Motor supplier faces closure

In a fresh blow to the Eastern Cape automotive industry, a Port Elizabeth component manufacturer may soon have to close its doors on 154 employees, with trade union Numsa blaming Volkswagen South Africa (VWSA).

Following a slash in a production contract with VWSA, Stateline Pressed Metals (SPM) has been left in dire straits.

This is according to a letter to VWSA chief executive Thomas Schaefer penned by Numsa regional secretary Mziyanda Twani.

The letter says that SPM can no longer operate due to debt and the loss of sales from the reduced VWSA contract.

The news comes after General Motors SA (GMSA) – a former client of SPM – shut down its Port Elizabeth operations at the end of last year.

Shortly after GMSA’s plans to divest were announced, Coega Autospray applied for liquidation in the Port Elizabeth High Court, saying it was unlikely to have any funds to finance any continuation of its business.

This comes as StatsSA’s Quarterly Labour Force Survey, published last week, shows the city’s unemployment rate for the first quarter of this year reached 36.3% – which is more than six percentage points up from the 30.2% recorded in the first quarter of last year.

In his letter to Schaefer, Twani said VWSA was only doing business with local branches of German-owned companies, at the expense of local suppliers.

“Your decisions have contributed immeasurably to the poor social conditions of the people of the region,” Twani said.

“I have already sensitised our Numsa leadership at VWSA of these crises you have created for us and the broader community of the Eastern Cape.”

According to Twani, the contract to supply components for the new Polo – which were made by SPM for the previous model – was awarded to a German manufacturer with a branch in Pretoria.

However, VWSA spokesman Matt Gennrich refuted Twani’s claims, saying no contract had been awarded yet to a new supplier.

Asked about the decision to use a different supplier, Gennrich said: “Stateline officially informed us last week that due to their financial problems, they were closing down their press metal business.
“It is not correct that we awarded this business to a German company.

“VWSA continues to be a leader in the industry in our support of BEE suppliers via a number of initiatives.

“VWSA does not favour nationalities when doing business. Being a German company does mean that our parent company often initially uses German companies, [but] we try and localise components where we can and are known for having the highest levels of local content in the industry with around 62% local content.”

Gennrich said VWSA management would engage with Numsa representatives to explain how the company has assisted SPM.

“For years we have been trying to assist this supplier with various measures from our side, including sending financial consultants to assist them.

“We also asked them to tender for the new Polo business, but they failed to submit a competitive bid.”

Speaking to The Herald yesterday, Twani said he was hopeful that the meeting, scheduled for Thursday afternoon, would help to turn the situation around.

“We are meeting to explore ways to avert possible job losses. It is our duty to secure these jobs.

“We’re still optimistic that we’ll be able to stop [the job losses and closure].”

SPM director Athi Lupondwana declined to comment on the situation yesterday, but confirmed he was aware of the meeting between Numsa and VWSA.

Lupondwana said SPM would be meeting with other affected manufacturers on Thursday to try to avoid the worst-case scenario of closure.

However, an employee, who asked not to be named, feared job losses could be imminent, both at the Port Elizabeth and Queenstown branches.

“It would be irresponsible to continue as is [if we don’t get more work in],” the employee said.

The company currently employs 154 people, down from 256 employees in August.

The loss in sales does not, however, affect operations at Stateline Tubing, a division of the SPM group that signed a contract with Toyota late last year which brings in R3.5-million a month.