Labour stability has emerged as a key factor in the automotive industry this year, with talks set to commence over new wage agreements for both the automotive component manufacturing and motor manufacturing sectors.
Negotiations are scheduled to commence in May between both the component manufacturing sector and the National Union of Metalworkers of SA (Numsa) at the motor industry bargaining council and between the Automobile Manufacturers Employers Organisation and Numsa about new wage agreements.
Theo Loock, the chief executive of listed auto component manufacturer Metair, said yesterday that some original equipment motor manufacturers had adopted “a waiting position” on new investments until the outcome of a new wage agreement was known and to see if there would be labour stability in the country.
Loock said these companies had previously also waited for the outcome of the ANC’s Mangaung elective conference from a political stability viewpoint and for the government’s stance on illegal strike action, but others, such as General Motors, Ford and BMW, had gone ahead with their planned investments.
Loock said manufacturers that had held back investments were feeling “a bit more positive” following the ANC’s elective conference last December but were now waiting for the outcome of the wage talks.
The latest quarterly business review of the new vehicle manufacturing industry released by the National Association of Automobile Manufacturers of SA (Naamsa) projected that capital expenditure would total R4.9 billion this year compared with R4.68bn last year and the R6.2bn peak in 2006.
Nico Vermeulen, Naamsa’s executive director, said the current three-year agreement would expire at the end of June and there was no reason why these negotiations should not go off well, but stressed that labour stability was an imperative for all industries, not only the automotive industry.
An eight-day strike in the industry in 2010 during talks over a new agreement resulted in the loss of production of about 17 000 vehicles and the loss to employees of R64 million in wages and benefits.
Workers in the automotive component manufacturing, fuel and motor retail sectors embarked on an almost two-week strike in 2010 before agreement was reached on a new wage structure.
Loock referred to the “Marikana effect”, which relates to the more than 40 people killed in violent clashes at Lonmin’s Marikana mine last year that resulted in labour disruption spilling over to other mines and industries.
He added that this tragic event had taught Metair to focus on human capital, had re-emphasised the importance of transformation and showed it was imperative in the operating environment in South Africa to understand the expectations of one’s employees.
“The one big lesson from Marikana is that you can’t rely on the union structures to do your communications for you. You have got to do it yourself and it’s got to be effective and correct,” he said.
Yesterday Metair reported a 19 percent growth in headline earnings a share to R3.10 in the year to last December from R2.60 in the previous year.
Turnover increased by 23 percent to R5.27bn.
Loock said about 20 percent of the growth in turnover came from Metair’s vision and strategy, with 13 percent from the increased turnover from its acquisition last year of Rombat, the largest automotive lead acid battery manufacturer in Romania, and 7 percent from customer and product diversification in South Africa.
He said Metair had dreams of acquiring one or two more battery businesses and also of expanding its after-market product range in the domestic market and expanding its battery footprint in Africa.
A dividend of 95c a share was declared. The share price gained 2.2 percent to close trade at R35.76 yesterday.