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Home News BMW says South Africa strikes scuppered investment

BMW says South Africa strikes scuppered investment

Published on 03/10/2013

German automaker BMW said Thursday that strikes at its South African plant have wrecked an opportunity to expand production there.

South Africa’s auto sector has been crippled for several weeks as factory workers and then parts manufacturers went on strike.

“Unfortunately due to labour instability we’ve lost the opportunity to compete for a new model coming up,” BMW South Africa spokesman Guy Kilfoil told AFP.

The company’s headquarters in Munich is soon expected to decide where in the world to send production.

“There’s always a healthy competition between plants around the world to see who could produce it most cost-effectively,” Kilfoil said.

“The ongoing strike action affects the reputation of South Africa to be a reliable partner for export.”

The company currently has an assembly plant north of the capital Pretoria, which is meant to run 24 hours a day.

But an ongoing nationwide strike has slashed production from 350 vehicles a day to 85 units, according to the company.

BMW’s statement comes a day after the International Monetary Fund warned that strident trade unions pose a risk to South Africa’s already moribund economy.

The country is struggling with growth that lags well behind most emerging markets and unemployment that is officially above 25 percent.

The current auto strike has affected seven plants of major car manufacturers including Volkswagen, Ford, Mercedes, Toyota and General Motors in a sector that contributes six percent to the economy.

The Retail Motor Industry Organisation said the strikes reduced vehicle exports by 75 percent last month.