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------.,.,,,.----.... ~---------r-r---- ,.,_ .. ____ ,._ , .. -------7 U.S. Motor Industry in J

South Africa: FORD, GE~ERAL MOTORS and CHRYSLER

They're our South African soldiers. One of them may be your son or your husband. Or the boy from nett door.

Nation-wide, Qievrolct Dealers believe we can never do enough for them. So in conjunction with the South African Army FW1d we arc launching the 'Esprit de C.Orps' campaign.

This i~ what happens to your Rand when you buy a ticket. It will help the Fund look after

by KareFl Rothmyer

the future for South African soldiers. It will provide security for theii: families should the unc:xpcctcd happen. And financial assistance if they're injured or disabled. It will help the Fund build rest and rehabilitation centres so they C3II relax when they come home on leave. And help thC{ll with further education.

Chevrolet Dealers nave also added another reason for talting pan in the campaign.

Every time you buy a ticket you have the chance of winning a brand new Oicvrolct A prestige Caprice, a luxurious Golden Anniversary 4100, or the exciting new Nomad.

Tickets will beon sale by approved sellers and at all Oievrolct shOWTOOJru.

These men never say 'No' when called upon-and you?

Inassociationwith241 SouthAfricanChevroletDealers m:i■'Y

The Africa Fund• 198 Broadway• New York, N.Y. 10038 • (212)962-1210

The Africa Fund wishes to express its thanks to the Interfaith Center on Corporate Responsibility for its assistance in preparing this study.

On the cover: This ad offered three Chevrolet models as prizes in a contest sponsored by Chevrolet dealers to raise money for members of the South African army. General Motors declined to accept any responsibility for the contest or the ad, which ran in the Rand Daily Mail on May 5, 1976, or to criticize the action of its dealers.

INTRODUCTION

Ford, General Motors and Chrysler constitute an important economic force in South Africa. Together, their investments total about $300 million, or about 17% of all US investment in the country, and their assets are valued at approximately $500 million. The three account for about one-third of all motor vehicle sales, and for the employment of more than 11,000 people. Chrysler, by merging its South African operations into a new, South African-managed firm in 1976, provided the nucleus of what is now the country's largest motor company.

The US firms also are important from a strategic point of view. They routinely supply heavy trucks, vans and other vehicles to the Defense Ministry and the police, and, in the event of warfare, their plants could be commandeered to serve military needs.

The companies talk a great deal about improving the lives of their African employees. Reverend Leon Sullivan, a member of the board of GM, was responsible for developing a set of principles which pledge companies to work toward better conditions for their African workers. GM and Ford have been among the principles' leading supporters. Henry Ford said at the time of a visit to South Africa in 1978 that his company now was spending three times as much on training as it had only two years prior.

The companies also insist that they are opposed to apartheid and that they are doing all they can to eliminate it. GM has stated that changes in apartheid constitute the "single most important factor" in the creation of a more promising investment climate in South Africa, while Ford says it has urged the South African government to "repeal all forms of racial discrimination" found in labor laws. The US firms' actions, however, frequently seem at variance with their public pronouncements. Between

1976 and 1978, when the South African economy was in a downturn and black protest was on the rise, GM laid off more than 40% of its African workers. A Ford employe, questioned in 1978 about the effect of the so­called Sullivan principles on working conditions, reported that "nothing has happened." Two secret GM memos written in 1977 spell out how the company would cooperate with military authorities in the event of "civil unrest."

Such actions suggest that ultimately, the US firms come down on the side of the status quo, a fact which has prompted many groups in the US and elsewhere to call repeatedly for divestment. As the late Steve Biko said, "Heavy investments in the South African economy, bilateral trade with South Africa ... relate to whites and their interests and serve to entrench the position of the minority regime." By their presence, the US auto firms strengthen the system while profiting from it, and in so doing, they raise their stake in apartheid.

January, 1979

William Winpisinger, president of the nternational Association of Mach­inists, which has been critical of US business ties with South Africa, and John Gaetsewe, General Secretary of the banned South African Congress of Trade Unions, are flanked by demonstrators protesting US investment in apartheid.

