Johannesburg - An estimated R500 million in wages and benefits have been lost by the about 70 000 workers at automotive component manufacturers during the three-week strike in the sector.
Robert Houdet, the executive director of the National Association of Automotive Component and Allied Manufacturers, said on Friday that the association would have an indication of the revenue lost by its 150 member companies only at the end of the year because there would be a scramble to catch up on lost deliveries and back orders as soon as the strike ended.
But Houdet said the major impact on component manufacturers would be seen only in two or three years’ time when a factory closed down because a major export contract had not been renewed.
“This is the price we have to pay for it [the strike]. The automotive industry hates risk and is risk averse.”
The National Union of Metalworkers of SA (Numsa) said yesterday that it had reached an agreement with the Retail Motor Industry Organisation to end the strike, which has crippled vehicle output because of a shortage of local component supplies. The union accepted a 10 percent pay raise in the first year and an 8 percent raise in the second and third years from major employers.
Small to medium-sized companies would raise wages by 9 percent in the first year, followed by two annual raises of 8 percent each.
Houdet said that when an original equipment manufacturer (OEM) wanted to launch a new car model, it selected its chosen component suppliers and gave them seven- to eight- year contracts.
Procurement and logistics staff had a lot of influence when an OEM was going to launch a new model and if they had to make a choice involving South Africa with its unstable labour environment, “they won’t choose South Africa”.
“The damage is already done. Yesterday, today and tomorrow decisions are being taken in Europe and elsewhere and OEMs won’t buy from us.”
Jeff Nemeth, the president and chief executive of the Ford Motor Company of Southern Africa, said components from South African suppliers to the Ranger bakkie programme would have to be airfreighted to Ford plants in Argentina and Thailand, which also produced the Ranger, to prevent production stoppages because of component shortages.
BMW South Africa confirmed it had lost the opportunity to bid for the production of a new car model for the global market, which would have created a significant number of new jobs, because of the strike.
Nomura International analyst Peter Attard Montalto said BMW had clearly had enough of the labour situation and the risk/reward of further investment simply did not make sense for the German firm.
“There are many other companies thinking the same thing because of labour issues. Plus remember that in the car sector electricity supply quality and the stalling by government of allowing major co-generation by manufacturers is a big issue,” he said.
Numsa general secretary Irvin Jim said Numsa’s leaders were seeking a meeting with BMW’s country managers to discuss the bid rejection, which amounted to “blackmail”.
The move was an attempt to prevent future strikes in the industry, he said.
BMW “can only be profitable if they continue to invest in South Africa”, Jim said. “They will not find the kind of cheap labour as they find here.
“We will not accept the BMW blackmail. We expect them to bring back that investment.” – Additional reporting by Bloomberg