Mercedes scrutinises SA labour relations

While a final decision is years away‚ the German car manufacturer is considering expanding the product line at its East London plant to include an entirely new model‚ the GLK, a small SUV that is popular in Europe but currently unavailable in a right-hand-drive version.

"It will be in the next generation of GLKs‚" Zimmermann said.

Such an investment would be "very long-term" for South Africa and would mean building a new body shop and employing and training hundreds of new staff.

However‚ Zimmermann said Mercedes was watching the labour situation in South Africa during the imminent negotiations between manufacturers and the National Union of Metalworkers of South Africa (Numsa).

He says the outcome of these negotiations will influence Mercedes' decision on GLK production in South Africa.

Zimmermann said the Mercedes-Benz team that visited South Africa last year to assess the East London plant's capacity to efficiently expand production did so as events at Marikana mines near Rustenburg unfolded, leaving 34 strikers and about ten police officers and security personnel dead.

Numsa wants 20% wage hike

Meanwhile, Numsa told reporters it would enter into negotiations with the Automotive Manufacturers Employers Association next month and demand a 20% across-the-board wage hike for its workers. This is way ahead of inflation currently estimated at just less than six percent.

The demand‚ which usually is made behind closed doors within the collective bargaining process‚ took the employers' association by surprise and it says this suggests the union is in combative frame of mind.

Numsa's deputy general secretary Karl Cloete said on Monday (29 April) Mercedes had "no need to fear" the union and its "track record speaks for itself".

"The car manufacturers have, from day one, been accustomed to collective bargaining. Our industrial relations in this sector are well established and manufacturers are accustomed to negotiating with Numsa‚" he said.

Cloete said the union welcomed the potential investment.

Mercedes-Benz's possible expansion in South Africa comes in the context of the rapid improvement of efficiencies at car factories globally and is only possible because of startling productivity improvements at the East London plant where productivity has risen by 30% since 2008.

Azar Jammine‚ chief economist at Econometrix‚ said if production at the plant in East London increased to the numbers Zimmermann had mentioned‚ it could constitute a 10% increase in passenger vehicle production in South Africa making it highly significant.

Jammine said this would have huge implications for employment at the plant itself‚ but provide knock-on benefits downstream for other suppliers.

Mercedes-Benz employs about 2‚800 people at its East London plant and recently embarked on a recruitment and skills-training drive to prepare the workforce for production on the W205.