Publications
Partners
Cape Town – The South African government is not happy about the short notice period General Motors (GM) gave when announcing its withdrawal from South Africa, said Deputy President Cyril Ramaphosa in Parliament on Wednesday.
Responding to a question from the ANC’s Lungi Mnganga-Gcabashe about the automotive manufacturer to divest from South Africa, Ramaphosa said government was notified only two days before the announcement was made to the workforce.
"GM’s decision was made on the back of sustained efforts by government to assist the company. It told us it didn’t performed well in South Africa in terms of production and sales. The timing of GM’s decision to withdraw did not allow for meaningful intervention," Ramaphosa said.
He acknowledged that the short notice given by GM "doesn’t sit comfortably with government or the trade union".
READ: GM wheels out of SA after 90 years
“This is something GM must have talked about and it’s something they sprung upon us where 900 people are losing their jobs,” Ramaphosa said. "We are unhappy about it. It’s incorrect that a decision is taken and announced in two days. It destabilises the lives of vulnerable people."
Ramaphosa said the Department of Trade and Industry is currently drafting an automotive masterplan that will serve before Cabinet in due course.
"It may be a good idea to consider protective measures that we can implement to safeguard workers from similar situations," he said in reference to a follow-up question about government considering instituting a penalty for such divestment decisions.
Ramaphosa said the lesson emerging from GM’s departure is that the global automotive industry is a highly dynamic and competitive one. "Decisions are based on global strategies," he said, adding that GM also announced that it is exiting Australia and India.
READ: PE to feel the pain as GM exits
On May 16, GM, which initially started vehicle production in South Africa in 1926, announced plans to sell its manufacturing plant in South Africa to Japanese truckmaker Isuzu Motors as part of a worldwide re-organisation to focus on more profitable businesses.
Trade and Industry Minister Rob Davies earlier said that GM’s decision to exit South Africa was a fait accompli and there was nothing government could do to reverse the decision.
According to Davies, GM is repositioning itself and the vehicle manufacturing company is looking at entering the driverless car space and the South African market has become insignificant to them.
SUBSCRIBE FOR FREE UPDATE: Get Fin24's top morning business news and opinions in your inbox.
Read Fin24's top stories trending on Twitter: Fin24’s top stories
