Get 40% Off
👀 👁 🧿 All eyes on Biogen, up +4,56% after posting earnings. Our AI picked it in March 2024.
Which stocks will surge next?
Unlock AI-picked Stocks

Ford, Toyota halt some South African output due to strike

Published 07/14/2014, 04:21 AM
Updated 07/14/2014, 10:21 AM
Ford, Toyota halt some South African output due to strike

By Wendell Roelf CAPE TOWN (Reuters) - U.S. motor company Ford (N:F) has suspended production at one of its South African plants and Japanese car-maker Toyota (T:7203) plans to follow suit as a manufacturing workers' strike hits suppliers of car components.

The two-week-old strike by 220,000 NUMSA union members, who are seeking 12-15 percent annual increases, follows on the heels of a five-month strike in the platinum sector that stunted economic growth and export earnings.

The manufacturing strike has also forced General Motors (N:GM) to close its assembly plant in the southern city of Port Elizabeth over a week ago, despite efforts by Labour Minister Mildred Oliphant to mediate between the union and employees.

"Production at our Silverton assembly plant has been temporarily suspended due to the strike," Ford spokeswoman Alicia Chetty said on Monday, adding that only the company's Pretoria plant was affected and its other plant in Port Elizabeth was operating normally.

Toyota said it will halt some production from Tuesday because of supply chain problems related to the stoppage.

"Toyota will close two production lines from Tuesday at our Durban plant," spokeswoman Mary Willemse said.

Production at BMW (DE:BMWG), VW (DE:VOWG_p), Mercedes Benz and Nissan (T:7201) was normal, although company officials said on Monday they were monitoring the situation closely.

Other companies affected are construction companies Murray & Roberts (J:MURJ) and Aveng Ltd (J:AEGJ), which are working on the construction of two major power plants for state power utility Eskom.

NUMSA rejected the latest pay offer from employers in the steel and engineering sector on Sunday and called on its striking members to intensify the industrial action.

3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads .

Employers have offered pay rises of 10 percent in the first year, 9.5 percent in the second year and 9 percent in the third year. But unions also have grievances about the role of labor brokers in industry and do not want to be bound to a multi-year agreement, preferring a one-year deal instead.

The union and employers were due to meet on Monday for further talks.

Smaller union United Association of South Africa (UASA), which represents about 20,000 workers in the sector, said it was awaiting a response from employers on questions about the same offer.

"We expect an answer by tomorrow and that will put us in a position to say if we accept or reject it but chances of accepting look good," said Johan van Niekerk, UASA spokesman.

The strike, which has hit the supply of beverage cans made by packaging firm Nampak (J:NPKJ) has damaged wider investor sentiment in Africa's most advanced economy, which is teetering on the brink of recession after a first-quarter contraction caused in part by the platinum strike.

Ratings agency Standard & Poor's cut South Africa's credit rating last month while Fitch put it on negative watch, both citing poor growth prospects mainly because of strikes.

The Reserve Bank's monetary policy committee meets on Thursday to consider an interest rate hike amid growth concerns after the central bank raised it by 50 basis points to 5.50 percent in January, the first increase in almost six years.

"If growth is the main concern, governor (Gill) Marcus may be unwilling to raise the repo rate unless the strike is resolved soon," Francois Stofberg, an economist at Efficient Group said.

3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads .

Analysts have long singled out South Africa's volatile labor environment as a deterrent to investment.

Separately, about 200 workers downed tools at unlisted Cape Town-based wine maker DGB, demanding a 10 percent wage hike, union leaders said. DGB, which makes some well-known brands, is offering a 7 percent raise.

(Additional reporting by Tiisetso Motsoeneng in Johannesburg; Writing by Olivia Kumwenda-Mthambo; Editing by Ruth Pitchford and Hugh Lawson)

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.