About 30,000 South Africa Auto Workers Walk Off The Job; Toyota, GM, Ford Auto Exports Affected; BMW Strike Enters Second Week

Tens of thousands of South Africa auto assembly workers walked off the job Monday after their demands for a 14 percent pay raise was rejected by top automakers, including Toyota, Ford and General Motors, setting the stage for the kind of sector-wide work stoppages that has struck the country’s mining sector for more than a year.

At the Mercedes-Benz South Africa (MBSA) plant in East London, about 1,700 workers walked off the job while about 3,000 employees at a Volkswagen plant in Uitenhage, 190 miles to the southwest of East London, joined the strike along with about 2,000 workers from a plant owned by General Motors in nearby Port Elizabeth. In all, about 30,000 auto assembly workers are participating nationwide.

“The strike started today,” Castro Ngobese, a spokesman for the National Union of Metalworkers of South Africa (NUMSA), told Bloomberg by phone. “There are no negotiations, since they broke down. We are waiting for employers to submit a revised offer.”

NUMSA initially demanded a 20 percent pay hike while the automakers are holding firm on a 6 percent pay hike, in line with South Africa’s central bank inflation growth estimates for the year. The dispute is part of negotiations to replace a three-year wage settlement that expired on July 30.

The Automobile Manufacturers Employers Organisation, which represents the automakers, says a prolonged strike would do reputational damage that would take a long time to recover from. The country has been hit with a series of mining strikes, including one in which 34 workers at a platinum mine in Marikana owned by Lonmin PLC (LON:LMI) were fatally gunned down by police last year.

Les Holbrook, director of the East London-based Border-Kei Chamber of Business, told the South African news site DispatchOnline that the shutdown of auto production will have a ripple effect across the country’s manufacturing supply chain and “sends poor signals to investors.”

Bayerische Motoren Werke AG (FRA:BMW) is already a week into a strike at its plant in Rosslyn. Some 2,000 workers walked off the job at the German automaker’s 45-year-old factory, the first one it built outside of Europe.

South Africa hit a historic peak of auto production in 2008, churning out 284,000 units. The recession knocked production down and the sector is still in recovery mode.

The auto industry accounts for about 6 percent of South Africa’s economy and makes up 12 percent of its exports, according to Reuters.

Toyota Motor Corp. (NYSE:TM) has a plant in Durban that makes the Corolla sedan, the Hilux small pickup and other brands. Ford Motors Co. (NYSE:F) has two facilities in South Africa employing about 4,500 workers: an engine factory in Port Elizabeth and an assembly plant in Silverton.

General Motors Co. (NYSE:GM) operates the Struandale plant in Port Elizabeth that makes the Opel Astra compact sedan and Corsa mini. Nissan produces cars in Pretoria.