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The effects of the seven-week strike in the automotive industry – first at assembly plants and then at component makers – would only be felt “two, three years from now”, when South African component manufacturers did not receive any new export contracts, said National Association of Automotive Component and Allied Manufacturers (Naacam) executive director Robert Houdet on Tuesday.
South Africa’s component industry had two main customers, local vehicle assemblers, such as Toyota, BMW and Ford, and overseas clients receiving export orders from the country.
Houdet said procurement and logistics staff in countries to which South Africa export components “had been losing sleep” the last few weeks over whether they “were going to receive their components from South Africa or not”.
“I was in that position in Europe a few years ago. Believe me, you never forget. Decisions are taken about South Africa yesterday, today and tomorrow, about whether to source from this country, and these strikes weigh heavily against South Africa.
“When decision time comes about where to source from, people will say South Africa had a six-week strike and we struggled to keep our plants running. We can’t afford that risk. They will go somewhere else.
“You won’t see this negative impact today, but you will see it two, three years down the line when contracts are not renewed. Factories will close, and we must not wonder why. We have given the signal that South Africa’s labour situation is unstable.”
Houdet added that repeated claims by trade unions that any company’ first objective was to maximise profits, did not reflect the truth.
“The first objective of any business is to survive, and we tend to forget that. People think businesses go on for ever and ever. They don’t. Businesses die.”
Houdet noted that component makers had returned to production on Monday, labouring to “quickly catch up” on lost orders.
One difficulty was that some urgent orders might have to be sent by air, which was more costly, as the sea route had been stopped owing to the strike.
It would take four to five weeks before the first post-strike component shipment reached European vehicle assembly plants by sea.
Assembly plants, which normally used two suppliers for a component, in an effort to reduce risk, might also by now have placed increased orders from their second source.
Naacam estimated that lost wages and salaries in the component industry over the six-week strike amounted to around R500-million.
The National Union of Metalworkers of South Africa on the weekend agreed to a three-year wage deal in the component sector, which would see workers receive a 10% increase in the first year, followed by 8% in each of the next two years.
South African component exports reached R37-billion in 2012.