General Motors South Africa closes plant due to strike
- 4 July 2014
- From the section Business
General Motors has halted production at its main South African plant because of the strike by the country's National Union of Metalworkers.
The US car giant has not been able to access component parts for its cars.
GM told the BBC that its production line was down, but that it has enough cars to sell over the next two weeks.
The current strike is targeted at the steel and engineering sector, which makes products for industries such as mines, automotives and telecoms.
"We undertook contingency planning to minimise disruption of supply to our plant and also to ensure sufficient inventory of finished vehicles," company spokesperson Gishma Johnson said.
GM, which is not directly affected by the NUMSA strike, is concerned that if the industrial action lasts more than a few weeks, it will not be able to stockpile cars such as small trucks and SUVs.
NUMSA workers are demanding a wage increase of 12% and a housing allowance.
On Thursday night, talks with employers failed to reach agreement after the union rejected their latest offer.
The strike has been underway for four days, but already manufacturers are taking the strain. NUMSA says its strike is indefinite.
Last year, 30,000 NUMSA members in the automotive sector downed tools. The strike lasted one-month and carmakers lost $2bn (£1.2bn) in revenues, with car exports for the international market dropping by 75%.
Since then, vehicle sales have recovered.
The latest NUMSA strike is getting more violent - on Friday, local media was reporting on armed members intimidating non-striking workers.
On Thursday, a spokesperson for power company Eskom confirmed that police fired rubber bullets at a group of picketing workers outside the Medupi power station.
Workers insisted on picketing at the company, the main electricity provider, despite a court banning pickets there.
South Africa has seen industrial action across key sectors of the economy.
A five-month long strike by workers on the country's platinum mines was resolved one-week ago.
Some commentators have cited the strike as a reason for the South African economy contracting by 0.6% in the first three months of the year. Economists are concerned that the NUMSA strike may lead to further economic decline in the second-quarter.
If that happens, then South Africa will officially be in a recession as a direct result of labour unrest.
NUMSA is the largest trade union in South Africa, and represents more than 300,000 workers, most of whom work in manufacturing. In turn, manufacturing accounts for 15% of economic output in the country.
In December last year, NUMSA said it intended to form political movement that may eventually contest elections. Experts believe that NUMSA may be using this strike to raise its profile as an economic and political force in the country.