By Lehlohonolo Lehana.
Giant tyre manufacturer Goodyear has officially closed its plant in Kariega in the Eastern Cape after 78 years in operation in South Africa.
The factory, in Kariega (formerly Uitenhage), was opened in 1947.
Many workers have slammed the company’s final severance offer, which includes a once-off payment of R50,000 and three weeks’ pay for every year worked.
Earlier this week National Union of Metalworkers of South Africa (Numsa) expressed dissatisfaction that the company was offering R50 000 to the workers as a part of the separation package.
However Numsa general secretary Irvin Jim said it had succeeded in attaining a substantial improvement on the minimum retrenchment package offered to hundreds of workers by Goodyear South Africa.
Jim held a briefing on Monday to communicate the agreement reached at the Commission for Conciliation, Mediation and Arbitration (CCMA).
He said the more pertinent improvements saw the company increasing severance pay from two weeks’ remuneration per completed year of service to four weeks’ remuneration.
This was in addition to Goodyear paying each worker a lump sum of R100,000.00, doubling the initial offer.
The union also outlined its thoughts on the broader risks facing manufacturing, and what government needs to do to protect the under-pressure manufacturing sector.
Numsa called on the government to increase tariffs across the automotive, tyre, steel, and engineering sectors in a bid to protect the country’s manufacturing sector.
Given that National Treasury has already passed the Public Procurement Act with the goal of supporting manufacturing and industrialisation, it is essential that National Treasury must move swiftly to introduce public regulations to implement this Act.
“This is critical if we are to use procurement as a tool to drive localisation and designation through our public procurement processes.
“NUMSA firmly believes that government must act without hesitation to protect what remains of our manufacturing base,” Jim said.
Numsa also drew attention to the fact that 65% of vehicles in the local market are imported with zero local content.
“Given the volumes of vehicles being brought in by brands with no local manufacturing presence, and thus no contribution to quality, living wage jobs, it is time for government to require that foreign brands seeking market access establish assembly plants in South Africa and employ local workers to manufacture vehicles and components.”
Jim said when the initial auto industry master plan was introduced in 2018, their analysis showed that even a 5% increase in localisation could translate into R30 billion in new component production opportunities.
He said instead of seizing these opportunities, the country is now scrambling to replace lost export markets such as last year’s R4 billion export market to the USA.
Government should therefore attach tighter conditions to the incentives it provides, making increased local content a non-negotiable step toward the 60% localisation target, while also continuing to pursue export opportunities,” he said.
The union urged SARS to crack down on transfer pricing and profit shifting, contending that such practices drain the fiscus and undermine incentives meant for job creation and local industry.
In steel, NUMSA called for stronger protection of primary production, including measures against cheap imports.
In an earlier statement, the company said that it was transforming its go-to-market strategy in the Europe, Middle East and Africa region to optimise its footprint and portfolio.
“As part of that transformation, Goodyear SA is launching a restructuring process in accordance with the provisions of the Labour Relations Act to address proposals regarding the closure of its manufacturing facility in South Africa and the realignment of certain sales, administration and general management functions.”
The Eastern Cape is already grappling with South Africa’s highest provincial unemployment rate, which is 41.9%.
The closure of the Kariega facility could have lasting effects on business confidence, household income, and regional stability.
Although Goodyear has not publicly detailed its reasons for the closure, experts believe the company is reacting to a perfect storm of adverse conditions.
These include global economic headwinds, rising operational costs, and increasing competition from low-cost tyre imports, particularly from Asia.