South Africa strikes: metal workers turn

Commodities , Labor , Metals , South Africa , Steel Jul 07, 2014 No Comments

South Africa strikeThe Platinum strike is barely over that already 220,000 members of the National Union of Metalworkers of South Africa are seeking wage increases above 10 percent. Employers are offering as much as 8 percent in the first 12 months of a three- year deal. Negotiations that began three months ago deadlocked on June 25.

Steel and engineering companies employ in excess of 300,000 workers, according to the Steel and Engineering Industries of Southern Africa. In 2013, the industry accounted for 283 billion rand ($26.7 billion) of output, representing about 17 percent of manufacturing.

The protests come as Finance Minister Nhlanhla Nene said South Africa will probably miss this year’s growth target of 2.7 percent after the platinum-mining strike caused the economy to shrink in the first quarter. The walkout cost three main platinum mining firms $2.25 billion in lost revenue.

About 10,500 companies may be affected by the new strike, accounting for about 4 percent of gross domestic product, Gina Schoeman, an economist at Citigroup Inc. in Johannesburg, said yesterday. The stoppage may last at least one month, and if it does, third-quarter GDP may contract again, she said.

General Motors suspended production at its main South African plant after the strike hit parts supplies, the U.S. automaker said on Friday, becoming the latest victim of relentless labor unrest in Africa’s most advanced economy. GM’s suspension of output at its plant in the coastal city of Port Elizabeth showed the escalating impact of the walkout, after NUMSA rejected an increased wage offer from the Steel and Engineering Industry Federation of Southern Africa (SEIFSA). “The plant has been shut since yesterday because of the parts supplier issues,” spokeswoman Denise van Huyssteen said. The company builds around 50,000 vehicles a year.

In one industrial area east of Johannesburg, mobs of strikers smashed car windshields and attacked workers who crossed picket lines, a witness said. “They are breaking factory windows,” said James, who declined to give his surname. “They are attacking people”. President Jacob Zuma’s government said it was concerned about the reports of vandalism and intimidation. It appealed for dialogue. Around 26 strikers were arrested in Gauteng province, which includes Johannesburg, on charges of public violence and malicious damage to property, police said.

“The ongoing labor disruptions are harming the South African economy and affecting the country’s image around the globe,” said Gishma Johnson, General Motors SA’s communications manager. “We recommend that government, business and labor need to work together in a constructive manner to implement solutions which are in the best interest of the country as a whole.”

Ratings agency Moody’s warned that this strike, combined with a weak investment climate, could lead to another credit downgrade. That would increase loan costs for borrowers and likely damage investor confidence, which has already been bashed by the country’s lingering “strike season”. “The ongoing strike activity leaves South Africa unable to take advantage of the recent pickup in growth among its major trading partners, consigning it to a third consecutive year of sub-par growth,” Moody’s said.

Last year, automotive companies including Toyota Motor Corp., Volkswagen AG and General Motors Co., lost about 20 billion rand in production revenue after a NUMSA-led strike. About 30,000 employees stopped work for 15 days, demanding higher wages.

Some motor manufacturers may be forced to stop production from the end of next week if part suppliers continue to be affected by the stoppage. Car manufacturers are a key driver of growth for South Africa‘s economy, accounting for about 7% of its economic output. During last year’s strike, carmakers lost around $60 million a day.

While General Motors said it stopped production at its main plant, other carmakers such as Toyota Motor Corp. and BMW AG said they had enough stockpile of parts such as tires and axels to produce for the next few weeks. But if the strike runs longer they said production could be interrupted too.

The strike won’t directly affect projects by members of the South African Forum of Civil Engineering Contractors because NUMSA isn’t affiliated to it, Safcec President Norman Milne said in an e-mailed response to questions. It may affect supply of reinforcing or other steelwork-type items, he said.

Pascal Blanc

Pascal has implemented numerous software solutions in the areas of procurement, sourcing, spend management, supplier evaluation and performance. His clients include Fortune 500 companies in Europe, Asia and North America. He is a co-founder of Source & Procure.

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