Car makers need labour stability, says BMW SA's new boss

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"Our relationship is as good as ever with the National Union of Metalworkers of SA," said Abbott, who was speaking at an event to celebrate the one- millionth BMW 3 Series produced in SA.

However, he did say that labour relations needed more work, stressing that car makers "must have a stable environment".

Vehicle manufacturers will enter into official negotiations with the unions next year over a labour deal, but Abbott suggested that initial discussions should begin about the middle of this year.

An area of concern to vehicle manufacturers is the problem of tier 2 suppliers - those that supply the major suppliers, which then supply the original equipment manufacturers (OEMs).

Labour disputes between unions and tier 2 suppliers have caused disruption in the industry in the past, even forcing plant closures in spite of agreements at the tier 1 and OEM stages. "Tier 1 suppliers must manage the tier 2 suppliers," Abbott said.

Last year, the South African automotive industry exported 156,569 passenger cars, up 2% on 2013 and in spite of numerous economic challenges in the local environment and pressure from the global supply chain.

A protracted labour strike, continual electricity supply problems and issues in the supply chain all raised concerns.

"We have to work around Eskom," he said. "We are trying to pre-empt the issues."

In this regard, BMW SA was constructing a green energy producing facility that would generate between 25% and 35% of the company's required energy. "Electricity is our biggest issue, followed by labour," Abbott said.

BMW SA was a key cog in the global supply chain of its parent company, he said.

The company's exports rose 17% last year and the one-millionth 3 Series is destined for a US customer. The US has been crucial for the export programme of the South African operation, which also exports to China and Korea.

"The Rosslyn (Pretoria) plant is a very important one for BMW," Abbott said, and he wanted to see another million cars produced in SA.

Harald Krüger, chairman of BMW SA and a member of the management board of BMW responsible for production, said: "Globalisation has been an inherent part of our corporate strategy for more than four decades. Established in 1973, plant Rosslyn is the BMW Group's first foreign plant and represents a cornerstone of our global production network with presently 30 sites in 14 countries. To this day, the South African production site remains a vivid example of a successful market entry through local production."

The future of the plant has been questioned in recent years, particularly after an announcement that BMW SA had lost out on a bid to build a new product line locally.

However, the future of the production operation in SA was definitely secure, said Abbott, which is vital at a time when the Nigerian government is implementing its own version of SA's Automotive Production and Development Programme, which has attracted manufacturers such as Nissan to establish new manufacturing facilities in the West African country.

"We have no plans to go to Nigeria at the moment," he said, adding that the company did have to look at the wider African continent for future strategy. It has expanded production at Rosslyn through the implementation of a permanent third shift last year, similar to that established by Mercedes-Benz at its East London plant.

Skills requirements for the future remained a concern, Abbott said: "We have to develop the apprentices of the future."

To this end the company is not only upgrading its training facility this year, but like Imperial is looking at working more with pupils in schools to attract them to work in the automotive industry.

Source: Business Day