GM exit will have massive impact

Panic sets in as workers, suppliers and charities brace for devastating losses

Suppliers, workers and charities are in a spin after General Motors South Africa announced the company’s departure from the country at the end of the year. The Port Elizabeth-based automotive giant shocked the nation on Thursday, confirming it was leaving and fully divesting, taking with it the Chevrolet brand.

The decision threatens about 600 jobs and impacts all the way along the company’s value and supplier chain.

Even though Japan’s Isuzu Motors is acquiring GMSA’s production, after-market and administrative facilities, those affected by the move are frantic with worry.

“This is affecting our families as well, because they see what is reported in the news,” one employee said.

Another one remarked: “The decision was very sudden. We are shocked.”

The father of two said GMSA management had told them earlier last week to expect a meeting at an undisclosed venue.

“We were excited. We thought this was good news,” he said.

“We will no longer work shorttime and, instead, will get fulltime jobs – so we thought.

“I am the only breadwinner. What will happen to my wife and two kids? This is very sad.”

On Thursday, GMSA sent an e-mail to suppliers and service providers informing them of the news.

The e-mail – which The Herald has seen – also informs component manufacturers that there would be “updated Chevrolet Spark and Utility production releases” and that they should “make adjustments to production and material plans in line with the updated releases”.

“We know that this will be a challenging period for all of us. However, we ask for your understanding and continued dedication and support as we work through these changes,” the letter says.

GMSA’s exit is expected to hit supplier OPM Tooling hard.

Chief executive Michael Kliment said the carmaker accounted for 25% of his turnover.

OPM Tooling provides parts for Corsa and Isuzu bakkies.

“I have nine employees dedicated to GM products. These are people specially trained on their high-detail specifications,” Kliment said.

Another contemplating tough times is Faaik Allie, whose businesses MFA Mould Design & Machining and MFA Global Plastics supply plastic injection mould products to GMSA.

Allie said he might need to lay off one or two staff members.

Less impacted would be Schaeffler South Africa, which produces clutches for Isuzu and Corsa vehicles, with only 2% of its turnover affected, managing director Marshal Myburgh said.

National Association of Automotive Component and Allied Manufacturers president Dave Coffey is taking a longer-term view.

“In the short term, it is likely that component manufacturers supplying to the Chevrolet assembly lines will be impacted negatively with respect to employment numbers,” he said.

“However, in the medium term, we are very optimistic that the Isuzu investment and commitment will bring about certainty and greater volumes, which will bode well for employment in the component sector.”

But GMSA’s divestment also has implications for charities, and housing and education projects.

The company has pumped more than R100-million into Port Elizabeth social initiatives in the past 13 years.

GMSA spokeswoman Denise van Huyssteen said the General Motors Foundation would no longer support various education and housing projects after this year.

She said it was too early to say if Isuzu would take over any of the projects.

GMSA will, however, honour contractual obligations like bursaries and partnerships with universities, according to Van Huyssteen.

Bay housing expert Lance del Monte said the contribution from the GM Foundation towards projects like Walmer Links, Fairview Links, Willowdene and others was immeasurable.

He said GMSA’s exit meant about 10 000 housing units planned in Nelson Mandela Bay over the next seven years were now in limbo until another donor could be secured.

This included 5 784 social housing units and 3 818 affordable housing units.

“Unless we can find other ways of sustaining these projects, we do not know what we will do,” Del Monte said.

GM Foundation education project managers Kathy Balshaw and Paula du Plooy said their operations would cease in December.

To date, they have worked at 150 schools in the metro and with 250 000 pupils, teachers and principals countrywide.

Adolph Schauder Primary School principal Thomas Matthews said: “The contribution they have made to our school is invaluable.”

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