Business

Top car manufacturer’s plan to slash jobs in South Africa under fire

Mercedes-Benz South Africa’s plan to cut 700 jobs as part of restructuring of its manufacturing operations is facing resistance from trade unions.

On 13 June 2024, Mercedes-Benz announced it had entered a consultation process which could impact 700 jobs at its East London manufacturing plant.

The company is restructuring its manufacturing operations, transitioning from the current 3-shift model to a 2-shift model.

Mercedes-Benz said the automotive industry has contended with several challenges in recent years, which have also impacted its South African operations and its suppliers

These challenges include deteriorating macroeconomic conditions and prolonged port challenges.

“Consumer sentiment has suffered due to fluctuations in the exchange rate, subdued household income, rising fuel prices, and increased energy and logistics costs,” it said.

Against these pressures, Mercedes-Benz implemented measures to address and improve the performance of its manufacturing operations.

These measures include cost-saving initiatives and efficiency improvements at its East London plant.

“However, despite our best efforts, the current operating environment remains challenging, necessitating further action,” Mercedes-Benz said.

Subject to the outcome of the consultation process, Mercedes-Benz estimates that 700 East London employees could be affected by retrenchments.

“The Section 189 consultation process could see the number of employees retrenched through the implementation of early retirement, voluntary severance, and natural attrition measures.”

Irvin Jim
Numsa general secretary Irvin Jim

This news did not sit well with the National Union of Metalworkers of South Africa (Numsa), which is keen to save jobs.

“Mercedes-Benz South Africa (MBSA) is contemplating retrenching 702 employees,” the labour union said.

The job categories likely to be affected are artisans, team managers, and hourly employees. Mercedes-Benz employs 3,396 people in South Africa.

“In the notice that was issued, MBSA claims that it is operating under difficult conditions and has cited various factors for its decision to retrench,” Numsa said.

These factors include prolonged port challenges, subdued household income, and increased energy costs.

Numsa general secretary Irvin Jim said they are dismayed by the section 189 notice from Mercedes-Benz South Africa.

“We are deeply concerned about workers and their families who will be affected if the company goes through with the retrenchments,” he said.

Jim added that the Eastern Cape province, where the majority of workers are based, will be hardest hit because of high levels of poverty and unemployment.

“It is unlikely that workers will find alternative employment if the MBSA implements the proposed retrenchments,” he said.

He said Numsa would wait for the CCMA to issue dates for the first meeting so they can consult with Mercedes-Benz South Africa.

“Numsa will do everything possible to provide alternatives, with the hope that we can prevent job losses,” Jim said.

South African Federation of Trade Unions (SAFTU) spokesperson Trevor Shaku has also criticised the plan to retrench workers, saying it is profit-driven.

He cited the financial records of Mercedes Benz South Africa, which showed a R4.4 billion profit in 2023, up R1.1 billion from the previous year.

“Whilst the complaints about other economic factors are legit, they are not the primary reason for restructuring and retrenchments,” Shaku said.

He added that the restructuring and retrenchments are aimed at maximising “surplus and profits thereof”.

SAFTU rejected the retrenchments, saying it would exacerbate the crisis of unemployment and have severe consequences for the affected employees.

Newsletter

Top JSE indices

1D
1M
6M
1Y
5Y
MAX
 
 
 
 
 
 
 
 
 
 
 
 

Comments