GM suspends SA production as striking union rejects offer

By Ed Stoddard

JOHANNESBURG (Reuters) – U.S. auto giant GM said on Friday it had suspended production at its main South African assembly plant in the southeastern city of Port Elizabeth because a strike by the country's biggest union had hit components suppliers.

The engineering and metal workers' strike shows no signs of abating after the National Union of Metalworkers of South Africa (NUMSA) rejected an increased employers' wage offer late on Thursday, the Steel and Engineering Industries Federation of Southern Africa (SEIFSA) said.

The NUMSA-led stoppage by over 200,000 members began on Tuesday, dealing a fresh blow to Africa's most advanced economy following a crippling five-month platinum mining stoppage that ended last week.

GM's suspension of output at Port Elizabeth signalled an escalating impact from the strike. "The plant has been shut since yesterday because of the parts supplier issues," GM spokeswoman Denise van Huyssteen said.

Japanese automaker Toyota said on Friday it was maintaining "business as usual" in South Africa despite the strike. "We still have full production capacity," Toyota spokeswoman Mary Willemse told Reuters.

Employers' group SEIFSA said it had tabled a fresh offer of wage increases of up to 10 percent, up from 8 percent previously. The union wants hikes of 12 to 15 percent, more than double the inflation rate.

"Regrettably, it would appear that we continue to be miles apart with the union," SEIFSA chief executive Kaizer Nyatsumba said in a statement.

Sticking points include NUMSA's insistence that the agreement being negotiated only be for one year, while the employers want to lock down a three-year deal.

South Africa's labour minister would meet with striking metalworkers and industry employers on Friday. "We want the strike to end and are quite hopeful that an agreement can be reached soon," spokesman Mokgadi Pela told Reuters.

"WORKERS INTIMIDATED"

SEIFSA said many employers represented by the federation had reported "serious incidents of violence" by striking workers. These had included damage to property at firms and also assaults on employees reporting for work.

"People fear for their safety in their work places, where windows have been stoned, entrance gates broken and workers intimidated on site," said Marius Croucamp, head of the metals and engineering sector at the Solidarity Union. Solidarity members have not joined the NUMSA-led strike.

South African police on Thursday said officers had fired rubber bullets to disperse workers blocking the entrance to the construction site of state power utility Eskom's  Medupi power station.

The country's biggest packaging group, Nampak Ltd, has said about 40 percent of the 4,000 employees in its metals and rigid plastics division had failed to report for work.

The stoppage is costing South Africa some 300 million rand ($28 million) a day in lost output and will further dent investor confidence already hurt by the platinum strike that dragged the economy into contraction in the first quarter.

The persisting labour unrest would consign South Africa to a third consecutive year of sub-par growth and posed risks for its credit rating, Moody's said in a statement.