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Job loss fears as GM pulls out of SA

May 18 2017 17:11
Lameez Omarjee

Johannesburg – General Motor’s (GM) decision to disinvest from South Africa on Thursday has sparked fears of job losses in the automotive sector.

The car manufacturer and retailer announced in a statement that it would be selling its plant in Struandale, Port Elizabeth to Isuzu. GM has been operating its vehicle production in South Africa since 1926, according to Bloomberg.

The local move forms part of a global, strategic drive by the company to withdraw from certain markets, including Australia (2013), Indonesia (2015) and India (2017), GM said.

READ: GM wheels out of SA after 90 years

GM spokesperson Denise van Huyssteen told Fin24 that GM plans to focus on developing autonomous vehicles, electrification and connectivity. GM confirmed the Isuzu acquisition of the Struandale plant to Fin24 and said its shareholding of Isuzu Truck South Africa is subject to approval by competition authorities.

When asked if GM’s withdrawal may result in job losses, Huyssteen said it would be “premature to speculate” on the number of employees who may be affected. “GM will enter into a consultation with employees and their representative unions to discuss all possible options going forward,” she said.              

Secretary general of the National Union of Metalworkers of South Africa (Numsa) Irvin Jim, however, raised concerns over the job security of the 1 500 employees at the Struandale plant.

“There was no consultation with the union, and furthermore, the company has not divulged any details about the fate of its employees affected by this restructuring,” he said. “Shutting down operations in South Africa will have a major impact not just on GM plants, but also for companies along the value chain.                

“Isuzu will be taking over operations at GM, but we doubt that they will absorb all the workers who used to work at those plants,” he added.

However, Huyssteen told Fin24 that Isuzu will assume control of GM’s Parts Distribution Centre and Vehicle Conversion and Distribution Centre. Isuzu also intends to set up its own dedicated dealer network and distribute and service light commercial vehicles for existing and new Isuzu customers.

Minister of Trade and Industry Rob Davies also shared his concerns about employees whose livelihoods may be directly or indirectly impacted by GM’s disinvestment.

In a statement, Davies acknowledged the challenges the car manufacturer had been facing in recent years.

This includes the South African plant's inability to meet the minimum production volume of 50 000 units since 2013. GM’s sales have also been on a downward trend for the past five years. Davies added that exports of between 2 000 and 3 500 vehicles annually remains low.

Davies however remained bullish about the prospects of the local automotive industry. “Although we do not welcome this decision, we believe that the future of the industry is positive.”

He explained that players in the industry are devising a “Master Plan” to help grow production volumes. The programme is to be announced in 2018. Davies also remains confident that the Coega Development Corporation will save jobs in the Nelson Mandela Bay metropolitan area.

ALSO READ: Coega courts R11bn Chinese deal

As for the impact of the move on the economy, FNB industrial economist, Jason Muscat explained that it is too soon to say if it may cut into manufacturing production volumes.

“Isuzu could well retool the plant and ramp up production for export in Africa, which could potentially be a positive,” he said.

“GM has not been one of the larger producers or exporters so the impact should not be too severe on overall manufacturing if volumes fall off from Struandale,” he added.

As for sales, the Opel brand will likely fall within the PSA Group. This should not compromise sales, added Muscat. 

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