Unions slam Mercedes-Benz for proposed job cuts after recording R4.4bn profit

Workers at the East London plant of Mercedes-Benz South Africa. SUPPLIED

Workers at the East London plant of Mercedes-Benz South Africa. SUPPLIED

Published Jun 18, 2024


Workers union federations have categorically rejected the proposed retrenchments at Mercedes-Benz South Africa (MBSA), saying the jobs bloodbath would have devastating consequences for the workers and the economy.

On Thursday, MBSA announced plans to cut 700 jobs out of roughly 3 000 employees at its East London manufacturing plant due to deteriorating macroeconomic conditions, and prolonged port challenges.

The luxury carmaker said it would enter into consultations in line with section 189(3) of the Labour Relations Act after it resolved to restructure its operations from a three-shift model to a two-shift model.

But the unions have vowed to wage a relentless battle in defence of workers’ jobs as retrenchments would have a devastating impact on the community and value chains of Buffalo City Metro, and deepen the already high unemployment rate.

Cosatu on Friday said this development at MBSA was astounding considering the company declared a staggering 35% rise in net profit after tax to R4.4 billion for the year-end December 31, 2023.

Cosatu spokesperson Zanele Sabela said a mere six months later, the global automaker was ready to retrench 700 employees, devastating the families that depend on their earnings.

“Now, following a slight slump in first-quarter earnings, MBSA is ready to kill 25% of the jobs at the factory. Too often any suggestion of a change in the country’s policies is met with threats of divestment by foreign investors.

“This stance must be reviewed if foreign investors are to be as fickle as MBSA. South Africa is beset with challenges. We need investors who are in it for the long haul. Dumping workers after one bad quarter does not bode well.”

Sabela added that MBSA was undoubtedly aware of the reforms under way at Transnet to ensure the ports were working efficiently, and thus must reverse their proposed restructuring.

As a result, Cosatu said it would be engaging the Department of Trade, Industry and Competition as well as employment and labour to ensure this bloodbath was halted, in addition to ensuring that the challenges at Transnet Freight Rail and Ports are resolved to ensure our export industries can take off and jobs can be created.

The MBSA East London plant is part of the group’s global production network for its C-Class model, and most of its vehicles – it produced 90 000 of them last year – are exported.

The current C-Class is the sixth generation of the high-volume model, and has been manufactured at the plant since 2021.

In recent years, the automotive industry has had to deal with several challenges.

These include deteriorating macroeconomic conditions that have led to relatively weak vehicle sales locally, prolonged port challenges, rising fuel and other prices, and a shift in buying to smaller, less expensive vehicles.

In October the Motor Industry Staff Association warned there might be retrenchments in the auto industry, this after many dealerships had already been forced to close last year.

Meanwhile, the SA Federation of Trade Unions (Saftu) also rejected the MBSA retrenchments, saying it would exacerbate the crisis of unemployment.

Saftu general secretary Zwelinzima Vavi said MBSA’s primary reason for restructuring is underwritten by the need to keep profit margins afloat or maximise them.

Vavi said Saftu’s claim was backed by the financial records of Mercedes Benz South Africa, which shows it recorded a R4.4bn profit in 2023, an increase of R1.1bn from a profit of R3.2bn in 2022.

“So, while the complaints about other economic factors are legit, they are not the primary reason for restructuring and retrenchments. As their annual report shows, they are interested in ensuring continued growth of their profit margins,” Vavi said.

“If their transition from a 3-shift model to a 2-shift model will guarantee them value higher than the value they make today, it means workers’ exploitation will intensify and be prolonged. It can only be intensified by bringing better machines and prolonged by extending the working day. This exploitation is meant to achieve nothing but maximised surplus and profits thereof,” he said.