GM pulls out of SA

IN a move which sent shock waves through its workforce and the entire South African motor industry yesterday, Port Elizabeth-based General Motors South Africa (GMSA) announced it was pulling out of the country, meaning the likely loss of scores of jobs.

The abrupt notice of its withdrawal from its domestic and East African markets means the end of the road for the automotive giant’s long-standing presence in the city as a major employer stretching back 91 years, save for an 18-year disinvestment period between 1986 and 2004.

The announcement has angered the National Union of Metalworkers of SA (Numsa), which said it had not been consulted in advance and that the fate of employees remained unknown.

The dramatic national media briefing on the American carmaker’s disinvestment from Africa at a Port Elizabeth beachfront hotel was a bittersweet announcement, with Japan’s Isuzu Motors simultaneously revealing its acquisition of GMSA’s production, after-market and administrative facilities around the country.

The new entity will be known as Isuzu Motors South Africa and will come into being when GMSA winds up its operations in South Africa by year-end. Having partnered with GMSA for more than 40 years, Isuzu’s renewed and increased presence in the Bay is seen as playing a critical role in avoiding more serious job losses while ensuring some component suppliers can continue to serve its bakkie and truck production.

Before the media briefing, GM bused the about 1 500 employees at its two Bay facilities to the Nelson Mandela Bay Stadium immediately after they reported for work at 7am to inform them of the move.

The media briefing, delivered in an upbeat tone, was addressed by Isuzu sales division senior executive Haruyasu Tanishige, GMSA president and managing director Ian Nicholls and GM international vice-president Ritch Schaafsma. They revealed that:

• GM will no longer manufacture or sell Chevrolet vehicles in South Africa as of year-end. All effective warranties and service plans and parts supply commitments will, however, be honoured;
• Isuzu intends maintaining a national dealer network of 90 dealerships. GMSA has 132 multi-brand dealerships, meaning that more than 40 dealers will be shed;
• Jobs will be shed as a result of the developments, but neither GMSA nor Isuzu has yet provided figures;
• Consultations with the affected GMSA workforce began immediately after the announcement. It follows a recent period during which the company started offering employees voluntary severance packages;
• Isuzu intends expanding its local and continental footprint, which will mean more investment in local facilities and the potential introduction of new models;
• GM will continue to source components, and specifically catalytic converters, from South Africa, with contracts in place to supply North America until at least 2024;
• Currently managed from South Africa, GM’s interests in Africa and the Middle East will in future be managed from Singapore; and
• The PSA Group (Peugeot/Citroen) bought GM’s German brand Opel earlier this year. Opel will continue to be sold in South Africa but under a new holding company.
• Nicholls said: “These decisions were not made lightly.

“We appreciate the support our employees, customers, dealers, suppliers, the government and other key stakeholders have given us over the many years that we have operated in this country.”

Tanishige said: “We are committed to the South African market.

“The integration of our light commercial and medium- and heavy-duty commercial business will strengthen our base to grow here.”

Schaafsma said the company was rationalising its markets to ensure it adhered to its core business operations and the move had nothing to do with the economic or political situation in South Africa. However, Numsa was shocked. “GM informed our members this morning it is withdrawing from the South African market,” general secretary Irvin Jim said.

“There are more than 1 000 employees at GM and 500 of those are based in the Chevrolet division.

“The vast majority of employees are Numsa members. We are surprised GM chose to convey this announcement in this way.

“There was no consultation with the union, and furthermore, the company has not divulged any details about the fate of its employees affected by this.

“Shutting down operations in South Africa will have a major impact not just on GM plants, but for companies along the value chain as well.

Trevor Villet, the Port Elizabeth general manager of the Williams Hunt Group – the largest national GM dealer network in the country – was, however, upbeat about the development.

“So we won’t be able to retail the Chevrolet brand,” he said.

“However, there are great prospects around Opel and we are really excited about the possibilities the Isuzu investment will bring.

“Isuzu’s three-year plan for its South African operations shows fantastic potential and we foresee an upswing in sales volumes going forward.”

While he believed there would be some short-term pain, trading conditions for the Isuzu brand would improve.

Jim said: “We expect to meet with the management of GM soon. We will also consult lawyers on the way forward.

“This is the second time GM is pulling out of South Africa and we smell a rat. We suspect shareholders got a very good deal at the expense of the workers.

“Isuzu will take over operations at GM, but we doubt they will absorb all the workers at those plants.

“Now that GM has made it clear it is disinvesting in the country, we will also probe whether this is not an agenda by the car company to dump the remainder of its cars on the South African market.

“If they proceed with dumping, we will take up a campaign to prevent them.”

At the stadium, many employees appeared worried, while others joked about the changes and how they would now have to familiarise themselves with Japanese culture.

Several appeared to have known about the move but expressed concern about the lack of detail.

Schaafsma, however, had addressed the workers on the cessation of the manufacture of Chevrolet vehicles for the South African market.

“This decision is based on GM’s performance globally, it’s not the reflection of the labour force’s work in South Africa,” he said.

“But we are very pleased Isuzu is investing in the local operations.”

Nicholls told the employees: “We will consult with you and workers’ representatives as we move towards this new proposed structure.

“This will have a significant impact on our dealers as well.”

Nicholls said he had spoken to Trade and Industry Minister Rob Davies about GMSA’s withdrawal, as well as with Bay mayor Athol Trollip.

Nelson Mandela Bay Business Chamber deputy chairman MC Botha said: “While we are saddened that GMSA will cease local manufacturing, we look forward to a greater understanding of the PSA Group purchase of Opel/Vauxhall.

“We welcome the news that the new Isuzu business model intends to have continued manufacturing in Nelson Mandela Bay and look forward to building on our partnership with Isuzu Motors in the metro.

“We trust that a smooth transitional process of safe-guarding and retaining the investment and employment in Nelson Mandela Bay will be achieved throughout the remainder of the year.” – Additional reporting by Johnnie Isaac