Newspaper article THE JOURNAL RECORD

GM Decision May Open Gates for Pullouts from South Africa

Newspaper article THE JOURNAL RECORD

GM Decision May Open Gates for Pullouts from South Africa

Article excerpt

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 statement.

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 since 1972.

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 dealings.

""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 since May.

Others were less generous in their praise, saying divestment was not enough. …

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