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Carmakers to Curb South Africa Investment on Strike, Naamsa Says

September 11, 2013

South Africa’s automotive industry will see less investment in manufacturing if labor disputes continue, according to the carmakers’ association.

European and Asian vehicle manufacturers are considering whether to establish manufacturing operations in South Africa, the Pretoria-based National Association of Automobile Manufacturers of South Africa said in a statement today.

“The rising incidence of strike action in South Africa was likely to impact the ultimate decision whether or not to invest,” it said.

Manufacturers including Toyota Motor Corp. (7203), Volkswagen AG (VOW) and General Motors Co. (GM:US), face a loss in production revenue of about 20 billion rand ($2 billion) after 30,000 workers downed tools for 15 days after demanding higher wages. The industry face further losses as the National Union of Metalworkers of South Africa leads a new strike of about 72,000 workers from fuel stations to car-component makers.

The automotive industry has lost about 45,000 units because of strikes, Naamsa said.

“These figures would rise further as a result of the current strike in the component-manufacturing industry,” Naamsa said. “The Mercedes Benz South Africa plant in East London already had to stop production at midday on Monday this week due to strike action at its suppliers.”

South Africa’s central bank forecasts the nation’s economy will grow 2 percent this year after expanding 2.58 percent in 2012, with labor unrest in mines shaving 0.3 percentage point off growth in 2013, President Jacob Zuma said in June. The rand is the worst-performing of 16 major currencies tracked by Bloomberg. Consumer prices accelerated to 6.3 percent in July, breaching the upper limit of the regulator’s target.

The country’s automotive industry accounts for 30 percent of South Africa’s manufacturing output, according to Naamsa President Johan Van Zyl. Industry exports and local production forecasts would be revised downwards, the association said.

To contact the reporter on this story: Kamlesh Bhuckory in Johannesburg at kbhuckory@bloomberg.net

To contact the editor responsible for this story: Simon Thiel at sthiel1@bloomberg.net


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