South African autoworkers seeking wage increases more than triple the inflation rate went on an indefinite strike on Wednesday, slamming the brakes on auto production in Africa's largest economy.
The powerful National Union of Metalworkers of South Africa (NUMSA), which represents 31,000 autoworkers, said it had rejected employers' offer of a 7 percent increase in the first year and a raise equal to consumer price inflation in the remaining two years.
The union is demanding a 15 percent wage increase, well above inflation, which was at 4.2 percent in July.
The employers should come on board because we have been negotiating with them for a period of more than two months now. Nothing has come out concretely out of those negotiations, union spokesman Castro Ngobese said.
NUMSA has asked an industry group -- which represents seven companies including Toyota Motor Corp, Ford Motor, Volkswagen AG and General Motors Co -- for a one-year agreement guaranteeing a 15 percent wage rise.
The other companies are Nissan Motor, BMW and Daimler AG's Mercedes-Benz division.
The South African unit of German carmaker BMW said its local plant was closed as of Wednesday until the strike was over.
There is no way we can build cars without workers. There is no contingency plan in place, said Guy Kilfoil, a BMW spokesman in South Africa, adding he hoped the strike will be resolved soon through the Automobile Manufacturers Employers Organization, industry group.
The Automobile Manufacturers Employers Organization said it had agreed to hold more talks.
We have agreed to a further negotiations session on Thursday in Port Elizabeth for the next day or two, said Chris Thexton, the group's chairman.
Thexton said carmakers have either shut plants or seen production reduced to a trickle.
I think the attendance levels or people reporting for duty despite the strike are up to 25 percent or even 35 percent in some cases, said Thexton.
Numsa said about 6,000 workers in tire manufacturing are not going to strike.
A strike could have a big impact on a South African auto industry that is already struggling to remain competitive and was poised for a recovery after two years of weak sales.
Motor vehicle production in South Africa is expected to hit 443,000 units in 2010 from 374,000 last year, according to the National Association of Automobile Manufacturers.
South Africa's government sees auto manufacturing as a key industry to help boost growth and jobs and has tried to help carmarkers build up exports.
Separately, unions representing more than a million South African public sector workers staged a one-day strike on Tuesday, threatening an extended labor stoppage this week.
The unions have set a Thursday deadline for the government to reach a deal.
(Editing by Jon Herskovitz and Hans Peters)