Volkswagen SA warns of 1,500 job cuts in car parts strike

By Clare Byrne Sep 19, 2007, 19:48 GMT

Johannesburg - German car manufacturer Volkswagen on Wednesday warned of 1,500 job losses at its South African operations if a strike in the motor parts industry, which has crippled car manufacturing, did not end 'immediately.'

'We are on the brink of a disaster,' David Powels, Managing Director of Volkswagen South Africa, said in a statement on the sixth day of a wage dispute that has forced Volkswagen, DaimlerChrysler and Nissan to suspend all production in the country.

Toyota and General Motors have had to halt production of some models because of a parts shortage due to the strike.

The strike's impact was so serious that the Volkswagen Group in Germany 'now has serious reservations about Volkswagen of South Africa playing a meaningful role in the Volkswagen Group worldwide supply chain,' Powels said.

Unless 'an immediate solution' to the standoff was found the loss of export contracts and the resultant loss of jobs at Volkswagen SA me a reality,' he added.

'If we lose our export business contracts, we can take 36,000 cars out of our annual production plan for 2008 and beyond.'

'If we lose this export business, we will then lose approximately 1,500 jobs at Volkswagen of South Africa. In addition approximately 3,500 employees in the service and component industries could lose their jobs,' he said.

Volkswagen employs some 6,600 people at its manufacturing plant in Uitenhage, in Eastern Cape province, making it the province's biggest private-sector employer.

Powel's remarks about the role of the South African plant in the group's supply structure were likely to fuel speculation it is planning to scale back operations in South Africa.

In August Volkswagen executives were quoted as saying plans were afoot to shift production of the right-hand Golf model from South Africa to its main manufacturing plant in Wolfsburg, Germany.

Within 24 hours of thousands of workers in the motor components industry downing tools on September 12 the supply of parts to car manufacturers began to dry up.

Some 4,000 Volkswagen production employees were sent home without pay on day two of the strike pending further notice. Volkswagen said it was losing 500 cars a day in lost production and that staff were losing 1 million rand a day in lost wages.

Production at DaimlerChrysler's East London plant ground to a halt during the second shift last Thursday, just as the company was ramping up production of its new W-204 C-Class Mercedes.

Some 1,600 workers were sent home without pay at DaimlerChrysler, company spokeswoman, Annelise van der Laan, said.

The stoppage affected the Mercedes C-Class series, the Mitsubishi LDV range and commercial vehicle assembly.

Production lagged by around 1,000 units in total across all models as a result of the strike, van der Laan said. But DaimlerChrysler did not anticipate any immediate threat to local jobs.

Nissan South Africa had stopped production at its plant in Rosslyn, outside Pretoria.

General Motors said Wednesday it had ceased some operations at two of its plants in the Eastern Cape that manufacture the Hummer, Corsa Utility and Corsa Light vehicles and Isuzu pick-ups and trucks.

The South African plant is only one of two that produces Hummers in the world.

Talks aimed at ending the pay dispute between employers and the National Union of Metalworkers of South Africa (NUMSA), which represents 50,000 workers in the car parts and retailing industry, were continuing Wednesday.

The union is looking for a 9 per cent wage increase and a minimum wage of 2,200 rand a month; the employers are reportedly offering between 8.5 and 10 per cent, depending on grade.

The strike comes on the back of a month-long strike in South Africa's tyre manufacturing industry that ended late August, which Volkswagen said set it back millions of rands after it had to ship in tyres by air from Europe.

'The component industry and NUMSA need to realise that they are holding thousands of people's livelihoods and the industry's future to ransom,' said Powels.