GM Halts South Africa Carmaking After Wage Talks Collapse

Photographer: Muhajid Safodien/AFP/Getty Images

Striking workers hold placards as they demonstrate on the first day of a nationwide strike called by South Africa's National Union of Metalworkers (NUMSA) in Johannesburg, on July 1, 2014. Numsa yesterday denied allegations that its members were involved in violence, saying in a statement that the reports are “part of a cheap ploy by the employers to undermine the integrity of our struggle for a living wage and improved conditions of employment.” Close

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Photographer: Muhajid Safodien/AFP/Getty Images

Striking workers hold placards as they demonstrate on the first day of a nationwide strike called by South Africa's National Union of Metalworkers (NUMSA) in Johannesburg, on July 1, 2014. Numsa yesterday denied allegations that its members were involved in violence, saying in a statement that the reports are “part of a cheap ploy by the employers to undermine the integrity of our struggle for a living wage and improved conditions of employment.”

Wage talks to end a four-day strike by more than 220,000 metalworkers in South Africa failed yesterday as protests turned violent and General Motors Co. (GM) and Bayerische Motoren Werke AG halted production.

The National Union of Metalworkers of South Africa rejected an improved offer from the Steel and Engineering Industries Federation of Southern Africa, the employer group said in an e-mailed statement today. The strike that began on July 1 has been marred by violence and prompted Moody’s Investors Service to warn yesterday that the country’s credit rating may be at risk.

Seifsa, as the employers’ group is known, said its offer to raise wages for the lowest-paid workers by 10 percent this year was the best it could make. No further talks are planned with Numsa, which is demanding a 12 percent pay increase and a ban on labor brokers.

General Motors shut its plant in the eastern coastal city of Port Elizabeth as “the strike in the metal and engineering sector has impacted upon supply of components to our production line,” Gishma Johnson, the company’s spokeswoman, said in an e-mailed statement.

GM, which has a target to build 50,000 vehicles a year in South Africa, said its assembly of light commercial autos such as Isuzu trucks and Chevrolet utility vehicles is affected by the stoppage.

Vehicle Loss

BMW brought forward a week of planned maintenance at its plant outside Pretoria, halting production on July 1, spokesman Guy Kilfoil said by phone today. The factory will reopen on July 8 with two shifts instead of the normal three if the strike continues, he said. That may result in the loss of 120 vehicles a day, he said.

“If the strike goes beyond two weeks, the risks to vehicle manufacturers and production plants will increase substantially,” Nico Vermeulen, director of the National Association of Automobile Manufacturers of South Africa, said by phone from Pretoria.

A Numsa strike over pay at carmakers between August and October last year cost the industry at least 20 billion rand ($1.8 billion) in revenue, according to Naamsa.

The current stoppage follows a five-month strike by more than 70,000 platinum miners that caused South Africa’s economy to contract in the first quarter of the year. Finance Minister Nhlanhla Nene said this week the government’s economic growth target of 2.7 percent this year will probably be missed.

Labor Talks

Labor Minister Mildred Oliphant is meeting with employers to seek a resolution to the strike and will hold talks with union leaders later, Mokgadi Pela, her spokesman, said by phone.

Police arrested 26 people today after several incidents of violence by striking workers at factories around Johannesburg. In Benoni, east of Johannesburg, more than 2,000 workers forced their way onto business premises, damaging equipment and computers, police said in an e-mailed statement. Protesters were shot with rubber bullets after stoning police and breaking through a factory gate in Elandsfontein.

Companies including Bell Equipment Ltd. (BEL) and Evraz Highveld Steel & Vanadium Ltd. as well as units of Murray & Roberts Holdings Ltd. and Aveng Ltd. (AEG) are affected by the stoppage.

The strike is also harming construction at Eskom Holdings SOC Ltd.’s Medupi and Kusile power plants. Police used rubber bullets to disperse 400 to 500 protesting workers at the Medupi site in Limpopo province yesterday. There were no reported incidents today, Eskom spokesman Andrew Etzinger said by phone.

Numsa yesterday denied allegations that its members were involved in violence, saying in a statement that the reports are “part of a cheap ploy by the employers to undermine the integrity of our struggle for a living wage and improved conditions of employment.”

Castro Ngobese, the union’s spokesman, wasn’t immediately available when contacted by phone today.

To contact the reporters on this story: Kevin Crowley in Johannesburg at kcrowley1@bloomberg.net; Rene Vollgraaff in Johannesburg at rvollgraaff@bloomberg.net

To contact the editors responsible for this story: John Viljoen at jviljoen@bloomberg.net Nasreen Seria, Andres R. Martinez

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