GM’s exit should set alarm bells ringing

WE just don’t cut it any more as an attractive destination for international companies and probably haven’t done so for longer than we realise.

So it wasn’t really such a surprise when General Motors announced this week that it was quitting South Africa.

Can you blame them, with a political climate that almost every week delivers another episode of You Could Not Make This Stuff Up?

The electorate is furious, as well as highly indebted or unemployed, or both — none of which lends itself to people who want to or can spend on cars, or pretty much anything else.

We believe the IMF’s economic growth forecast of 1% for this year is actual growth. If it materialises, granted it will be better than the 0.3% contraction in the last quarter of 2016. But let’s face it, at best we are standing very still.

More likely, we are sinking in quicksand perhaps too slowly for us to fully comprehend.

Then, of course, there are the downgrades by two credit-rating agencies. A third downgrade is expected any day now.

Of course, none of this is what GM has said.

Rather, it was reported that the vice-president of its international operations, Stefan Jacoby, said: “We determined that continued or increased investment in manufacturing in South Africa would not provide GM the expected returns of other global investment.”

The company also said that its decision to leave South Africa “was not influenced by local economic or political considerations”, according to a Fin24 report.

The company began selling its products in South Africa in 1913, and since 1926 has been assembling vehicles here. It did divest during apartheid, in line with US law at the time, but it still supplied parts to South Africa.

It returned to the country with the purchase in 1997 of a 49% stake in Delta Motor Corporation and bought the balance of Delta in 2004, when the economy was booming.

Having operated in the country in various forms for more than 100 years, the company must have ridden out many lows, and stuck it out here through many dark days to be around to benefit from the highs.

They say their decision to pack up and go is not because they consider the country’s prospects grim and are unlikely to improve any time soon. But if they did think that, we could hardly blame them.

Especially if you consider the shenanigans since South Africa was downgraded.

At a time when you would expect politicians at the very least to be focused on building confidence though their words and actions, recent developments indicate the government either doesn’t seem to think the downgrades will affect us much, or they couldn’t be bothered if they do. I suspect the latter. The government was quick to highlight a range of issues behind GM’s decision.

These included the challenges the company faces globally that resulted in it exiting various countries or selling brands, and the fact that it did not really cut it in South Africa anyway, so no diffs, really, if it

The Guptas also said they were going to sell up, but didn’t. Pity

shoves off.

GM’s departure comes after the Citröen and Daihatsu brands left in the past few years.

Then there is Chevron, which plans to sell 75% of its South African business to Sinopec, and Barclays plc, which wants to sell its stake in Barclays Africa. And the collapse of the deal which Pioneer was negotiating with a multinational company.

The Gupta family also said they were going to sell up, but nothing has come of it. Pity, that.

It is not only international companies that are looking beyond South Africa for better options — most big, home-grown businesses are cementing their operations elsewhere.

You never know — in 10 years or sooner, they may also decide to call it quits.

Enslin-Payne is deputy editor of Business Times