BMW drops expansion plan in South Africa due to intense labor strikes

Article by Christian Andrei, on October 7, 2013

Intense labor strikes that affected the auto industry during the past couple of months in South Africa prompted the BMW Group to stop its expansion plan. In a recent interview, BMW spokesman Guy Kilfoil said that any plans to expand its plant or add to its capacity have been put on hold indefinitely. He explained that because of the current state in South Africa, things have changed.

For three weeks in August and September, the plants of BMW, Toyota Motor Corp., and Volkswagen Group in South Africa were shut down as workers went on strike over demands for higher pay. The Automobile Manufacturers Employers Association said that each day that the labor dispute continues, the industry loses up to 700 million rand ($69.6 million).

Complicating matters and adding to losses is the fact that around 72,000 car industry workers from fuel stations to suppliers also went on strike. BMW has not wavered from its long-term plans in South Africa.

Kilfoil said that BMW thinks that the country has become “less globally competitive” when it comes to wages, energy costs, and water costs and so, it has become a “less attractive destination for foreign investment." Auto sales in South Africa dropped in August and September.

Exports fell by 75% as strikes affected automakers' operations. According to the National Association of Automobile Manufacturers of South Africa, sales decreased by 1.5% from the previous year to 54,281 units. [source: BBC]

Topics: bmw, south africa, strike

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