Strike threatens sustainability of auto export business

SOUTH AFRICA’S automotive industry, which accounts for over 7% of GDP, is in danger of being stalled by strikes, warns Volkswagen South Africa. David Powels, managing director of VWSA, says that a less than speedy resolution of the wage strike could lead to job losses and see export contracts being cancelled. He also warns that the country’s vehicle and component manufacturing industry will collapse without export business. VWSA is unable to meet its export orders to Asia Pacific countries. “If we lose our export business contracts, we can take 36 000 cars out of our annual production plan for 2008 and beyond. This is approximately one third of our total production,” says Powels. The manufacturer has also had to spend millions on air freighting tyres from Europe to its Uitenhage plant. The automotive manufacturing industry stands to lose millions of rand and export contracts from the ongoing wage strikes that are being led by Numsa. “The industry will become an importer of fully built-up vehicles and vehicle manufacturing plants will be forced to dramatically scale down operations,” he says. “The component industry and Numsa need to realise that they are holding thousands of people’s livelihoods and the industry’s future to ransom. They need to resolve their differences immediately in order that we can get back to business and start proving to the rest of the world that South Africa is serious about becoming globally competitive. Failure to do this, will have major consequences.” Volkswagen’s warning comes after media reports from Germany that the parent company was considering moving production from South Africa to Germany. These reports have since been denied.