Bloomberg reports that the National Union of Metalworkers of SA (Numsa) is demanding that employers in the vehicle manufacturing sector, including BMW SA and the local units of Toyota and Ford, give workers 10% raises ahead of talks that will settle wages for the next three years.

But, while that’s more than three times the annual inflation rate, it’s the union’s lowest initial ask in at least four negotiation cycles and comes as several headwinds threaten the long-term viability of manufacturing vehicles and components locally. Formal wage negotiations have yet to begin. Numsa’s Phakamile Hlubi-Majola has indicated that an inflation-linked increase was “unrealistic” because the union’s members were struggling to survive. Averting a fourth-consecutive deadlock in pay talks and a potential strike by more than 100,000 workers is seen as key for the survival of an industry that has long been hobbled by electricity-supply constraints and logistics challenges. Industry association data show global trade wars are also weighing on exports, which account for about two thirds of vehicles produced in SA. While higher tariffs imposed by the US on imported vehicles and components only took effect in April, shipments to North America had already declined 73.2% year-on-year in the three months through March. Given changes in the operating environment, key players in the industry have asked the government to bring forward a review of its production-incentive programme and so-called industry master plan to 2025.

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