TIIE MOTOR INDUSTRY IN SOUIH AFRICA

The Motor Industry's Role in the South African Economy The motor industrv in South Africa. as in the US. occu­

pies a central role in the economy. In addition to employing a large number of people, it has spawned a whole .set of suppliers and related industries which collectively have acted to spur technological development and boost gerwral economic growth. . ,. .

H.A. Van Hoogstraten. a member of the South African Parliament. noted in a parliamentary debate in 1977 that "the total motor industry is the catalyst for growth in this country. It is a measure of our economic prosperity and economic health ... we must build up this industry as an asset and allow it free rein to be one of the leaders in the boom which we hope may eventually come to the fore. " 1

The motor industry is the largest industry within the manufacturing sector of South Africa, 2 which had a Gross National Product of $31. 9 billion in 1976. 3 Spending at retail in 1976 on vehicles. parts and accessories was esti­mated at $i.4 billion', and as one example of motor manu­facturing 's widespread impact. in 1975 the industry spent almost $1 billion on goods and services. 5

Most of the growth of the motor industry has taken place since 1960. In I 975. there were more than two million cars in South Africa. double the number 15 years before. 6 Not surprisingly. most of those two million vehicles belonged to whites, who ha.ve the highest per capita vehicle ownership in the world outside the US. 7

According to Lou Wilking. GM managing director in South Africa. in mid-1973 there were eight cars per 1.000 Africans in the country. 40 per 1.000 Coloureds. (the nanw

1

given to those of mixed African and white parentage). 100 per 1.000 Asians. and about 400 per 1.000 whites. 11

The So:uth African government has acte_d as the major · force for expansion of the indtistry through its institution of

a local content program in 1961. Under local cbnterit regu­lations. an increasing percentage. by weight. of autos pro­duced in South Africa must be composed of domestically manufactured parts. In late 1973. the percentage stood at 6(>%. Plans call for putting into effect a local content program for commercial vehicles by I 930.

Various reasons have been advanced for the introduction of the local content program. the result of which has been to increase dramatically both outlays for plants and machinery and the number of domestic firms producing auto components.

Key among these has been the government's desire to make the economy invulnerable to foreign pressures. Con­cerned over a rise in world disapproval as a result of the 1960 Sharpeville Massacre in which 69 Africans were killed while peacefully protesting against the pass laws. South Africa determined to make itself self-sufficient in all impor­tant areas. These included vehicle production.

US auto firms have been more than willing to expend the vast sums needed to comply with South Africa's local content regulations. General Motors. in fact, has been de­scribed in the South African financial press as the chief "cheerleader" for the local content program. While the real reason for GM's enthusiasm may be economic-as a big company backed by plenty of money, it has been in a posi­tion to increase local content more readilv than its smaller competitors-GM chose to endorse the local content program in ringing patriotic terms.

1

John Rhame, the GM managing director. was quoted in 1975 in the Financial Mail, a major South African business publication, as saying that GM could reach 84% local con­tent on any vehicle. The article comments. "Ah, cry the others, so can we-but at what cost? And is it worth it? Yes, says Rhame, in the national interest it is worth it. " 0

The Motor Industry's R~le in South Africa's Defense Aside from its economic significance, the motor industry

in South Africa is viewed by the Pretoria government as highly important from a strategic point of view.

On a day-to-day basis. US and other motor firms produce many vehicles with both commercial and military uses. These include troop transport trucks, police vans. and four-wheel drive vehicles.

It is not known how much of the US firms' business­direct or indirect-consists of defense-related sales. Until t'ecently, the companies gave out no details on such sales and even though they now have released limited informa-

, tion, it is likely that the figures given represent only a por­tion of the true sales total.

