The US Auto Bosses And De-Industrialization Of South Africa
|The US Auto Bosses And De-Industrialization Of South Africa
WHY THE PUBLIC INTEREST TAKES A BACK SEAT
by Terry Bell
THE PUBLIC interest and the well-being of communities are all secondary when they come into conflict with the maximising of profits to shareholders of companies. That is a simple fact of life under our present economic system — and it is legally bolstered by precedent going back to 1919.
That was the year that the Dodge brothers — later makers of cars and trucks of the same name — won their case against Henry Ford in the Michigan supreme court. Ford had decided to reduce the price of his cars as a contribution to the community. Such a move would have eaten into the profits of the Ford Motor Company in which the Dodge brothers had a 25 per cent share.
The brothers took the matter to court — and won, with the judge ruling that the priority of any company is to maximise returns to shareholders. This week, in Pretoria, Judge John Murphy’s decision in the Vodacom matter was an echo of that 1919 judgement.
It was also a reflection of the the comment by the late Milton Friedman, who is widely regarded as the architect of the present — and now crisis-ridden — global economic system. He noted that company directors who prioritising social responsibility should be sacked on the spot since such action would contravene basic fiduciary responsibility.
“That’s exactly what it is: a victory for money,” says Cosatu spokesperson Patrick Craven. Cosatu, which opposed the JSE listing of Vodacom, now 65 percent owned by Britain’s Vodaphone, will discuss “further action” at the the federation’s executive meeting on June 1 and 2. There will also undoubtedly be some harsh words in alliance meetings since the communications ministry supported Vodacom against the union federation.
The concern of the unions is not only about possible job losses, but also about the ongoing drain of resources from South Africa. In this category is the much hailed “investment” of R30 billion by Barclays Bank to purchase of Absa.
From a union viewpoint, this was a case of “selling the family silver”. Barclays bought a going concern and, as a result, a greater flow of dividends goes abroad, adding to our already dangerously high current account deficit.
Most estimates are that Barclays will recoup its R30 billion in eight to ten years — and still own Absa as a future source of more profits. However, the classic case, quoted by National Council of Trade Unions president Joseph Maqhekeni is that of Sasol where 40 percent of dividends now flow to the United States alone.
Another constantly reiterated concern of the labour movement is the further de-industrialisation of South Africa. It has been pointed out that while manufactures accounted for 30 percent of GDP in 1980, they account for little more than 16 per cent today.
“Now we are faced with parent companies in the auto industry trying to protect jobs in their home countries or sourcing cheaper components from areas such as Brazil and China,” says National Union of Metalworkers (Numsa) spokesperson, Alex Mashilo. As a result, Numsa resolved at its recent special congress, to demand that domestically produced motor vehicles should contain 70 percent local content.
“That should be a condition for any loan or bailout from the government,” says Mashilo. The union also wants government to review its import tariff structure because “our tariffs are below even what the World Trade Organisation demanded.”
These demands all fly in the face of the proclaimed principles of free trade but parallel the subsidies and other protective measures practiced for decades by the industrialised world. In other words, all part of the same game all sides are continuing to play.
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