Johannesburg - Job cuts in the motor sector appear inevitable, with even the unions now consumed with trying to cushion the blow of joblessness rather than fending off lay-offs.
The automobile sector has been hard hit by the credit crunch and the general slowdown in the economy, with demand for new vehicles sharply down.
The National Association of Automobile Manufacturers of South Africa (Naamsa) said this week new vehicle sales declined 30.1% to 38 143 units in October compared to the same month last year.
Unions organising workers in the sector want employers to commit to social plans to cushion the blow of retrenchment for their members.
The National Union of Metalworkers of SA (Numsa) said on Friday it was in talks with employers under the auspices of the Motor Industry Bargaining Council.
"We want them to commit to retraining and/or reskilling workers so that they at least have another opportunity to re-enter the economy," says Numsa national spokesperson Mziwakhe Hlangani.
He says the economic meltdown ?has seen retail vehicle sector employers spitting blood as more than 100 car dealers have announced they are closing down, threatening to retrench thousands of metalworkers.
"General Motors of South Africa has threatened to cut down 2 000 before the end of the year, while Ford is retrenching about 800 in its Port Elizabeth-based engine plant and Pretoria and the Volkswagen plant in Uitenhage has implemented continuous short-time since early this year," says Hlangani.
"The global economic recession has had a ripple effect as employers in the car component manufacturing sector have also threatened restructuring due to the current economic recession wave.
"While Numsa is mobilising to fight these unbridled retrenchment threats to the bitter end with general strikes and major protests, we will engage fruitfully with employers committed to finding a solution through adopting social plans and initiating other creative options available.
"It is not enough for the employers' association to express commitment to finding a solution through social plans, but then plead poverty at the same time when real action has to be taken," adds Elias Kubheka, Numsa motor sector national coordinator.
The Motor Industry Staff Association (Misa) says employers should look for alternatives to retrenchments.
Under pressure
"In the event that retrenchments can't be averted, these skilled workers should be retrained to take up jobs in areas of the economy that may not be as adversely affected," says Misa chief executive Dana De Villiers.
He says McCarthy has filed notice with Misa about closing down six dealerships.
Absa managing executive for vehicle and asset finance Marcel de Klerk says if the vehicle market does not recover until 2010, as is currently predicted, between 20% and 30% of the car dealers will not survive the downturn.
At the beginning of this year Absa was transacting with 2 700 dealers. Today the figure is 12% lower.
This is almost double the number that shut shop last year.
Of the 4 000-odd dealers in South Africa, 2 800 are franchised businesses and the remainder are used-car dealers, estimates De Klerk.
Dealers' profitability has declined by 50% to 70% and many of them no longer make any profit at all.
Sales are significantly down. Combined figures for the Naamsa and Associated Motor Holdings show a 31.2% decline, year-on-year, in sales of new vehicles.
Stock levels are currently very high. Whereas dealers previously had enough stock for about two months, they now have on average 120 to 180 days' stock.
Some dealers are sitting with stock that could last a year. These vehicles not only occupy space in the showroom but they also lose value.
De Klerk says a car standing in the showroom loses an average 2% of its value every month. Add to this the high interest rate, and the cost is even more.
The high infrastructure costs of many dealers' impressive new buildings add to the thorn in their flesh.
He expects sales to remain under pressure until interest rates start coming down next year and consumer confidence is restored.
- City Press with Sake24