Strikes cost SA R11.6bn in cars

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IOL BR Vehicles production 7816 Independent Newspapers. The Volkswagen SA plant in Port Elizabeth. Back-to-back strikes in the vehicle and component manufacturing industries paralysed production lines from mid-August to October. Photo: Simphiwe Mbokazi.

The production of 58 000 vehicles worth a total of about R11.6 billion was lost by South Africa’s motor industry last year because of back-to-back strikes in the sector.

Despite the strikes, the number of people employed by the new vehicle manufacturing industry increased by 1.5 percent, or 441 jobs, at the end of September last year from the industry head count of 29 903 jobs at the end of June.

The strikes in the vehicle manufacturing and automotive components industries ran from mid-August until the first week of October.

Nico Vermeulen, the executive director of the National Association of Automobile Manufacturers of SA (Naamsa), said last month that the industry was a net positive contributor to employment creation in the third quarter, even though the strikes were under way at the time.

Vermeulen said the employment figures included both salaried and weekly paid employees.

He acknowledged the growth in employment could have been partly due to the anticipation of additional production once the strike had ended.

He stressed the production lost during the strikes was not necessarily permanent, because most motor manufacturers had plans to recoup these volumes. Some of these plans extended into this year.

Vermeulen said the average retail price of cars produced was about R200 000 a unit.

The latest review of business conditions in the motor vehicle manufacturing sector was released by Naamsa in mid-December. It said the strikes in the vehicle manufacturing and automotive component manufacturing industries had had a devastating effect on industry output.

This, in turn, contributed to the poor economic growth performance in the third quarter, a contraction in manufacturing output in August and September, and pressure on the country’s balance of payments during those months.

The review said industrial action in the automotive sector contributed to substantial declines in production and sales both in the domestic and export markets.

Naamsa is now projecting a reduction in total industry vehicle output for the 2013 calendar year of 9.5 percent, or 58 000 vehicles, to about 552 000 vehicles from its original projection of 610 000 units.

But this is still the third-best annual production by the industry, exceeded only by the 587 719 units produced in 2006 and the 562 965 units in 2008.

It said the major contributor was a reduction in exports to a revised forecast of 281 000 vehicles from the previously projected 336 000 units.

The review said export sales remained a function of the performance and direction of global markets, adding that vehicle exports to Europe remained under pressure because of the recession in the euro zone.

However, higher exports to the rest of Africa, Asia and North America, along with the contribution of new export programmes, should enable the industry to increase production over the next few years.

Naamsa estimated that vehicle exports would come in at 281 000 vehicles for last year, compared with the 277 893 vehicles exported in 2012. Domestic new vehicle sales were expected to have grown by about 4.5 percent last year.

It said exports to the rest of Africa showed a decline in new car sales and an increase in light commercial vehicle exports during the first nine months of last year.

Light commercial vehicle exports into the rest of Africa rose by 3 percent, or 1 562 units, to 52 854 vehicles in this nine-month period from 51 292 in the corresponding period last year.

Naamsa said total vehicle exports into Asia and America continued to reflect strong gains.



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