Strike to hit car production

Johannesburg - As many as 31 000 South African autoworkers seeking a 15% wage increase and better conditions plan to go on strike next week, potentially dealing a blow to auto production in Africa's largest economy.

The powerful National Union of Metalworkers of South Africa (NUMSA) said in a statement on Friday that workers could down tools from next Wednesday after talks broke down with a group representing auto manufacturers.

NUMSA has asked the industry group, which represents seven companies including Toyota Motor Corp, Ford Motor, Volkswagen AG and General Motor, for a one-year agreement guaranteeing a 15% wage increase, more than triple the country's inflation rate.

The other companies are Nissan Motor, BMW and Daimler AG (DAIGn.DE: Quote) unit Mercedes-Benz.

"We have had enough. We have been in negotiations with the employers for two full months now," said Castro Ngobese, a union spokesman.

As many as 6 000 workers in tyre manufacturing could also strike, the union said in a statement.

The contract under negotiation covers about 16 000 hourly-paid auto workers, said Chris Thexton, chairperson of the Automobile Manufacturers Employers Organisation, the industry group.

A strike could have a big impact on a South African auto industry that is already struggling to remain competitive, he said.

"It could result in a significant growth of opportunity for those companies that just import their product fully built-up."

Three-year deal

The manufacturers have offered a three-year contract with a 7% increase in the first year and a raise equal to consumer inflation in the remaining two years.

South Africa's consumer inflation stood at 4.25% in July.

Thexton said his group did not have more meetings scheduled with the union, but would be "seeking opportunities" to resolve the issue in the next few days.

Union spokesperson Ngobese said workers were intent on striking and a majority would would walk off the job next week.

Motor vehicle production in South Africa is expected to hit 443 000 units in 2010, according to the National Association of Automobile Manufacturers.

South Africa's government sees auto manufacturing as a key industry to help boost growth and jobs and has tried to help car markers build up exports.

Separately, more than a million South African public sector workers plan to strike nationwide on Tuesday in what could be a prelude to prolonged industrial action.

- Reuters