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Car production hit as parts dry up

Sep 18 2013 13:06 Reuters


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Cape Town - South Africa's car makers are struggling to build cars because a strike in components manufacturing has choked off the supply of parts, industry officials said on Wednesday, adding to the woes of a sector badly hit by earlier labour unrest.

More than 30 000 workers at major auto makers including Ford, Nissan and General Motors returned to work this month after a strike for higher wages that cost the industry $2bn in lost output revenue over four weeks.

But workers in the automotive parts and retail industry represented by the main manufacturing union Numsa are on strike, shutting down the supply of key parts and components used to assemble autos. The industry accounts for 6% of GDP and 12% of South Africa's exports.

"The impact has been huge, massive. We are only producing 85 cars instead of the normal 345 cars a day," said Guy Kilfoil, a spokesperson for German automaker BMW.

The BMW plant would not be able to make up the lost production, he said. It lost 7 900 vehicles from the autoworkers' strike and expects to lose another 2 300 by the end of this week because of the shortage of parts.

Numsa has been pushing for double-digit wage hikes and better shift allowances, demands the Retail Motor Industry Organisation has said it would struggle to meet.

The situation was similar at a plant producing Daimler AG's  Mercedes-Benz line.

"We haven't been producing our passenger vehicle line since last week. Our commercial line for trucks and buses has been going, but could stop producing next week if the strike continues," spokesperson Lynette Skriker said.

She said most of the plant's 2 500 workers have been at home on short time due to the parts shortage.

Nevertheless, apart from the auto sector, strikes this year have been relatively short-lived and less violent than some analysts had feared. The local economy is recovering from a wave of violent mines strikes last year.

Workers in the gold industry went back to work this month after a three-day stoppage, although wage settlements are likely to cost bullion producers an extra $150m over the next 12 months.

It is unclear whether the hardline Amcu mining union, which is still pressing for wage hikes, intends to strike.

Last year, Amcu helped organise a wave of wildcat strikes that brought the mining industry to a standstill and dented investor confidence. More than 50 people were killed during the mines unrest, including 34 strikers shot by police.



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labour unrest  |  auto industry


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