Disinvestment decision is regrettable – DTI

TRADE and Industry Minister Rob Davies yesterday said he remained optimistic that the future of South Africa’s motor industry was positive, despite the decision by General Motors to cease some of its operations in the country.

Davies said he had learnt of GM’s decision “with regret and concern for the many employees whose jobs and livelihoods” would be directly and indirectly affected.

He said GM’s decision was part of a broader, international strategic position by the company to exit certain markets and focus the organisation on target markets and products.

Davies said he believed the future of the industry was positive, because automotive industry stakeholders were finalising a master plan for South Africa to grow domestic vehicle production volumes and local value addition.

An announcement on the final programme could be expected early next year, he said.

Numsa (National Union of Metalworkers of SA), which is the biggest union in the automotive sector, said it was shocked by the decision.

Numsa general secretary Irvin Jim said the move would have a major impact, not just on GM plants, but on companies along the value chain.

Jim said although Isuzu would be taking over GM’s operations in South Africa, Numsa doubted Isuzu would absorb all the workers who used to work for GM.

“We are consulting lawyers to see what legal avenue we have in resolving this crisis,” he said.

Azar Jammine, the chief economist at Econometrix, said it appeared GM’s decision was a global strategic decision and not linked directly to South Africa’s politics and the country’s credit ratings downgrade.

“But it does show that GM has lost some confidence in Africa as a whole as an investment destination,” he said.

Jammine said GM’s decision would exacerbate the negative business confidence, which would feed into the narrative of expected declines in foreign investment, leading to lower economic growth than was previously anticipated.