EDITORIAL OPINION

Poker with robots

AT A GUESS, motor industry employees should take the best offer they can get by about Wednesday. After that the odds are likely to start stacking up against them.

The atmosphere of labour negotiations often resembles a game of poker, with two grim-faced players trying to raise the stakes without giving away the weaknesses of their hands. In poker the stakes go up the longer the players hold out. If this strike lasts more than a few days, the union will be the losers. So will the unemployed and the country.

When the strike began yesterday, the union was demanding 12% and the employers' offer dropped from 8% to 7,5%.

Again at a guess, the critical moment can probably measured by lost production. When that gets beyond the number of units which can be caught up within a reasonable time -- say about a month -- the manufacturers would begin to suffer serious sales losses. From then on they might begin planning their departure.

In the local example, DaimlerChrysler SA has reached its daily production target of 200 units for the C-Class Mercedes-Benz. Quality is also up to standard. But the model is so popular there is a waiting time of several months before any new order is delivered, and the costs per unit from East London are still the highest of all the plants.

This sounds unlikely against claims by the National Union of Metalworkers of SA (Numsa) that the strike would continue until the companies improved on "a pathetic slave wage."

After the 8% increase, this wage would amount to a minimum of R3365 a month and an average of R4350, according to the Automobile Manufacturers Employers' Organisation (Ameo). In addition, Ameo says, workers receive another 40% in fringe and other benefits, and they have been able to increase their wages on average by another 3% a year by increasing their skills.

"The wages paid by the auto industry are the highest in the South African manufacturing industry and are well above those paid in most developing countries," Ameo says. The problem is that they look poor in comparison with wages paid in industrialised countries, where the cost of living is also very much higher. Lower labour costs are among South Africa's few competitive advantages.

Again taking the example of DCSA, there are far fewer robots in the East London plant than there are in German, American or Japanese automobile plants. And robots never strike. As a result, manufacturing costs are higher here, risks are greater and workers do not have job options in other highly-skilled industries.

As Numsa's members raise the stakes, they will have to judge several risks: one is that the employers will opt to fill empty spaces with ever more robots; another is that the motor corporations will take their valuable contracts somewhere else.

South Africa's hopes of wooing other manufacturers, like Ramatex, in a slowing world economy, will depend on how Numsa plays this hand.