Gauteng Business News

Send  Share  RSS  Twitter  10 Feb 2009

Motoring: Car Sales Crisis Spreads to Component Manufacturers


Recent Gauteng Business News

With more than 28 000 employees in all industries in South Africa facing retrenchment, the economic conditions are now also sinking its claws into the component manufacturing sector, the trade union Solidarity warned today. The crisis has already delivered the death blow to several component companies while others are fighting for survival by reducing staff.

According to Solidarity spokesperson Jaco Kleynhans, the trade union has already received several Section 189 notices of planned retrenchments in this sector. “The sector is facing an extremely difficult period. Car sales dropped sharply in 2008, which on the one hand led to the crisis in the platinum industry, but on the other hand also caused a collapse in the demand for the production of vehicle components,” Kleynhans explained.

Meanwhile, Solidarity warned the worst is probably still lying ahead for the industry. “Although car dealers now offer various specials in an effort get sales to pick up again, consumers will still be very hesitant to buy new vehicles now, especially since economists warn that the economic downswing could still last about 14 months. Apart from this, experts in the car industry do not expect car sales to improve at all in the coming year and it could only start picking up again by the end of 2010,” Kleynhans warned.

In the past month, Solidarity has already received notices of the retrenchment of employees from companies such as Hayes-Lemmerz, Robor Stainless, Guestro Automotive, IG Tooling, Formex and Dana Spicer.

Solidarity has also expressed concern over figures regarding the crisis in the component manufacturing industry released by Naamsa (Association of Automotive Component and Allied Manufacturers). According to the association, more than 10 000 employees in the sector were retrenched last year, while 30 companies have already indicated that they are considering retrenching nearly 4 500 employees. There are about 78 000 employees currently working in the sector.

“In addition, car manufacturers such as Ford, Mercedes Benz, Nissan and Volkswagen plan to retrench more than 2 200 employees,” Kleynhans added.

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