Picture: REUTERS
Picture: REUTERS

BMW SA has confirmed in a face-to-face meeting with Trade and Industry Minister Rob Davies that labour instability had dashed South Africa’s chances of producing a new model of the German marque.

The loss of 15.8% of BMW’s annual vehicle production for 2013 had sunk the country’s chances as a site for producing a new model.

A continued commitment to existing investment would require that manufacturers, the state and organised labour tackle fundamental issues facing the motor sector, BMW SA said on Thursday.

Almost eight weeks of successive strike action by the National Union of Metalworkers of SA (Numsa) in the manufacturing and components sector has seen BMW report an irrecoverable loss of production of 13,000 3-Series cars at its plant in Rosslyn, Pretoria.

The German car maker subsequently announced that as a direct result, South Africa had been removed from consideration as a site for production of a new model.

Direct evidence of how South Africa’s labour relations environment is costing the country jobs has sparked fears of reputational damage in a sector that accounts for 30% of manufacturing output.

Mr Davies met BMW MD Bodo Donauer on Wednesday to clarify BMW’s decision and to discuss improving South Africa’s ability to compete for future contracts. Similar fears on competitiveness have been raised following Japanese car manufacturer Nissan’s announcement that it would begin producing vehicles in Nigeria following a vigorous drive by that country to attract manufacturing investment.

Both Mr Davies and Mr Donauer had endorsed a proposal for a further meeting between the department and the CEOs of major car manufacturers, a joint statement from the Department of Trade and Industry and BMW read yesterday.

This is expected to take place on the sidelines of the Johannesburg International Motor Show, which starts next week.

While BMW had emphasised that it was "in no way, shape or form" planning to disinvest, "Mr Donauer stated that it was a matter of fact that lengthy strike action … had cost BMW SA an opportunity to compete for a potential second model," read the statement.

BMW spokesman Guy Kilfoil said on Thursday that raising questions of the "fundamental issues" in the sector formed part of the company’s intention to act as a responsible corporate citizen, but that this should take place across the sector.

Numsa has dismissed BMW’s decision as "blackmail", accusing the car manufacturers of having headed into this year’s wage negotiations in bad faith.

In an open letter to BMW yesterday, Numsa deputy general secretary Karl Cloete said "we must from the outset reaffirm our statement that BMW’s public posture with respect to no further investments in South Africa amounts to political and economic blackmail".

Mr Cloete said the union, which took decisions in the interests of jobs and sustainability, dealt with "facts, not emotions".

"South African citizens have handsomely contributed to the profits that these multinational corporations have raked in through our taxes that have gone into the Motor Industry Development Programme (MIDP) and the introduction of the Automotive Production Development Programme (APDP), along with the introduction of the highly lucrative Automotive Incentive Scheme (AIS)," he said.

The union was owed an apology by those labelling it as "economic saboteurs", and the unemployed and underpaid "are not fools and shall see through the smoke and mirrors", Mr Cloete said.

Democratic Alliance finance spokesman Tim Harris said yesterday the party would request that Finance Minister Pravin Gordhan announce a "rescue plan" for the automotive industry in the medium-term budget policy statement.