Mercedes-Benz South Africa (MBSA) plans to close its East London production plant for four weeks in April and for a further four weeks from the last week in May.
In addition, it anticipates only operating its plant for four days a week in May, according to a production status note sent to all its suppliers this week.
These production cutbacks come as the international automotive industry is in a crisis because of a severe slump in sales caused by the global credit crunch.
MBSA has already had two days without production in March. It plans to have another one on April 3.
Spokesperson Annelise van der Laan said the cut in production required a four-day closure before the Easter weekend but current economic pressures required more than average flexibility in production planning.
She said production plans were firmed up no more than a month in advance and further plant shutdowns had not been finalised.
MBSA was in discussions with the National Union of Metalworkers of SA (Numsa) on possible additional shutdowns and ways to minimise the impact on employees.
Van der Laan said MBSA was reviewing various options to reduce the financial impact on hourly-paid workers.
MBSA had almost 2 200 hourly-paid employees at its East London plant and labour costs comprised, on average 50 percent of the total build cost of a C-Class.
MBSA retrenched 150 of its 800 salaried staff effective from the end of February but no further retrenchments of salaried or hourly paid staff are planned.
Roger Pitot, executive director of the National Association of Automotive Component and Allied Manufacturers, said MBSA’s plans would worsen the crisis for automotive component manufacturers.
The new Mercedes-Benz C-Class had not been in production that long, Pitot said, and MBSA’s plant had been closed for four months during the changeover to the new mode.
Suppliers had invested for the new model, with volumes expected to be high.
He said about 100 first and second-tier suppliers were probably supplying MBSA and they would all definitely suffer.
It was hard to understand why MBSA had kept working a five-day week in the first quarter of this year, he said, when all domestic manufacturers had cut back on production.
“It would have been much better to work a four-day week in the first quarter and then they would not have had to take out so much production now. Unfortunately, it’s suppliers that suffer,” he said.
It was possible that it could push some suppliers into closure, especially those who were dedicated or dominant MBSA suppliers, Pitot added.
Numsa regional secretary for the Eastern Cape Irwin Jim said on Thursday the union was still engaging MBSA on this issue. Whatever happened, it needed to ensure its 3 000 members at the plant were not negatively affected. “We are demanding full pay for non-production days,” he said.
Jim said automotive companies were going through “a rough time” and needed help and must approach government for assistance.
“This crisis cannot be transferred to workers because they have no control over what is happening,” he said.
Jim said workers had already been affected because of working short time and layoffs.
Sourced via busrep.co.za