Volkswagen Shuts South African Plant After Car-Component Workers Strike

Volkswagen AG shut its South African plant for the second time in a month after workers in the auto-parts industry went on strike over pay.

The indefinite shutdown will result in a “substantial loss of volume” in Polo models destined for export markets, the company said in an e-mailed statement today from Port Elizabeth, where the factory is located.

General Motors Co., Toyota Motor Corp. and other carmakers closed their plants for eight days in August after 31,000 workers went on strike to demand a pay increase of 15 percent. The walkout, which ended on Aug. 20 after carmakers agreed to raise wages by 10 percent, caused a production loss of about 17,000 cars. Car-component workers began an indefinite strike today, demanding a pay increase of 15 percent, more than double the 6 percent offered by employers.

“The company deeply regrets this unavoidable situation, particularly as the company was starting to recover from an eight-day motor manufacturing industry-wide strike, which also severely impacted customer deliveries,” Volkswagen said.

South Africa’s car and car-parts industry accounts for about 6 percent of gross domestic product and is the country’s biggest manufacturing exporter.

Nissan Motor Co. and General Motors said operations haven’t been affected yet by the strike.

“The longer this strike action continues, the greater the risk becomes that the operations of manufacturers will be halted, resulting in loss of production,” General Motors said in an e-mailed statement from Port Elizabeth today. “Industrial action like this affects the viability of the industry and sends a negative message regarding labor cost and flexibility in South Africa.”

To contact the reporter on this story: Nasreen Seria in Johannesburg at nseria@bloomberg.net.

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