No bail-out needed
Layoffs continue and plants go idle, but there are bright spots
VOLKSWAGEN SOUTH AFRICA followed several other local vehicle manufacturers and opted for a voluntary retrenchment programme earlier this year. The company now employs 5 100 workers, down from 5 500 previously.
This is in line with industry trends: According to Naamsa’s quarterly report employment levels remained under pressure during the first quarter of 2009 with net industry employment falling by 2 571 jobs as a result of downsizing at most assembly operations. During all of 2008, 2 566 jobs were shed, suggesting conditions are worsening. The industry employs 33 300 workers in total.
Capacity utilisation of only 63% in the industry is at multi-year lows. Despite this, capital expenditure for 2009 is estimated at R3,6bn, up on last year. It’s not all negative however. South Africa’s share of global production jumped over 10% in 2008, and the industry’s share of local GDP is up to 7,3% from 6,8% in 2007.
Anecdotal evidence also points to some bright spots. Volkswagen, together with other SA manufacturers, planned to idle its plant as local demand and exports fell. “We did in fact pencil in a two-week shutdown over the Easter period, but thanks to demand for the Polo in Germany, we produced throughout April,” says Bill Stephens, GM for communications at VW SA.
The demand for the Polo is thanks to a scrapping allowance introduced in Germany