BMW has already shut shop in SA, with further Covid-19 slowdown inevitable

The Covid-19 pandemic could prompt a slowdown in South Africa’s automotive manufacturing industry, which could lead to further jobs losses, an expert has warned.

This as production and sales were taking a knock in the US and Europe, with General Motors announcing desperate measures to boost sales, such as 0% interest financing and a three-month payment reprieve.

Motor and metals industry union Numsa did not appear to be notified about the closure prior to the company’s announcement. The union represents 3,800 workers at the plant.

According to the union’s spokesperson, Phakamile Hlubi-Majola, Numsa was still preparing a media response on the impact of the shutdown at the time of going to press.

“There was a meeting that happened today with Numsa members and BMW management where they confirmed there would be some operational shutdowns taking place. I can only tell you that at this stage we don’t have a response to that as a union; officials are discussing it and when we do I will communicate further.”

The rest of the industry does not appear to have any plans for shutting down production as yet.

According to the National Association of Automotive Manufacturers of South Africa (Naamsa), the rest of the country’s car manufacturers created a comprehensive response plan to curb the spread of the virus in their facilities, but for the moment were not planning to shut down. Naamsa CEO Micheal Mabasa said it was still early days to measure the impact of BMW ‘s decision on the industry.

“BMW is still working on quantifying the impact and once they have those numbers they will tell us.”

According to economist at the University of Johannesburg (UJ) Professor Peter Baur, it is possible that local manufacturers decide to slow down production, but this would cost the industry dearly and result in further retrenchments.

“This is a very vulnerable industry because in a lot of cases you can’t simply slow down production. That would be very costly and, at the same time, if a decline in sales is anticipated then cars will simply not move, and for as long as they are just sitting there, they are running up bills and it will be very expensive.”

Overall the automotive manufacturing industry directly and indirectly accounted for 8% of the country’s GDP. In 2018, it comprised 4.7% of the country’s total manufacturing sales amounting to R25 billion. The sector was responsible for half a million jobs in the country, including secondary industries.

Meanwhile, local manufacturers were scrambling to implement strict disease control measures in their plants. According to Mabasa, companies were taking heed of government’s guidelines and travel restrictions. It was also providing paid leave for quarantined workers.

“We have created a new form of leave to deal with this. It is fully paid leave. In most cases gatherings of more than 100 people in the workplace happen at cafeterias, so we have moved to reduce canteen capacity by more than 50%,” said Mabasa.

Plants have also extended hours for lunch intervals so workers can dine in smaller groups. Hygiene protocols were also tightened.

The global outbreak reportedly dented sales and created costly store traffic at US dealerships, leading several manufacturers to suspend work in North American factories.

simnikiweh@citizen.co.za

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