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Local automotive industry back on track


THIS past week we saw the conclusion of what was a month-long strike by over 220 000 metal workers throughout the country. The agreement came after the National Union of Metalworkers of South Africa (Numsa) accepted a 10 percent annual pay increase, which will remain fixed for three years.

The strike has had shocking effects on the automotive industry in particular, with employees at General Motors downing tools, while over at BMW, the production of the 3 Series was cut by a third. Even Ford, VW and Toyota had to stop local production because of the labour unrest as well as a shortage of parts.

The vehicle industry is worth over R30 billion annually and therefore the repercussions of the strike could be severe as we may see decreased investment in local production and even job losses. It’s not only the manufacturers who lose out, but the smaller suppliers of specialist components made in South Africa.

For instance, 40 percent of our automotive exports are platinum-based catalytic converters used in all cars’ exhausts to control emissions. This means that South Africa produce 10 percent of all catalytic converters used worldwide, annually, so both major strikes have crippled this sector in 2014.

The other problem is that current inflation rates are around 6.6 percent meaning this wage increase is something that many employers may not be able to afford without having to retrench employees. The increase in income may lead to increased productivity from the workers. However, should this not be the case, it may lead to job losses.




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