GM South Africa Revises Output Schedule as Economy Slips

  • Automaker is considering options including voluntary job cuts
  • Industry sees domestic new-vehicle sales declining in 2016

General Motors Co. has adjusted output levels at its South African assembly operations and is considering options including voluntary job cuts as the automaker prepares for a further drop in local sales.

“Due to the deterioration in the economic environment and the anticipated resultant decline in vehicle sales, we have revised our production schedule,” spokeswoman Denise van Huyssteen said in an e-mailed response to questions. “We are currently considering all alternatives, including voluntary separations, to minimize the impact of these changed circumstances on our business and on our employees.”

South Africa’s economy is expected to expand at the slowest pace this year since a 2009 recession, according to government and central bank estimates, and business confidence in the continent’s most industrialized economy fell to the lowest in almost 23 years last month. Domestic new-vehicle sales declined in 2015 for the second consecutive year and are expected to fall further in 2016, according to the National Association of Automobile Manufacturers of South Africa.

General Motors assembles the Chevrolet Spark, Chevrolet Utility and Isuzu pickups as well as Isuzu trucks at its Port Elizabeth operations in South Africa’s Eastern Cape province, according to the company’s website.

Union Engagement

The automaker is engaging with unions, Van Huyssteen said. She declined to provide details of the production changes.

The National Union of Metalworkers of South Africa has received notice under Section 189 of the Labor Relations Act, which involves the discussion of possible job cuts, from GM South Africa, union General Secretary Irvin Jim said in an interview on Friday.

“We will be engaging with GM to defend our members’ jobs as well as demanding improvement of their wages and benefits,” Jim said.

Vehicle manufacturers start wage negotiations with South African workers this week, hoping to avoid a repeat of crippling, weeks-long strikes that have paralyzed the industry in the past.

While automakers including Ford Motor Co. and BMW AG have announced more than $800 million of spending plans in South Africa in the past year, investments in the industry have been increasingly focused on exports and have been supported by the country’s automotive-incentive program, which encourages vehicle production in the country through tax breaks.

The automotive sector contributed 7.5 percent to gross domestic product last year and while local demand for new vehicles is shrinking, the industry predicts exports will increase by about 25 percent from 2015 to 2017.

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