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South Africa Auto Strike May Spread to Gold, Construction

Aug. 22 (Bloomberg) -- Strikes that have shut plants owned by Toyota Motor Corp. and General Motors Co. in South Africa may spread to gold mines and construction companies, threatening more than 10 percent of the economy’s output.

Two labor unions representing gold mining workers said today their members may vote to strike after wage talks with gold producers such as AngloGold Ashanti Ltd. stalled. A walkout by about 90,000 construction workers from Aug. 26 is set to affect building at Eskom Holdings SOC Ltd.’s two power plants.

South Africa has been wracked by labor turmoil since last year, disrupting production at gold and platinum mines and undermining growth in Africa’s biggest economy.

Workers at carmakers including Toyota, Bayerische Motoren Werke AG and Volkswagen AG are on strike for a fourth day to demand a 14 percent increase in wages, more than double the 6.3 percent inflation rate. The stoppages are costing the industry 700 million rand ($68 million) a day in lost output, according to an industry group.

Unions representing gold miners rejected the latest offer from employers to raise the pay of some categories of workers’ wages by 6 percent. The National Union of Mineworkers, which represents 64 percent of workers in the industry, is seeking a 60 percent increase for entry-level jobs. Strikes could cost 349 million rand a day in lost output, according to the Chamber of Mines.

“We are very, very far apart; we are in severe financial difficulties as a gold mining industry,” Elize Strydom, chief negotiator for the chamber, said in an interview today on Johannesburg-based SAFM radio station. “We have to be prudent and do what’s right for the sustainability of the gold mining industry.”

Construction Strike

A strike could start as early as Aug. 28 after the NUM consults members during the weekend and then potentially issues a 48-hour notice to companies, its spokesman Lesiba Seshoka said today.

NUM is also leading a strike in the construction industry after wage talks with South African Federation Civil Engineering Contractors deadlocked. The union is demanding a 13 percent pay increase for this year, while employers have offered 7.5 percent.

The FTSE/JSE Africa Construction & Building Materials Index, which groups six construction companies, has declined 4.9 percent this year, according to data compiled by Bloomberg. This compares with a 9.3 percent gain in the 166-member FTSE/JSE Africa All-Share Index.

“It will definitely make things more difficult as the industry is already under pressure,” Dirk Noeth, a Cape Town-based analyst at Avior Research Ltd., said in a phone interview. “The excessive demands in the mining sector have spilled over to the construction companies. Only thing that can happen is people losing their jobs if a high increase is awarded.”

Stefanutti Stock Holdings Ltd. can’t yet assess the impact of a likely strike, though it’s putting in place strategies to mitigate its effect, Chief Executive Officer Willem Meyburgh said in an e-mailed response to questions.

To contact the reporters on this story: Paul Burkhardt in Johannesburg at pburkhardt@bloomberg.net; Kamlesh Bhuckory in Johannesburg at kbhuckory@bloomberg.net

To contact the editors responsible for this story: John Viljoen at jviljoen@bloomberg.net; Simon Thiel at sthiel1@bloomberg.net

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