Volkswagen was one of the automakers affected by this weeks strike. It recently added Polo hatchback assembly at its local plant

Volkswagen was one of the automakers affected by this week's strike. It recently added Polo hatchback assembly at its local plant

We, or, to give due credit, our business/industry reporter Simon Warburton, have been tracking the little spat between automakers and workers down in South Africa. Usual scenario: What do we want? More money. When do we want it? Now.

All this started, as we reported, in the middle of last week in a bid to secure wage rises of 15% plus a range of other demands that SA's automotive employers estimated would add more than 30% to their cost structure. As well as the 15% salary hike, union NUMSA was demanding an eight hour day Monday to Friday and that all short-term contractors be entitled to all benefits - and employed permanently after three months. It also wanted Saturday working to be paid at one-and-a-half times the normal rate and Sundays and public holidays at double time. And it wanted six months of paid maternity leave and short time lay-off payments of 100%. All of which read to me like the sort of thing the UAW and/or British Leyland's union might have asked for in the mid-1970s.

The Automobile Manufacturers Employers Organisation (AMEO) predictably rejected NUMSA's demands, insisting they were unrealistic and would hamper an industry struggling with what it claimed was a "relative lack of competitiveness." Instead, it offered a 7% wage increase for 2010, based on a three-year agreement with increases in subsequent years linked to inflation. Dependency on exports and relative lack of competitiveness required wage increase "moderation", it added.

"It has never been our intention to embark on strike action but because of AMEO's stubbornness we are compelled to take the battle to the streets," NUMSA told us. "Ours will neither be a picnic nor a fan park but a metalworkers' militant action until our demands are met."

Later that same day, we were told talks had been scheduled. NUMSA spokesman Castro Ngobese said: "Our demands are reasonable. We are for ever available to meet with them [AMEO] - but we will never run to them."

AMEO, for its part, conceded that some short time contract workers, at point of entry level, earned around R5,500 (just over $US750) a month, although it insisted, by South African blue collar standards, this was a "relatively good" wage. "It is the ultimate lose-lose situation from employers and unions," AMEO chairman Chris Thexton said. "There is no such thing as a strike fund in South Africa - they have a complete loss of income. From an employer's point of view there is the [issue] to support the local, domestic market and half of our production is geared towards export markets."

Next, the union predictably added some pressure, pointing out how much the strike was costing the auto industry a day. We were rather surprised at NUMSA's Ngobose's attitude when he said the union would only be represented at shop steward level: "Our leaders are extremely busy to be wasting time to meet the employers," he said. "They have got more important work to do than listening to the employers. It is our ordinary shop stewards who will be there." But AMEO's Thexton insisted there would be "senior union officials there" in a bid to halt the walk-out of what was by then 31,000 workers at seven major automakers.

Yesterday, the employers blinked first, tabling a revised offer and hoping the union would recommend acceptance. And, today, hooray, peace as the guys who work the lines accepted a three-year deal that will give them a 10% increase this year, and 9% a year in the next two years. Cost? Lost production of about 17,000 vehicles, AMEO said, adding: "The strike and resultant loss of volume has caused significant reputational damage to the automobile manufacturing industry in South Africa as a stable production location." And analysts said a prolonged action could have hurt car exports with global carmakers filling the void of lost production from the country with vehicles from low-cost production centres.

Memo to NUMSA, representing workers in an industry that accounts for about 6% to 7% of the country's gross domestic product (GDP), and produces about 420,000 vehicles a year: that may have already started. South African vehicles go a surprising number of places - its factories produce, or have produced, Mercedes-Benz C-class, BMW 3-series and VW Golf models for Europe, UK and other RHD markets and SA-assembled Ford Focuses and Toyota trucks go to Australia (perhaps in return for the Chrysler Valiant and Holden CKD packs shipped the other way until the mid-1970s). But SA Focus supply to Australia ends soon in favour of another 'low-cost production centre' - a brand new assembly line in Thailand. Might be worth thinking about.

Before you start, I'm not anti-union, having benefited from deals back in those troubled 1970s that saw me paid time and a half on Saturdays and double time Sundays for hard physical work in a variety of jobs in return for my weekly 'sub' to the union, membership was mandatory in those 'no sign up, no job' days. And $750 a month would not get a US, UK or Australian assembly line worker out of bed. But SA car plants are seen as low cost by their global owners and have to compete with other low cost regions - China, Thailand, India, where industrial unrest and political instability are also not unknown. And they also know how to build cars in places like Indonesia, the Philippines, Malaysia and even Vietnam. Don't chuck the baby out with the bath water...

Still on unions, this report about the new UAW leader was also worrisome this week. I hope this is not a return to dinosaur 70s and 80s tactics ahead of a key round of talks next year to thrash out the next deal. A good quarterly profit, at last, plus word at last this week of GM's pending IPO, does not mean a return to 70s and 80s profits, and corresponding cushy pay packages, there just for the asking, after a little hardball play, from the Detroit Three. I hope the incoming Mr King took time for some wise counsel from the departing Mr Gettelfinger. Otherwise, the next 'UAW round' is going to see some blood on the carpet.

Have a nice weekend.

Graeme Roberts
Deputy/News Editor
just-auto.com

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