Transport Strike Threatens South African Exports (Update2)

By Mike Cohen and Nicky Smith

May 10 -- Workers at South Africa’s state-owned transport company, Transnet Ltd., started an indefinite strike today, potentially halting shipments of iron ore, ferrochrome, fruit and the coal that fires many European power plants.

Members of the South African Transport and Allied Workers Union, who started the strike at 6 a.m., are intimidating workers in other unions, forcing the closure of ports and rail lines, said the United Transport and Allied Trade Union, which will decide whether to join the action tomorrow.

“It’s getting very, very violent,” Utatu President George Strauss said by phone from Johannesburg. “If all this intimidating is going on, our members are saying they won’t come to work.”

South Africa is the largest supplier of coal to European power plants, the world’s biggest exporter of ferrochrome, used in the production of stainless steel, and has a $1.2 billion fruit industry. While Richards Bay Coal Terminal is privately operated, the trains that supply the terminal and the bigger port in which it operates are managed by Transnet.

Coal “is being loaded as per plan” onto ships at Richards Bay, said Raymond Chirwa, the terminal’s chief executive officer, said in an interview today. Operations are “not affected by the strike,” he said.

The terminal had stockpiles of 4.62 million tons of coal as of April 30 and Transnet planned to close the rail lines to the port for 10 days as of today for maintenance irrespective of the strike action.

‘Crippled’

Satawu said railways and ports are not operating and that it was unaware of any violence. Satawu represents about 18,000 of Transnet’s 54,000 workers, while Utatu represents 21,000.

“If people are being intimidated they must go to the police,” spokesman Robert Mashego said by phone. “We don’t condone any violence and condemn it.”

Transnet spokesmen John Dludlu and Mboniso Sigonyela didn’t immediately respond to voice messages left on their mobile phones.

“Coal and iron ore exports, and the distribution of fuel, and the supply of gas and bunker fuel to airlines and shipping lines could be crippled,” Neren Rau, chief executive officer of the South African Chamber of Commerce and Industry, said on May 6. “The resultant reputational risks to South Africa as a reliable trading partner would be incalculable.”

Pay Claim

Utatu suspended action until May 11 while it consults its members on Transnet’s latest pay offer, General Secretary Steve Harris said. It may join the strike on May 12.

The unions are demanding a 15 percent wage increase while the company is offering 11 percent. South Africa’s inflation rate was 5.1 percent in March.

Carmakers such as Volkswagen AG, General Motors Co. and Bayerische Motoren Werke AG may also be affected by the strike.

BMW’s South Africa plants are operating normally, Guy Kilfoil, the company spokesman, said today. The carmaker’s next shipment out of the country isn’t scheduled until May 19, he said.

“Our biggest concern is the ports,” Kilfoil said. “We are much more reliant on inbound imports for components.”

The company would use road transport to move cars to the port of Durban if necessary, he said. Cars are normally transported by rail.

Mercedes Benz South Africa was able to bring a shipment of Mercedes C Class cars to the U.S. forward by a day, and the second of two ships left the port of East London yesterday, Annelise van der Laan said in an interview today.

Retirees

“Any industrial action at South Africa’s ports and rail infrastructure would be extremely damaging to the automotive and associated industries,” David Powels, president of the National Association of Automobile Manufacturers of South Africa, said on May 5. “Strike action would close all the assembly plants within a matter of days with a massive cascade effect.”

Transnet retirees, trainee staff and managers have been called on to step into positions left vacant by striking workers to keep some services going, said Pradeep Maharaj, the company’s group executive for human resources.

Plans for iron ore to be loaded on to ships calling at the west coast port of Saldanha have been made, though loading may be slower than usual, he said.

The strike is also a blow to fruit exporters. “We’re harvesting Pink Lady apples and navel oranges now, if there is a strike it will be a huge problem,” said Gielie van Aarde, chief executive officer of Freshgold SA Exports Ltd. The company exports 36,000 metric tons of fruit a year to markets in east and West Africa, Ireland, Italy, Germany, Russia and the Middle East. “We can’t have stoppages at the harbor. It’s not like a production line. We are working with nature.”

The strike may add to South Africa’s 25.2 percent unemployment rate and stifle growth that resumed in the third quarter of last year after the country’s first recession in 17 years. The economy shed 870,000 jobs in 2009 and a further 171,000 in the first three months of this year.

Source: http://www.bloomberg.com/apps/news?sid=aOvuO8QQ2yks&pid=20601087

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