Prior to 1978, according to a GM letter to the Investor Responsibility Research Center, a private research group. GM supplied "in the area of 1500 units" annually to the police and military. 1° Ford told the Interfaith Center on Corporate Responsibility, a coalition of Catholic and Protestant religious groups, that between 1973 and 1977. it sold 128 cars and 683 trucks directly to the South African Ministry of Defense and 646 cars and 1.473 trucks to the South African police. 11

In the same month that a Ford official wrote that letter. the US Commerce Department, acting in accordance with State Department instructions. ceased granting licenses for the export of goods or technology directly to the South African police and military. The restrictions followed the imposition of a mandatory United Nations arms embargo against South Africa in November, 1977. The embargo was supported by the US.

The new regulations, which also forbade exports to per­sons or firms whom an exporter knows will resell to the police or military. are of concern to US motor firms because almost all vehicles made in South Africa contain some foreign parts.

Some time after the regulations went into effect, GM told 1RRGthat the restrictions were keeping it from supplying passenger cars to the military and police. since its cars con-

2

tain US-made parts. According to IRRC. "The company stated, however, that it has continued to supply commercial vehicles-primarily small trucks-to the security forces since these vehicles are assembled without any US-origin parts. " 12 This is further corroborated by a:statement made by GM officials to representatives of the United Presby­terian Church at a meeting in mid-1978 to the effect th~t GM was continuing to sell to both the police and militarv.

Ford reported to IRRC that as a result of the Comm~rce regulations. it had experienced "some loss of sales of US­origin trucks to certain agencies of the South African government." Ford said, however, that the effect of the cancellation was "marginal. " 13

The reasons for the limited impact of the ne,v regulations are not hard to find. For one thing. according to Commerce Department officials. 90% or more of the South African government's purchasing is done through a central authori­ty. similar to the US General Services Administration, rather than directly by units such as the army or police. Even more important, Commerce officials. who franklv admit that they are opposed to the new regulations. hav~ left it up to the companies to decide how much thev should do to ensure against their goods being sold or pass~d on to the military or police. 11

Moreover. there is nothing to prevent a US firm in South Africa from using US technology on hand before February 1 L the date the regulations were issued. to fill militarv contracts. And the regulations are weak enough to allow ~ US corporation to sell via a foreign subsidiary. meaning. for example. that Ford of West Germanv is not affected bv the ban. So. in fact. it remains permissible for Ford's South African subsidiary to produce a Ford car in South Africa. using imports purchased either from some Ford subsidiarv outside the US or from some other firm. and to sell that ca·r directlv to the South African armv. Presumablv. this is what GM is doing to build the sm;ll trucks and ·other ve­hicles which it told IRRC it is still selling to South African security forces. Thus. the impact of the Commerce regula­tions on US auto firms is minimal at best.

If the US and other motor firms are vital for the ongoing operations of the South African police and militarv. thev would be even more important in times of fnll-scaie wa;­fare. Such was the case in World War II. when Ford and GM plants in South Africa assembled 60.000 vehicles and other items of equipment for military use. 15

The key role of. the motor firms is well-appreciated in

Henry Ford, Ford Co. Thomas A. Murphy, General Motors Lee lacocca, Chrysler

South Africa. The Financial Mail noted in 1977 at the time of passage of the National Supplies Procurement Act, which empowers the government to dictate production to any company in times of national emergency: "It is the general impression that foreign-controlled firms supplying the Department of Defence could be commandeered if their parents instructed them to stop supplying goods which ( the government) needs. These go beyond arms and ammuni­tion: motor vehicles ... are among the strategic materials produced by foreig_n-controlled firms. " 10

In 1 %7. the South African Financial Gazette com­mented that "In times of emergency or war each (motor) plant could be turned over rapidly to the production of weapons and other strategic requirements for the defence of South Africa. " 17

I~ contrast. GM chairman Thomas Murphy maintained in a letter to Timothv Smith. executive director of ICCR. that it would take o~e to two years to convert its South African plants to military production. 18

Mr. Murphy's comments were made in defending two secret GM memos. prepared by GM's South African sub­sidiary. which indicate that the.company is well aware of its strategic importance.

