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Cars and car parts make up more than ten percent of South African sales abroad, making them the largest export sector, worth more than gold and mining combined.

A year ago, analysts saw growth and foreign investment into the sector as a major source of jobs, potentially cutting South Africa’s high unemployment, nearly a quarter of the workforce now.

But as the global economic crisis has taken hold, export markets in Japan, Europe, and the United States have collapsed.

Nico Vermeulen, National Association of Automobile Manufacturers of South Africa (NAAMSA)

Things have changed dramatically in the last four or five months as the impact of the global financial and economic crisis also impacts on South Africa. Export sales this year will be down about 30 to 35 percent in volume and also in value terms.

In a 15-month period, the vehicle manufacturing industry had shed 5,000 out of 35,000 jobs, about 15 percent of its workforce, he said.

Easing slightly the crisis’ human costs, the South African government is spending more than 20 percent of its economic stimulus on social security measures and twelve percent on welfare grants.

In the meantime, workers and employers have undertaken a lengthy social dialogue to find other alternatives to job cuts, such as cutting the working hours instead.

Vic van Vuuren, ILO Office in South Africa

We are a highly unionized environment and we are finding that a lot of the negotiations between employers and workers has already happened, is ongoing, and is about minimizing job losses.

South Africans throughout the country are hoping the global economic crisis will not push high unemployment even higher. But these measures will mean their car manufacturing industry is well positioned when the economic crisis ends.