision to disinvest from the country.
In a written response to Fin24, GM confirmed that its decision to withdraw operations from the country is part of the group’s strategy to cut its operations in international markets.
“It was not influenced by local economic or political considerations. General Motors would like to thank all levels of government for their continued support of our business in South Africa,” the group stated.
GM announced on Thursday, that Isuzu will be taking over its light commercial vehicle manufacturing operations. Isuzu will also purchase GM’s minority (30%) shareholding in Isuzu Truck. Isuzu will also take over GM’s vehicle Conversion and Distribution Centre, and the Parts Distribution Centre. The group expects the Opel brand to likely move to the PSA Group.
The move was condemned by labour unions, with the Federation of Unions of South Africa (Fedusa) and its affiliate Motor Industry Staff Association (MISA) in the motor retail sector stating on Friday that they are deeply disturbed by the unilateral announcement of GMSA to leave South Africa.
Fedusa is especially upset by GMSA's decision in the light of what it calls "a highly negative environment of high unemployment, low growth and the recent downgrades by two credit rating agencies. According to Fedusa hundreds of jobs are in jeopardy.
Irvin Jim, Secretary General of the National Union of Metalworkers South Africa (Numsa), said on Thursday that the union was not consulted ahead of the announcement of the restructuring. “Shutting down operations in South Africa will have a major impact not just on GM plants, but also for companies along the value chain,” he said.
GM however has said that it would work with unions and local authorities to support the transition process, as Isuzu takes over working with employees, their union representatives and local authorities to provide transition support
Minister of Trade and Industry Rob Davies also expressed concerns over the impact on jobs at the manufacturer’s plant in Struandale, Port Elizabeth.
In a statement Davies explained that “emerging global geo-political dynamics” might have influenced the business decision as additional investments are being made in the US.
FNB industrial economist, Jason Muscat echoed these views. “If anything, this may be attributed to the changing tone in America, where the focus is increasingly on bringing back outsourced jobs to the US.”
Fedusa said more than 1 900 workers are affected at the assembly plant of GM, while 134 motor dealerships will be affected in the motor retail sector.
Fedusa called Davies to convene a high-level meeting of social partner leaders in the motor assembly and the motor retail sectors to develop a comprehensive response to protect the jobs and to strengthen motor industry.
According to MISA there are about 124 GM dealerships in South Africa and 34 of them are likely to close down. The dealerships that are part of big corporations such as McCarthy stand a chance to absorbed by them and this will inevitably translate to other employees losing their jobs.
Among the reasons given by GM for exiting South Africa include consolidation of its capital and resources. “We are committed to deploying capital to higher return initiatives that will enable us to lead in our core business and in the future of personal mobility,” said chief executive Mary Barra.
GM had embarked on a process to review its international operations, and its actions to improve its performance, as far back as 2013.
Among the other changes announced include focusing its operations in India to manufacturing for export only. GM’s Chevrolet brand will also be phased out of both India and South Africa by the end of 2017.
In East Africa, Isuzu has purchased GM’s 57.7% stake in its operations there and has assumed management control.
GM International will also streamline its regional headquarters office in Singapore, the group said. The office will retain oversight of markets like Australia and New Zealand, India, Korea and Southeast Asia.