Mercedes-Benz South Africa Limited (MBSA) has announced the initiation of a consultation process aimed at restructuring its manufacturing operations at the East London Manufacturing Plant, a move that could potentially affect 700 jobs. The restructuring involves a shift from the current three-shift operation to a two-shift model.
In a statement released on June 13, MBSA outlined the various challenges that have beset the automotive industry in recent years, which have also had a significant impact on MBSA and its network of suppliers. The company cited worsening macroeconomic conditions and persistent difficulties with port operations as key factors.
The announcement further highlighted that consumer confidence has been adversely affected by several economic pressures, including exchange rate volatility, stagnant household incomes, escalating fuel prices, and rising costs associated with energy and logistics.
MBSA has taken several steps to mitigate these challenges and enhance the performance of its manufacturing operations, such as implementing cost-saving measures and pursuing efficiency gains. Despite these efforts, the company acknowledges that the current business environment remains difficult, prompting the need for additional measures to secure the future viability of its manufacturing operations.
The company is embarking on the consultation process as stipulated by Section 189(3) of the South African Labour Relations Act (LRA). This legal provision mandates employers to provide written disclosure to their employees or their representatives, detailing all pertinent information, including the rationale for the proposed retrenchments, the consideration of alternatives to layoffs, and the reasons for dismissing those alternatives.
Depending on the results of the consultation process, MBSA anticipates that around 700 employees at the East London Manufacturing Plant may be impacted by the retrenchments and the shift to a two-shift operational model.
MBSA has indicated that the Section 189 consultation process may lead to a reduction in the workforce through various means, including early retirement programs, voluntary severance packages, and natural attrition. The company is committed to engaging with affected employees and their representatives throughout this process.
