VW South Africa plant shutdown hits exports to UK
03 September 2010
Volkswagen AG has closed its South African factory for the second time in a month, following a strike staged by workers in the auto-parts sector over pay
Volkswagen AG has closed its South African factory for the second time in a month, following a strike staged by workers in the auto-parts sector over pay issues.
The company's indefinite shutdown will lead to a "substantial loss of volume" in Polo models that are intended for export, VW said in an e-mailed statement.
The plant, which is located in Port Elizabeth, exports Polo models to right-hand drive markets such as the UK, Ireland, Australia, New Zealand, Malaysia and Singapore.
Toyota Motor Corp., General Motors Co. and other car manufacturers closed their plants for eight days last month, when 31,000 workers staged a strike over a pay increase of 15%.
The strike, which ended on 20 August after the manufacturers agreed to increase wages by 10%, caused production loss of around 17,000 vehicles.
Car-component workers started an indefinite strike to demand a pay increase of 15%, which is more than twice the 6% offered by employers.
"The company deeply regrets this unavoidable situation, particularly as the company was starting to recover from an eight-day motor manufacturing industry-wide strike, which also severely impacted customer deliveries", Volkswagen said.
South Africa's vehicle and car-parts industry makes up about 6% of gross domestic product and is the nation's biggest manufacturing exporter.
General Motors and Nissan Motor Co. announced that operations have not been affected yet by the walkout.
"The longer this strike action continues, the greater the risk becomes that the operations of manufacturers will be halted, resulting in loss of production", said General Motors. "Industrial action like this affects the viability of the industry and sends a negative message regarding labour cost and flexibility in South Africa."
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