SOUTH AFRICA: GM, VW, on short time as domestic sales fall
General Motors and Volkswagen units in South Africa have confirmed they have implemented short-time working at their car assembly plants due to declining domestic demand while industry organisations said a drop in domestic sales was being countered to some extent by a rise in exports.
As reported recently by just-auto, South African new vehicle sales fell by 19.7% year-on-year in July according to data released by the National Association of Automobile Manufacturers of SA (NAAMSA). New car sales were off 19.1% on last year's pace at 26,015 units under the impact of higher interest rates and an economic slowdown in the country.
The domestic decline has had a snowball effect, forcing the component sector at large to restructure production in line with manufacturers' demands, local paper The Herald reported in its online edition.
GMSA communications officer Gishma Abrahams told the paper: "Our sales unfortunately have declined by about 11.5% for the first seven months of the year, while the overall industry has declined by about 15.5% compared to the same period last year.
"As a result, GMSA, like many other original equipment manufacturers in South Africa, has excess capacity in the market place. In response to this, GMSA has regrettably had to implement short-time strategies to address the immediate issue of excess capacity. A rebalancing of production capacity to the projected market requirements is therefore currently in process."
VWSA has implemented the same strategies as rising interest rates, oil and food prices continue to eat into consumers' disposable income, reducing the demand for cars, the Herald Online said.
VWSA communications manager Bill Stephens told the paper: "The passenger car market is down on last year and this has necessitated the downward adjustment of production schedules. VWSA has taken 12 full days out of production this year due to the weak market. Where possible, employees have been granted paid leave, failing which the day is unpaid. Most of these days coincided with the Easter holiday period and public holidays in April and May."
Abrahams said short-time was likely to continue until manufacturing capacity was aligned to market demands. The employees most affected at GMSA were those involved in manufacturing.
"As production volumes vary on product lines, short-time has affected employees to varying degrees," she said. "Hourly employees are adversely affected, as they are only paid for the hours worked."
The Herald Online said the company was still in negotiations with the National Union of Metalworkers of SA (Numsa) regarding the axing of 502 workers, announced last month.
Goodyear SA public relations manager Lize Hayward told the paper the tyre maker had not implemented short-time but said there had been a decline in demand for tyres. "Goodyear is therefore aligning its production with the motor vehicle manufacturers' changing requirements. No jobs are affected (now)."
NAAMSA told the Herald employment levels declined 416 posts to 36,475 in the second quarter, largely due to operational adjustments at two assembly operations.
Increased exports were expected to offset the decline in local demand for new cars.