Tens of bags of workers in South Africa’s automotive area are adverse unemployment as a aftereffect of the all-around bread-and-butter slowdown.
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Industry assembly are admonishing that if the 2008 trend of bargain appeal continues through 2009, businesses would access to cut alive hours and jobs to ensure their survival.
The automotive industry – one of the sectors acclimated to barometer South Africa’s bread-and-butter bloom – has been a cornerstone of added than decade of growth, with a government action envisioning agent assembly accretion to 1.2 actor units annually by 2020 from the accepted akin of about 500,000 units.
The area accounts for about 10 percent of accomplishment exports and 7.5 percent of gross calm product, authoritative it a acute weapon in active South Africa’s unemployment rate, clearly estimated at 24 percent.
More than 1,000 General Motors South Africa (GMSA) employees took autonomous back-up in 2008, over a third of its bounded workforce, while in 2008 Ford retrenched 800 advisers from its Port Elizabeth and Pretoria operations.
The knock-on aftereffect is putting at accident bags added jobs in the apparatus sector, which relies on the bread-and-butter bloom of the car producers for its existence.
The National Abutment of Metalworkers of South Africa (NUMSA) – one of the country’s better unions, boasting a associates of about 220,000 workers – will authority a two-day meeting, starting on 5 February, with industry assembly to altercate agency of ameliorating the furnishings of the downturn.
“The bad account comes in daily. Volkswagen has served their advisers with a apprehension of retrenchments, and for every architect who downscales production, their suppliers are additionally abnormally affected,” Mphumzi Maqungo, NUMSA’s bounded broker in the Eastern Cape Province, told IRIN.
“Here in Port Elizabeth we access heard that Welfit Oddy, which makes caster rims, will additionally be absolution 550 advisers go soon, which is bisected the plant.” He said the abutment was accepting accustomed letters from boutique admiral that companies were admonishing agents of the likelihood of retrenchments.
No allowances for the unemployed
“For the workers it is not alone the salaries they lose but additionally the benefits, which in abounding cases are actual important. Companies pay for medical aid and children’s academy fees, which can bulk to a lot of money. And what happens if you are HIV absolute and you charge the medical aid for your antiretroviral drugs?” he said.
The latest industry abstracts appear by South Africa’s National Association of Auto Manufacturers of SA (NAAMSA) appear huge declines in new agent sales.
Sales for December 2008 were 32,765 vehicles, a bead of 12,162 cartage or 27.1 percent, compared to new agent sales of 44,927 units in December 2007.
“On a bazaar articulation basis, agent sales during December 2008 (with the barring of the baby aggregate bus sector) registered aciculate declines in every articulation about to the agnate ages of December 2007,” NAAMSA said in a contempo columnist statement.
Economic pressures were additionally actuality acquainted by car dealerships said Brand Pretorius, arch controlling of the country’s better car dealership chain, McCarthy Motors.
“What we are experiencing has been brought on by a abasement of agent affordability, due to a cardinal of factors added than the all-around cyberbanking crisis,” he commented.
“The weakness of the rand is active up the amount of raw abstracts and, by extension, the vehicles; and the National Acclaim Act [a acrimonious agency analysis for -to-be accommodation applicants] has meant abounding bodies are not accepting admission to the money they charge to acquirement cars,” he said.
Car dealerships abutting
“The acclaim appliance approval from banks is black at the moment – about 35 percent of bodies applying for acclaim are actuality approved, compared to 55 percent two years ago. I anticipate it is a amount of aggravating to ride out the storm, as there is little the bounded industry can do.”
Pretorius believed the automotive area was adverse cogent lay-offs in the advancing months, as companies could not advance the accepted cardinal of advisers if sales were to abatement by amid 25 and 35 percent.
“We access already had to abutting bottomward branches in the aftermost six to eight months – we acclimated to access 148 branches but now we access cut aback to 120,” he said.
“Many in the industry access fabricated a cardinal of mistakes over the accomplished six months in agreement of how we able for the downturn. The admeasurement of it was underestimated, as was the acceleration at which it would happen.”
GMSA President Steve Koch told IRIN that to ensure the aggregation remained assisting – sales in 2008 were up 18 percent on 2007 – and aggressive during the difficult time ahead, restructuring bare to booty place. This would accommodate accepting retrenchments as able-bodied as streamlining assembly systems to access productivity.
“We had 12,000 units of banal in July aftermost year  and we bare to abate this to 3,000 to accumulate us in a absolute cash-flow position. Fortunately we access done this, but if the industry was to abatement added we would access to appraise added options to abate our arch count. A big affair for us is the bloom of our administration arrangement [car dealerships].
“It has been adumbrated that 200 of the 1,700 dealerships actuality may abort or consolidate during the downturn, and we appraisal 120 or so access already done so,” he said.
According to Koch, the advancing abasement of the rand was a austere affair – it absent about 50 percent of its amount adjoin the Japanese yen in 2008. “It takes 70 percent added rand today to access actual in yen than it did at the alpha of aftermost year , and abstracts represent over 80 percent of the amount of a vehicle,” he said.
“With bounded abstracts authoritative up alone 40 percent of an automobile, imports abide a cogent agency in amount structure. The net affect is a amazing burden on [profit] margins, which agency the customer can apprehend to see a 20 percent amount access this year .”
Koch said the industry hoped 2010 would adviser an bread-and-butter recovery, but it was not a certainty. “If the First World all-around economies don’t acquisition a band-aid to their bread-and-butter problems, again I don’t see South Africa convalescent either.”
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