Is the honeymoon period over in the motor industry?

It has been widely reported that the motor industry strikes have cost BMW SA the contract to build a new car at its Rosslyn assembly plant near Pretoria. The car maker has been building the 3-Series sedan there for years and, according to the company, for the past four years BMW SA has been negotiating with its German parent to become the sole global producer of a soon-to-be-announced new product.

In newspaper reports National Union of Metalworkers of SA (Numsa) spokesman Castro Ngobese said workers wanted a double digit wage increase and changes to conditions of employment, such as the banning of labour brokers, establishment of a short-time workers’ fund, and a transport allowance. He said the strike would continue until a deal was agreed on.

Once the announcement by BMW SA was made Numsa dismissed the move as brinkmanship, and said the German car maker must seek the union’s approval before trying to increase the size of its operations.

The statement by Numsa continued with: “The blackmail by BMW is rejected with the contempt it deserves.”

However, BMW has clearly had enough of the labour situation and the risk/reward of further investment simply doesn’t make sense to the company. This is despite the incentives that the government has put in place for the motor industry.

Therefore I ask myself, has the 2013 strike in the automotive industry by Numsa members facilitated in the abrupt and premature end to the honeymoon period in the South African motor industry?

I say no. Rather it has been a culmination of Numsa strikes over a number of years. BMW’s German parent has been very patient over this period, as have the rest of the OEMs.  Car makers have obviously been considering how much to invest in South Africa, where wage hikes have not been met by higher productivity, and labour relations are ranked as among the world’s worst in the World Economic Forum’s Global Competitiveness Report, for some time now.

Johan van Zyl, the president of the National Association of Automobile Manufacturers of SA (Naamsa), warned that the strikes in the motor industry had damaged South Africa’s status as a reliable supplier to international export markets and could negatively affect future export contracts being awarded to South African automotive manufacturers.

There are countless stories of OEMs investing in other countries and South Africa’s name has not been mentioned. This BMW announcement should therefore not be a surprise. Countries worldwide have been struggling with the economic situation and would gladly accept investment by such a big industry that is just showing signs of recovery.

Not so in South Africa apparently. The labour union bosses have really gone too far this time and their arrogance and self-enrichment is certainly going to put their members into financial stress. But it is not just their members who are affected. The knock on effects are too numerous to mention. Cosatu, NUM, and President Jacob Zuma take note. This will not be the last of these types of announcements.