Ford South Africa to Retrench Nearly 500 Workers Amidst European Demand Slump
Ford South Africa has announced plans to retrench nearly 500 workers at its manufacturing plants in Silverton, Pretoria, and Struandale, Gqeberha. The decision comes as the company faces a sharp decline in European orders for its popular Ranger bakkie, impacting its South African operations.
Reasons for the Retrenchments
The retrenchments, affecting 474 employees, are primarily driven by new UK tax rules that make double-cab pickups more expensive and weaker-than-expected demand for the plug-in hybrid Ranger model. While local sales remain stable, the export slump has forced production cuts at facilities operating below their 200,000-unit annual capacity. The changing tax laws in the UK, a key market for the Ranger, have significantly impacted demand.
- UK Tax Changes: Double-cab pickups are now taxed as passenger vehicles, increasing their cost.
- Hybrid Demand: Sales of the plug-in hybrid Ranger have been underwhelming in Europe.
- Production Capacity: Plants are running below capacity despite steady local demand.
Ford's Operations in South Africa
Ford South Africa plays a crucial role in the country’s automotive sector, employing thousands at its Silverton and Struandale plants. The Ranger bakkie is a flagship product, primarily produced for both domestic and export markets. In 2021, Ford invested R15.8 billion to boost production for exports, particularly to Europe and the UK, with the goal of establishing South Africa as a global hub for the model. The current retrenchments mark a significant shift in the company's plans.
Impact on Workers and Union Response
The retrenchments will directly affect 474 workers – 391 operators at Silverton, 73 at Struandale, and 10 administrative staff. Unions like NUMSA have voiced deep concerns over the impact on workers, calling for urgent talks to explore alternatives such as retraining or reduced hours. Solidarity, another union, also fears the possibility of further cuts in the auto sector. Ford has commenced consultations with unions under section 189 of the Labour Relations Act to negotiate fair packages.
Ford's Perspective and Future Outlook
Ford SA spokesperson Minesh Bhagaloo stated that the decision was difficult but necessary due to market changes. The company affirms its commitment to South Africa and hopes to recover as markets adjust. Ford is exploring options to support affected staff, including redeployment or skills training. Despite the current challenges, Ford maintains that it has no plans to close its plants in South Africa.
"As a consequence of that, people have unfortunately reduced their volume. So that’s had a big impact in terms of our European orders," - Neale Hill, President of Ford Motor Company Africa, told Reuters.
Union Reactions and Calls for Intervention
NUMSA spokesperson Phakamile Hlubi-Majola described the news as “devastating” and urged government intervention to save jobs. Solidarity’s Dirk Groenewald echoed concerns about wider sector cuts, advocating for discussions on preserving positions. Both unions aim to investigate options like short-time work or increased export initiatives to mitigate the impact of the job losses.
| Factor | Impact |
|---|---|
| UK Tax Changes | Reduced demand for Ranger bakkies in the UK |
| Hybrid Ranger Sales | Weaker-than-expected sales in Europe |
| Production Capacity | Plants operating below full capacity |
