South Africa car strike forces BMW to scale back plans
- 2 October 2013
- From the section Business
BMW has stopped "all future plans" to expand in South Africa after a four-week strike in the car manufacturing industry caused export sales to drop by 75%.
It cost the economy $2bn (£1.2bn), according to the South African Chamber of Commerce and Industry.
BMW told the BBC all plans to increase capacity at its Rosslyn plant had been called to a halt.
A separate strike by car component manufacturing workers is ongoing.
Seven major car manufacturers in South Africa, including Nissan, Ford, General Motors and Mercedes Benz were affected by the protest.
Reports suggest between 30,000 and 40,000 people took part in the strike, with workers demanding a 14% pay rise.
But instead car manufacturers offered a 11.5% rise, which would decrease to 10% in the following two years, which the workers accepted, said a spokesperson for the National Union of Metalworkers for South Africa (NUMSA).
The car manufacturers' strike finished on 9 September, but the car component industry's strike is in its seventh week.
Meanwhile, the car component industry workers have been offered a 10% rise followed by an 8% rise in each of the following two years, but the negotiations are ongoing, said NUMSA's spokesperson.
Bodo Donauer, managing director at BMW South Africa, said the company had been unable to produce 11,000 cars while its workers were striking.
"But more important than these 11,000 cars is the sustainable damage which this [the strike] has made," Mr Donauer said.
He said the German car maker had been in South Africa for 40 years so had seen "a lot happening", adding it was "not panicking".
"But on a very serious note we have stopped all of our future plans to increase capacity in our plant in Rosslyn," he said.
Mr Donauer said BMW, which owns luxury car maker Rolls-Royce, had been thinking about another model to make good the losses.
But he said the car manufacturer had "definitely" stopped the plans as they needed a lot of preparation, which he said was a "pity".
Nissan halted production at its Rosslyn plant on 9 September and is yet to restart it.
The National Association of Automobile Manufacturers, South Africa (NAAMSA) analysed statistics released by the country's government.
It said the strike had "decimated" the industry's export sales, as they dropped by 75% during September 2013.
The export sales industry accounted for 30% of the country's manufacturing output, a statement by the association reported.
NAAMSA said: "The strike action had damaged South Africa's status as a reliable supplier to international export markets and could well negatively affect future export contracts."
The discussions come as the International Monetary Fund published a survey warning South Africa faces low economic growth, widespread unemployment and a high reliance on foreign capital inflows.
A spokesperson for the Congress of South African Trade Unions (COSATU) said the strikes were happening because South Africa had the highest levels of inequality in the world.
"Even really low paid workers like the car workers earn a fifth of what American car workers in the same job would earn," he said.
He said the low wages were a problem particularly because of the country's high unemployment rate, which he said was unofficially at 36%.
It meant workers were supporting extended unemployed families, so their wages were stretched, he added.