NEW YORK - The decision by General Motors Corp. to
sell its South African car and truck assembly plants marks a turning
point in the tre nd of U.S. companies pulling out of the racially
torn country, analysts say.
In what could mirror that argument, IBM Tuesday announced that it
also planned to sell its South African subsidiary to local interests.
The world's biggest computer company also cited political andeconomic
factors in making its decision.
Roger B. Smith, chairman of GM, in the past has been one of the
principal proponents of maintaining an American business presence in
South Africa as a way to keep pressure on the Pretoria government to
dismantle its apartheid policy of racial separation.
The announcement Monday that GM will sell General Motors South
African Ltd. was interpreted by some anti-apartheid activists as an
admission that the strategy had not worked.
In explaining the decision, Smith highlighted the financial
uncertainty of doing business in South Africa while noting that there
were social and political considerations as well.
""GMSA (General Motors South African Ltd.) has been losing money
for several years in a very difficult South African business climate
and, with the current structure, we could not see our operations
turning around in the near future,'' Smith said in a prepared
GM, the largest U.S. automaker, has operated in South Africa since
1926 but the two plants it has there account for only a minor
fraction of its total assets.
Its 2,800 employees at the two plants that assemble cars and
trucks make GM the second biggest U.S. employer in South Africa
behind Mobil Corp., according to the Investor Responsibility Research
Center, a private, non-profit watchdog group in Washington.
The pace of U.S. companies leaving South Africa has gained
momentum in recent years largely because it has become unprofitable
to operate there amid the firestorm ignited by apartheid.
Thirty-nine U.S. companies withdrew from South Africa last year, a
big jump from seven in 1984, according to the group, which has
studied U.S. businesses and their labor practices in South Africa
So far this year, 22 companies have pulled out, and six more,
including GM and recently Coca-Cola Co., have announced their
intentions to do so, the group said.
Some anti-apartheid activists praised GM's move and said it could
encourage other U.S. companies to abandon their South African
""I believe that General Motors' decision will be the straw that
broke the camel's back and the trickle of companies that have left
South Africa already will soon become a flood,'' said Timothy H.
Smith, executive director of the Interfaith Center on Corporate
Responsibility based in New York.
He added, however, that he hopes GM seeks assurances that vehicles
and parts sold by the plants in the future do not end up in the hands
of South African police or military. GM has not permitted such sales
Others were less generous in their praise, saying divestment was
not enough. …