BMW Group announced it has decided to postpone expansion plans in South Africa because of the labor strikes that have caused plant shutdowns for the past two months.
South African manufacturing facilities of carmakers including BMW, Toyota and Volkswagen Group had to stop production output for three weeks in both August and September after workers decided to strike in order to leverage their demands for wage raises.
“Any plans to expand our plant or our capacity further have been put indefinitely on hold,” said BMW spokesman Guy Kilfoil. “Future decisions are being made where South Africa would have been in the running. Based on the current environment we’re definitely not. You could say things have changed.South Africa is becoming less globally competitive in terms of costs. All of those things are making South Africa a less attractive destination for foreign investment.”
The labor dispute has so far amounted to a total industry charge of as much as 700 million rand ($69.6 million) a day, according to the Automobile Manufacturers Employers Association. Around 72,000 car industry employees, ranging from fuel stations to suppliers also decided to enter the strike, causing further losses.
South African vehicle sales dropped the second month in a row in September and exports fell 75% as strikes hit manufacturers operations. Sales have dipped 1.5% from a year earlier to 54,281, according to the Pretoria-based National Association of Automobile Manufacturers of South Africa.