ICCRBrief Vol. 18 No.6, 1989 White Wheels of Fortune: Ford and GM in South Africa After decades at the top of the South reevaluated their involvement in South the largest union, the non-racial Na­ African motor industry, both Ford and Africa. When rumors surfaced that Ford tional Automobile and Allied Workers General Motors moved during might be pulling out, analysts sensed an Union (NAA WU). 1987 -1988 to end all direct investment in important turning point in the history of the country. But neither withdrawal was the industry. Companies like Alfa­ GENERAL MOTORS: "Braaivleis, what it appeared to be. Both companies Romeo, Peugeot, Renault and Leyland, Rugby, Sunny Skies and Chevrolet" continue to play important behind-the­ though neither large nor influential in The Ford-Amcar merger left scenes roles in South Africa. They re­ South Africa, abandoned commercial General Motors as the only wholly- own­ main a prominent focus for the antiapar­ manufacturing there. ed American motor vehicle manufac­ theid movement because of their contin­ turer in South Africa. GM had followed uing ties to their former South African The Ford-Amcar Merger of 1985 Ford to South Africa in 1926, and like subsidiaries, because of the controversial Ford, chose to build its assembly plant in way in which they sold their South In mid-1984 Ford .secretly began Port Elizabeth. Over the years GM and African assets and because their suc­ negotiating with Anglo-American's car Ford shared top billing as the leading cessors have resumed vehicle sales to the making company, Amcar, over a possi­ manufacturers. Even today GMs adver­ South African police and military. ble merger of their operations. Both tising jingle makes the most of things This brief endorses the antiapar­ companies had suffered losses in quintessentially white South African: theid movement's call for General preceding years, lost market share and "Braaivleis (barbecue), rugby, sunny Motors and Ford to fully and responsibly carried excess capacity. The companies skies and Chevrolet." (In the U.S. GM's withdraw from South Africa. It urges in­ had a natural affinity as Amcar held the slogan was "Baseball, hot dogs, apple stitutional investors and purchasers to local license to produce Mazda and Mit­ pie and Chevrolet.") But through the refine their selective purchasing and subishi cars while Ford USA held a 1970s GM lost its position as market responsible investment (and divestment) substantial share in Toyo Kogyo (Maz­ leader; by 1985 it could claim a bare 9 regulations to maximize pressure on da) in Japan. With such overlap in design percent share of the passenger vehicle companies like Ford and GM for authen­ between Ford and Mazda products, a market. tic withdrawal from South Africa. ICCR merger provided plenty of room for ra­ members also support tougher federal tionalization of models. GM Searches for a Way Out sanctions backed by strong penalties Both companies denied merger which would oblige Ford and GM to rumors virtually to the day the deal was As 1986 passed and the motor in­ sever all ties to South Africa. Finally, made public. In January 1985, Ford and dustry sales deteriorated, GM was ICCR member organizations urge com­ Amcar announced they would become unable to hold its already low market panies to negotiate with their workers the partners in the new South African Motor share in a declining market. The press terms of withdrawal well before the date Corporation (SAMCOR), with Anglo was alive with rumors of possible of disinvestment. holding 58 percent and Ford 42 percent mergers between GM and a number of of the shares in the company. Over the competitors. In early 1986 the managing FORD: Leading South Africa's next year, Ford closed its Port Elizabeth director of General Motors South Africa Motor Industry automobile and truck assembly opera­ (GMSA), Bob White, gave assurances tions, except for a small engine assembly that the company would not disinvest Ford was the first car maker to factory. As a result, nearly 4,000 hourly and later gave assurances that GMSA assemble vehicles in South Africa. It paid workers, most of whom were black, would remain in Port Elizabeth. opened a factory in Port Elizabeth in were laid off. In 1986 the U.S. Congress enacted 1924 and for many years was the leading Ford refused to admit its plans to its the Comprehensive Anti-Apartheid Act, producer. Ford was also one of the most own workers or their unions. By the time which barred U.S. firms from making important firms in the Eastern Cape the deal was announced, workers could new investments in their South African region with more than 5,000 employees do little but contest the terms of their operations. GM's response to the legisla­ and dozens of supplier companies. retrenchment package. After a series of tion was disclosed in October 1986 when As a result