South Africa’s vehicle assemblers faced another challenging week as a strike in the component industry started to take its toll on production.

In what could be described as a 'labour-action relay', the National Union of Metal Workers of South Africa (Numsa) this week announced a strike at automotive component makers, following directly in the wake of its three-week strike at assemblers.

National Association of Automobile Manufacturers of South Africa (Naamsa) president Dr Johan Van Zyl on Wednesday warned that the component industry strike would only serve to further disrupt vehicle manufacturing operations.

He anticipated that all of the country’s major vehicle producers would again have to halt assembly by the end of the week, owing to a lack of locally produced original-equipment components.

He said the Mercedes-Benz South Africa plant, in East London, had already stopped production on Monday afternoon.

Production losses in the local automotive industry amounted to more than 45 000 vehicles to date, which translated into a production revenue loss of about R20-billion.

These figures were now set to rise further as a result of the component industry strike.

As the vehicle and automotive component manufacturing sectors accounted for around 30% of South Africa’s manufacturing output, the series of strikes in the industry 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, shrinking employment as producers opted for higher levels of mechanisation and automation, warned Van Zyl.

He said the labour unrest damaged South Africa’s status as a reliable supplier to international export markets, and could also jeopardise any future export contract awards to South African vehicle manufacturers.

Labour stability was one of the most important considerations by multinational corporations when they allocated production volumes to South Africa, noted Van Zyl.

“Frequent and prolonged industrial action portrays South Africa as an unreliable base for manufacturing of vehicles for the world market.”

Van Zyl said Naamsa was aware of a number of feasibility studies by European and Asian automotive manufacturers, mulling the possibility of establishing South African vehicle manufacturing operations to supply the African continent.

“The rising incidence of strike action in South Africa is 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.”

Van Zyl called the recent strikes “counterproductive and unnecessary”, saying that South Africa’s increasingly politicised and militant trade union movement was undermining the country’s industrial policy objectives of facilitating investment, encouraging growth and creating employment. 

Prior to the current wave of automotive industry strikes, industry exports and domestic production had been on target to reach record levels of 336 000 units and 610 000 units respectively. 

These figures were no longer attainable, and 2013 projections would be revised downwards, said Van Zyl.

ONE-SIZE-FITS-ALL BARGAINING FAILING
Van Zyl added that the current model of industry-level bargaining – based on an one-size fits all approach – was not delivering the labour stability and productivity required to ensure continued international investment and industry competitiveness. 

“Moreover, the current situation, where different sectors in the automotive manufacturing value chain bargain at different times, will also have to be reviewed as it is 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.”

Van Zyl warned Numsa that it would have to accept responsibility for any lasting negative consequences from the prolonged strike. 

“Unless the strike action in the component industry is settled in the next few days, the damage to the prospects of the automotive industry and on foreign investment sentiment will be immeasurable.”