You are here:


GMSA exit sparks worry as trade union and opposition party weigh in

19.05.2017

The National Union of Metal Workers (Numsa) and Democratic Alliance (DA) have expressed concern over General Motors' decision to exit South Africa, describing it as shocking and a vote of no confidence in the government.

In a statement on Thursday, the Detroit-based auto giant announced that it would leave the local market at the end of 2017, pulling the plug on production of the Chevrolet Spark and Utility at its Struandale plant in Port Elizabeth, and ending sales of the Chevrolet brand completely.

A sale of its remaining assets, and indeed the plant, has however been reached with Isuzu, which will see the Japanese commercial vehicle giant continue production of its KB bakkie range, as well as medium and heavy duty trucks locally, and take over GMSA's Parts and Distribution Centre and rebrand its existing dealer network.

"These decisions were not made lightly. We appreciate the support that our employees, customers, dealers, suppliers, the government and other key stakeholders have given us over the many years that we have operated in this country. We will manage the transition as smoothly as possible," GMSA Managing Director and President Ian Nicholls said.

GM's departure from South Africa comes in the wake of the automaker also pulling out of the European market following the sale of its Opel / Vauxhall divisions to the PSA Group, ending local production of its Holden brand in Australia, and wrapping up its presence in India, Indonesia and Singapore as part of a wider restructuring process.

According to a report by Reuters, a total of only 49 000 vehicles were sold by GM in India and South Africa during the entire twelve months of 2016 combined.

"As the industry continues to change, we are transforming our business, establishing GM as a more focused and disciplined company," GM CEO Mary Barry was quoted in a statement as saying.

"Globally, we are now in the right markets to drive profitability, strengthen our business performance and capitalise on growth opportunities for the long term. We will continue to optimise our operations market by market to further improve our competitiveness and cost base".

Reacting to GMSA's announcement, Numsa General Secretary Irvin Jim said it will be consulting with its lawyers as no attempts were made to convey to message to members employed by the company.

"This is the second time that GM is pulling out of South Africa, and as NUMSA we smell a rat," Jim said in reference to GM divesting from the country in 1986 out of protest against Apartheid.

"The company has already shut down the plant and has indicated that they will meet with us to discuss the latest developments, but that is after the fact. They acted unilaterally and did not inform the union of this decision".

He also stated that its unlikely that most of the affected workers of the Chevrolet division would be integrated into Isuzu, adding that an investigation would be launched as to whether GM plans on "dumping the remainder of its cars on the South African market".

"If they proceed with dumping, we will take up a campaign to prevent them in light of the fact that they are disinvesting in the country," he said.

In a subsequent rebuttal, DA Shadow Minister of Trade and Industry, Geordin Hill-Lewis, said the company's explanation that South Africa does not provide the expected returns on investment it had hoped for, could be attributed to President Jacob Zuma's shock cabinet reshuffle last month, which saw the axing of Pravin Gordhan as Finance Minister and ratings agencies' downgrade of the country's economy to junk status.

"GM currently employs 2 000 South Africans at its plant in Port Elizabeth, and their withdrawal will threaten the livelihoods of all of these workers. Government has failed to create a climate conducive to attracting investment, and in fact, is going out of its way to chase investment away," Hill-Lewis said.

"The DA will now write to the Minister of Trade and Industry, Rob Davies, to call on him to act decisively in order to prevent further potential job losses as a result of foreign investors pulling out of the country’s automotive sector. We will also request that the Minister report back to Parliament on what the specific reasons are for GM deciding to withdraw from South Africa, and possible solutions to bring this concerning trend to an end".

Davies' office has meanwhile expressed regret at GM's exit, describing it as a "concern that directly impacts the jobs and livelihoods" of those employed by the company.

"Whilst it is regrettable to see General Motors exit South Africa, market performance leading to cuts in profitability, coupled with recent global initiatives have created the conditions to make such a move likely," the Department said.

"Although we do not welcome this decision, we believe that the future of the industry [is] positive, as automotive industry stakeholders are finalising a Master Plan for South Africa with a view to growing domestic vehicle production volume and local value addition and an announcement on the final program can be expected early 2018 latest and will cover the period post 2020".

Article written by Autodealer
19.05.2017
Comments
You have an opportunity to be the first by writing a comment about this article. Ask a question or share your opinion!
 
Notify me via email when someone comments or replies
- Enter security code