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Strikes cast shadow over Ford's South African investment prospects

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(Credit: Reuters) A man walks past a new Ford car at the Jacob Javits Convention Center during the New York International Auto Show in New York April 16, 2014.Ford
November 14
12:47 AM 2014

U.S. carmaker Ford is hesitant about investing further in its South African operation because of repeated production stoppages caused by strikes, its regional chief said on Thursday.

The South African auto industry, which accounts for about 6 percent of the continent's most developed economy, has been hit directly and indirectly by four strikes in the past year.

"A challenge for us here in South Africa is convincing our board to continue to invest in a country where the stability of output is a little less certain than in other countries," Jeff Nemeth, president of Ford's South African business, told reporters.

Carmakers resumed production in September after a four-week strike by 220,000 metalworkers. Last year a strike by auto workers cost the industry $2 billion in lost output, followed by a strike in the auto parts sector and another by truck drivers who haul vehicles to ports and dealerships.

"Year after year after year, having that much of your output constrained by labor actions, you don't have a clear view of what your output might be," Nemeth said. "That will have an impact in our investment decisions."

Ford sells about 6,000 vehicles a month in South Africa, making it the third-largest supplier behind Toyota and Volkswagen. It also exports vehicles.

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