of the crisis in the South strikes, workers achieved a substantial GM Chairman Roger Smith mentioned African motor industry dating from improvement in their retrenchment in an interview that GM was reviewing its 1983, many multinational auto firms payout, which was negotiated through presence in South Africa. An ICCR Brief appears in each edition of The Corporate Examiner, a monthly newsleller on corporate social responsibility. Each briefhighlights a par­ ticular social area and focuses on one or more cOlporations. It also provides information about action options and resources for Issues studIed. Copies of the ICCR Brief may beobtainedjrom the Intel:faith Center on Corporate Responsibility, Room 566,475 Riverside Dr., New York, N. Y. 101/5. Telephone (212) 870-2936. Price: 1-10 copies, $1.25 each; 11-19 copies, $1.00 each; 20-49 copies, $.75 each; 50 or more copies, $.35 each. © 1989 Interfaith Center 017 Corporate Responsibility. 3A Efforts to Fight Back Fail estimated 100 million rand debt of the for, but at least we' re back on the buying li st subsidiary by transferring money to again, NAA WU shop stewards, with the GMSA ahead of the sanctions bill invest­ After receiving "significant" orders memory of the Ford closure fresh in their ment deadline. Finally, GMC would from two or three major departments, he minds, immediately asked GMSA continue to supply components, designs predicted Delta would do "more govern­ management to clarify Smith's remarks. and spare parts to GMSA largely ment business in 1987 than GM did in the They were told that the chairman had through its Opel subsidiary in West Ger­ last five years. "3 Buoyed by such been misquoted. But more than a week many and its associated Isuzu Motors in measures, management stabilized later GMSA announced that the com­ Japan. market share for the first time in years pany would be sold, withholding mean­ GMSA claims to have transferred a and'looked poised to break even, if not ingful details. portion of its assets to a trust "designed The workers were not satisfied with to enable those employees who con­ report a small profit. management's lack of responsiveness tribute to the growth and success of the and called a general meeting of approx­ company to participate in its future prof­ Fighting Corporate Camouflage: imately 1,000 of NAA WU's General itability." However, it has not disclosed The Union Responds Motors South Africa members. They how much of the assets were given to the demanded severance pay, that their pen­ trust, how many employees will benefit South African trade unions sion fund contributions be paid out and or how their benefits will be determined. vigorously debated the question of the right to select two worker represen­ Company representatives confirmed in disinvestment in response to the GM tatives to the board of directors. Finally, 1988 that they had not discussed the trust strike and similar cases of corporate they asked for an urgent meeting with with the employees or distributed any withdrawal and restructuring. In the course of the GM strike, the unions, GMSA management to discuss the situa­ money.' which would soon merge to form the new tion. With the return to work and union In a letter leaked to the press before plant leadership decimated, GMSA has National Union of Metalworkers of it was received by the union, a GMSA permitted only four shop stewards in the South Africa (NUMSA), issued a joint director rejected the union demands, ig­ plant and greatly restricted their freedom statement setting forth their demands to nored the request for a meeting and to operate on worker business. In addi­ any company contemplating with­ threatened to hire unemployed workers tion, NAA WU has charged that a new drawal. NAA WU, the Metal and Allied to replace anyone unwilling to "assist" sweetheart union has appeared at the Workers' Union and the Motor Industry the company. Two days later workers plant with the unofficially backing of the Combined Workers' Union demanded downed tools and began a sit-in. The sit­ company. The Free and Independent that disinvesting companies give workers in ended two weeks later after the com­ Workers Association, as the new union is sufficient notice, provide full details of pany called in police to evict strikers and called, gave assurances not to strike and plans, negotiate their terms of fired 567 workers. The company allowed agreed not to embrace the broad political withdrawal and guarantee that no a police brigadier to direct his operations concerns of the black community.' benefits would be prejudiced by the sale. against the workers from a strike com­ Thus, the company could reorgan­ Further, they demanded that worker mand post on company premises. ize without the encumbrance of labor op­ wages and benefits be protected for General Motors broke the strike position.