South African Car Industry Strike to Cost 700 Million Rand a Day

Carmakers in South Africa, including Toyota Motor Corp. (7203) and Bayerische Motoren Werke AG. (BMW), face daily losses of as much as 700 million rand ($70 million) in a planned labor strike over wages, an industry body said.

About 30,000 workers for seven manufacturers will down tools from Aug. 19 after a breakdown in wage negotiations between carmakers and union leaders, Nico Vermeulen, director of the National Association of Automobile Manufacturers of South Africa, said in a phone interview today. The industry could lose output of more than 3,000 vehicles each day of the strike, valued at 600 million rand to 700 million rand, he said.

South Africa has been plagued by labor strikes that have spread from the mining industry to other parts of the economy, restricting growth. The automobile industry accounts for almost 7 percent of the country’s gross domestic product, according to the Department of Trade & Industry.

Car industry employers are offering a 10 percent wage increase in year one and 7.3 percent in the following two years, compared with a workers’ demand for 10 percent in each of the next three years on top of various benefits, Irvin Jim, General Secretary of the National Union of Metalworkers of South Africa, told reporters in Johannesburg .

“The strike is indefinite,” Jim said. “We are willing to meet employers even this weekend if an agreement can be reached.”

Other carmakers affected by the strike include Ford Motor Co. (F), Volkswagen AG (VOW), Nissan Motor Co. (7201) and Daimler AG. (DAI) Naamsa has forecast a 21 percent increase in South African car exports to 337,000 vehicles this year, compared with 277,893 in 2012.

To contact the reporter on this story: Kamlesh Bhuckory in Johannesburg at kbhuckory@bloomberg.net

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