MyPE

Community Business Directory, Event Listings, News and Views from Gqeberha, Nelson Mandela Bay

GMSA and Isuzu Motors Announce Future Plans for Operations in South Africa

By

Editor: We stopped singing “Braaivleis, Rugby, Sunny Skies and Chevrolet!” a long time ago.

Read between the lines below whilst contemplating the devastating effect that the ‘sale of GMSA to Isuzu’ by GMSA will have on our local economy.

For pointers on that let’s travel back in history to June 1986 when Ford Motor Corporation closed it’s remaining assembly plant in Port Elizabeth immediately putting 950 workers on the streets to make the total job loss at more than 2 200. In the years from 1982 to 1986 more than 6 000 motor industry workers were retrenched in Port Elizabeth with over 35 000 workers in the motor assembly, components and retail industries losing their jobs in the period 1985 to 1986. The loss of revenue to the city was devastating and estimated at 8% of Port Elizabeth’s economic output. To this day there are people affected by the Ford disinvestment that will not buy any Ford product. I well remember that my late father – an electrical contractor – was also directly affected in the aftermath and had to place his employees on short time.  

Related: Devastating news from GMSA for Port Elizabeth

Mark my words: What is going to happen is that all the employees who are retrenched/made redundant will have to re-apply for their jobs and not automatically continue in employment for Isuzu.

General Motors and Isuzu Motors today announced their respective future plans for the Isuzu, Chevrolet and Opel brands in South Africa, subject to local regulatory requirements.With this announcement, Isuzu Motors intends to purchase GM’s South African light commercial vehicle manufacturing operations and strengthen its presence in the market. GM intends to cease local manufacturing and selling Chevrolet vehicles in the domestic market by the end of 2017. Isuzu is not a GM brand, but GMSA has built, per agreement with Isuzu Motors, the Isuzu KB one-ton pickup in South Africa for more than 40 years.

GM South Africa (GMSA) sells the Opel, Isuzu and Chevrolet brands in South Africa.

“After a thorough assessment of our South African operations, we believe it is best for Isuzu to integrate our light commercial vehicle manufacturing operations into its African business,” said Stefan Jacoby, GM executive vice president and president of GM International. “We determined that continued or increased investment in manufacturing in South Africa would not provide GM the expected returns of other global investment opportunities.”

Isuzu announced it intends to:

  • Purchase the Struandale manufacturing plant and GM’s minority shareholding in Isuzu Truck South Africa (Pty) Limited to continue manufacturing the Isuzu KB and medium- and heavy-duty commercial trucks in Port Elizabeth. This is subject to competition regulatory approval;
  • Assume control of GM’s Parts Distribution Centre and Vehicle Conversion and Distribution Centre;
  • Set up its own dedicated dealer network to market, distribute and service light commercial vehicles for existing and new Isuzu customers.

“We are committed to the South African market,” emphasized Haruyasu Tanishige, senior executive officer for the Sales Division of Isuzu Motors Ltd. “The integration of our light commercial and medium- and heavy-duty commercial business will strengthen our base to grow here. We will do this through our focus on providing outstanding aftersales and customer support, establishing close relationships with our local partners and expanding our business.

“Isuzu is building a strong base to grow on the African continent in the long term. Evidence of this is our recent purchase of GM’s 57.7 percentage shareholding in its East African operations, which has given us management control of the company. Integrating the South African light commercial vehicle operations into our business is the next step in laying the foundation for our growth plans in the future.”

Isuzu vehicles have had a presence in South Africa since assembly began over 44 years ago. For the past four years, Isuzu has occupied the number one position in the medium- and heavy-duty commercial truck segment of the South African market.

GM South Africa announced its plans to:

  • Cease the manufacture and supply of Chevrolet vehicles to the domestic market by the end of 2017, subject to consultation with employees and unions;
  • Continue to provide service and parts support for Chevrolet customers.

Following the recent announcement of the sale of Opel/Vauxhall to the PSA Group, GM continues to work with PSA to evaluate future opportunity for the Opel brand in South Africa. Importantly, existing Chevrolet and Opel customers will continue to be supported in the market.

GM South Africa President and Managing Director Ian Nicholls said: “These decisions were not made lightly. We appreciate the support that our employees, customers, dealers, suppliers, the government and other key stakeholders have given us over the many years that we have operated in this country. We will manage the transition as smoothly as possible.

GM South Africa informed employees and unions of the announcements this morning and will begin the formal consultation process with them immediately. GM South Africa has established support centers for employees.

GM South Africa will also work closely with affected dealers on a robust transition plan. Customer support center resources will be expanded and all warranties and service agreements as well as ongoing service and parts requirements for all vehicles will continue to be honored.

Leaving South Africa

The decision to discontinue GM’s operations in South Africa was driven by global business considerations and not local economic and political considerations, commented GM International VP Ritch Schaafsma.

GM International president Stefan Jacoby added that “continued or increased investment in manufacturing in South Africa would not provide GM the expected returns of other global investment opportunities”.

“As the industry continues to change, we are transforming our business, establishing GM as a more focused and disciplined company,” said GM chairperson and CEO Mary Barra. “We are committed to deploying capital to higher return initiatives that will enable us to lead in our core business and in the future of personal mobility.”

Production

GMSA produces the Chevrolet Spark small car, the Chevrolet half-ton bakkie and the Isuzu KB one-ton bakkie in Port Elizabeth.

Production at the plant reached around 31 000 units last year, down from 41 209 in 2015.

GMSA has been building vehicles since 1926.

Nicholls said Spark and Chevrolet half-ton bakkie production would “end in the coming months”.

GMSA sold 1 203 Chevrolet passenger cars and light commercial vehicles in South Africa in April. The company sold 1 049 Isuzu KB bakkies in South Africa in April, exporting 314 units.

ITSA sold 257 trucks in South Africa in April.

Nicholls noted that GMSA would need to be “right-sized” as it became IMSA.

He said he informed the 1 500 employees of the Port Elizabeth operations on Thursday morning of GM’s decision to sell its South Africa operations.

Editor: The rot started on Monday 6 March 2017 which marked the end of an 88-year era as General Motors announced that it had sold Opel, along with its UK sister brand Vauxhall, to the PSA Group, which owns Peugeot and Citroen. The deal, worth 2.2-billion euro (or R30.4bn), will see PSA become Europe’s second largest carmaker and the company expects the resulting synergies to eventually save in the region of 1.7bn euro (R23.3m).

At the time the question was asked but what are the implications for South African consumers?

More to the point the questions should have been:

  • What are the implications for GMSA and it’s continued viable existence? AND
  • What are the implications for it’s employees?
  • What are the implications for the economy of Port Elizabeth?
The following two tabs change content below.
My Twitter profileMy Facebook profileMy Google+ profileMy LinkedIn profileMy Flickr profileMy Pinterest profile

Alan Straton

Chief Cook, Bottle Washer and Broom Mechanic at MyPE
Passionate about Port Elizabeth and definitely NOT packing for Perth. Alan's ethos is epitomised in the words of Nelson Mandela; "I have fought against white domination and I have fought against black domination. I have cherished the idea of a democratic and free society. If need be, it is an ideal for which I am prepared to die." See more articles by Alan.