South African vehicle assemblers and union negotiators try again today (Wednesday)
to break the deadlock which has virtually halted all car production for a week,
the industry’s main union has threatened to escalate the dispute internationally.

The National Union of Metalworkers of South Africa (NUMSA) has reacted furiously
to threats from DaimlerChrysler that unless the strike ends soon, production
of the Mercedes-Benz C-Class for right hand drive markets could be switched
from South Africa to Germany.

However, as NUMSA has just accepted a 9% wage increase to settle a strike at
Highveld Steel this week, expectations are that it will reach a compromise with
the vehicle assemblers later today at about this level.

If not, it has threatened to accelerate the dispute into the local motor trade
and component manufacturing to bring out as many as 150,000 workers compared
to the some 20,000 who stopped work at seven assembly plants nine days ago.

The union is also seeking the support of international metalworker unions in
its angry response to newspaper advertisements, a letter to employees and media
interviews by local DaimlerChrysler CEO Christoph Kopke on Tuesday.

Seven hours of talks yesterday with the Automobile Manufacturers Employers’
Association (Ameo) failed to result in the compromise expected between union
demands for a 12% wage increase and the employers offering only 8%.

However, there is still optimism that a settlement will be reached today to
enable production to resume before the weekend.

DaimlerChrysler South Africa spokespeople have been trying to soft-pedal the
impact of the company’s statements and maintain they were not actually
a threat to close down South African C-Class production, as both media and workers
have interpreted them to be.

But NUMSA declares that such statements are “irresponsible and mischievous”
and has already moved to get the support of the International Metalworkers Federation
and DaimlerChrysler’s employees in the German Metalworkers union to block
any company attempt to shift production from South Africa to the two C-Class
plants in Germany.

“Considering the proud history of the German workers and their contribution
to the anti-apartheid struggle, we doubt whether they will agree to the scab
arrangements,” NUMSA declares.

In another reaction, the South African Communist Party General Secretary Dr
Blade Nzimande is leading a protest march of car workers through the streets
of motor town Port Elizabeth.

“Companies like VW, BMW and Daimler Chrysler have invested billions to
build up their South African plants as global suppliers of particular models,”
says NUMSA. “The export deals were brought to South Africa because of our
skilled workforce, political stability, good infrastructure and the capacity
of the workforce to produce high quality cars. It makes business sense for them
to invest in South Africa because of cheap labour costs as compared to Daimler
Chrysler Germany.”

The union points to the recent motor industry strike in Australia demonstrating
that OEMs can recover quickly from lost production and that a strike need not
have serious impact on a national economy. It maintains that productivity in
the South African vehicle assembly industry has risen substantially, so that
real labour costs have declined and the gap between local management earnings
and the wages of South African motor workers compared to those in other countries
has widened.

NUMSA cites research by the International Metalworkers Federation indicating
that the average hourly wage for a South African blue collar car worker is about
a fifth of his equivalent in Canada, one third of a German car worker’s wage,
18% of a Japanese car worker’s wage, and also well below Eastern European levels.

It claims that CEO Kopke – assuming he works a 60-hour week – has
an hourly rate 200 times greater than that earned by DCSA’s lowest paid
worker. The average motor industry wage in South Africa is under the equivalent
of $US450 per month.

“Until such time as there is transparency around directors’ pay in South
Africa, suspicion amongst workers that their bosses are improving their lives
at workers’ expense will continue,” says NUMSA.

NUMSA is also threatening strike action in its dispute with the South African
Tyre Employer Association, which has offered 7% in response to the union demand
for 10% wage increases across the board. The union and tyre employers are still
talking but there is company resistance to union demands for a two-year wage
agreement for both the automotive and tyre sectors, and their merger into one
statutory council.

Despite DCSA’s warnings about switching C-Class production from its East
London plant, industry observers note that it would be very difficult to change
global sourcing strategies and create extra capacity in Germany to produce over
40,000 right hand drive units annually.

The South African plant is the sole supplier of the right-hand drive C-Class
sedan with a contract for 22,000 units a year for just Australia and Japan and
expectations that it will soon boost production to over 50,000 units a year.

There are long waiting lists for the popular model in many markets and the
other C-Class plants in Sindelfingen and Bremen are already operating at high
levels. They would have major production problems trying to add right-hand drive
units and union sources expect German workers to resist doing overtime to take
over even some of the South African production.

BMW, Delta (General Motors), Ford, Toyota, Nissan and Volkswagen have also
had their South African production disrupted by the strike, with only Volkswagen
claiming to have been able to continue to supply substantial export volumes.

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