Car-making Operations at GMs South African Plants Cease after Wage Talks Fail

Published Date : Jul 07, 2014

Production of cars at the South African plants of Bayerische Motoren Werke (BMW) and General Motors Co. (GM) came to a standstill after wage talks collapsed and a strike by over 220,000 metalworkers turned violent. The strike also disrupted car-component manufacturers.

Twenty six people were arrested after incidents vandalism, attacks, and intimidation were reported at factories in the periphery of Johannesburg. Talks of a wage hike failed after an improved offer presented by South Africa’s employer group, South Africa Steel and Engineering Industries Federation, was rejected by the National Union of Metalworkers.

The stoppage has been on since July 1 and directly threatens the operations of one-third of the country’s automobile manufacturing output. In the meanwhile, Moody’s warned that this disruption could risk South Africa’s credit rating. This labor strike comes close on the heels of a five-month strike that was called by over 70,000 platinum earlier. The strike had caused the South African economy to contract in the 2014 first quarter.

The employer’s group, known as Seifsa, said in a statement that it had offered a 10% wage-raise to the lowest-paid workers and that was the best offer possible from its side. With the rejection of this offer, no further talks are being planned. The workers’ union has demanded a 12% pay rise as well as labor brokers being banned.

GM had to shut operations at its plant in Port Elizabeth, located on the east coast of South Africa. The company’s spokeswoman Gishma Johnson said in a statement that their production line has suffered lost time because of the metal and engineering sector strike.