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South Africa Auto Strike May Spread to Gold, Construction

Aug. 23 (Bloomberg) -- Workers at South African plants owned by Toyota Motor Corp. and General Motors Co. are weighing a wage offer that may end a week-long strike as employees in gold mines and construction companies consider walkouts.

The strike at the seven main car plants across the country may be close to being called off after the employers tabled a revised pay proposal. Details of the package, which haven’t been disclosed, are being presented to the workers today at plants in Pretoria, Durban, Port Elizabeth and East London, the National Union of Metalworkers of South Africa said in an e-mailed statement.

About 30,000 employees at carmakers including Toyota, Bayerische Motoren Werke AG and Volkswagen AG are on strike for a fifth 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 automakers group.

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. The country’s labor environment is deteriorating, Trade Minister Rob Davies said in Cape Town yesterday after a cabinet meeting. The rand has weakened 17 percent against the dollar this year, making it the worst performer of 16 major currencies tracked by Bloomberg.

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

Rejected Offer

Unions representing gold miners rejected the latest offer to raise the pay of some categories of workers’ wages by 6 percent. The National Union of Mineworkers, which represents 64 percent of employees 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 yesterday on Johannesburg-based SAFM radio station. “We have to be prudent and do what’s right for the sustainability of the gold mining industry.”

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. The union will organize a march in Johannesburg tomorrow and meet representatives of mining companies and the South African Federation of Civil Engineering Contractors, it said in e-mailed statement.

Decision Monday

“We’ll announce the decision on Monday,” Seshoka said.

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

Construction and mining account for about 8 percent of gross domestic product, according to Statistics South Africa, while the vehicle industry makes up 7 percent of the economy, according to the Department of Trade and Industry.

The FTSE/JSE Africa Construction & Building Materials Index, which groups six construction companies, has declined 5.1 percent this year, according to data compiled by Bloomberg. This compares with a 9.4 percent gain in the 166-member FTSE/JSE Africa All-Share Index.

’Excessive Demands’

“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 yesterday. “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., a South African construction company, can’t yet assess the impact of a probable 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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