The memos. made public in the US in 1978 by ICCR and the American Committee on Africa. state as a given as­sumption that in times of national emergency brought on bv "civil unrest." the South African government would a~sume a major role in operations. As a designated "Key Point," it is stated. GM operations at Port Elizabeth would automatically qualify for military protection. Government officials would doubtless impose production requirements and would take charge of plant security. the memos note. but "Unless civil unrest or industrial interruptions pre­cluded the plant from operating by reason of reduced sup­plies. withholding of labor. failure of transportation sys­tems or a combination of these factors. normal plant opera­tion is assumed." In other words. business as usual.

The sympathy of US firms for officials of the c1irrent government is further suggested by the companies' reported response to warnings by South African security police in the

3

Port Elizabeth area. where Ford and GM are located, not to employ relatives of Africans who have been detained or whom the police deem activists. "The firms have agreed not to hire such individuals." according to the Christian Science Monitor. and have agreed "not to fund organiza­tions that look after black interests. " 19

Ford and GM officials, queried about the report. say they have received assurances from their South African managers that it is false.

"Activists" in Port Elizabeth form a large part of the population: Steve Biko died of injuries sustained in the Port Elizabeth police station and. according to the Monitor. out of all individuals prosecuted in connection with the 1976 uprisings in Soweto and elsewhere. more than 1.400. or over half the total. have been from Port Elizabeth.

Of even more concern. perhaps. is the stance taken by Chrysler. which since 1976 has been a minority partner in a new company. Sigma. formed by Chrysler and Anglo­American. a giant South African firm. By this act. Chrysler abdicated responsibility for the products made in its South African facilities while still providing an impor­tant means of access to US technology. It has shown no indication of desiring any voice in the management of the new company and it can be assumed that Anglo-American would cooperate with its own government authorities.

The head of Anglo-American. Harry Oppenheimer. is well-known internationally for his pi1blic insistence that there must be wage increases and other improvements for Africans in South Africa. Mr. Oppenheimer, however. has never indicated that he would like to see anything other than a system of modified white supremacy.

In a speech before the US Foreign Policy Association in 1977. he said. "It is one thing for a foreign country to press South Africa to rid itself of an unjust system of government base.p on racial discrimination; it is quite another thing to seek to impose a simplistic system based on majority rule and a one man one vote as the only reasonable solution. " 20

Increasingly. of late. Mr. Oppenheimer has emerged as the leading voice of "thoughtful" opposition to any foreign economic pressure on South Africa.

Signs like this one in an old Chrysler plant are supposed to be coming down in GM and Ford facilities in keeping with efforts to end obvious discrimination.

The US Companies' Place Within the Motor Industry The South African motor industry traditionally has been

controlled by foreign firms among whom US companies hav~ been dominant. The first assembly plant in South Africa was built by Ford in 1923, with GM following in 1926. Chrysler did not begin production until 1958.

As late as 1958, Ford and GM owned about 70% of total assets employed in the motor vehicle industry23 and ac­counted for the vast majority of vehicle sales in the country.

In 1977, by which time Japanese firms in particular had made big inroads into the market, Ford and GM's position had been reduced, but together the two still accounted for more than 27% of auto sales and more than 23% of com­mercial sales. (See Table I.) Ford ranked number one in car sales, with the Ford Cortina the country's top-selling model. (For the first six months of 1978. Ford slipped into second place just behind VW. Together GM and Ford had 25% of the auto market and about 28% of the commercial market. 22

The dominance of US firms has now been broken by Sigma, which has grown rapidly since the Chrysler/ Anglo­American deal. In mid-1978. Sigma took over the South African operations of Peugeot-Citroen. with assets of $35 million. and shortly afterward. British Leyland merged its operations into a Sigma subsidiary, taking a 49% interest in the new concern.

With these moves, Sigma became the largest motor manufacturer in South Africa, with assets of nearly $230 million and as much as one-third of the auto market. 2 '

Looked at in the broader context of overall US invest­ment in South Africa, which was estimated by the US Com­merce Department at $1.8 billion in 1977. US auto firms account for close to one-fifth of all US investment in South Africa.

GM has reported publicly that its investments totalled about$ l 19 million at the end of 1977. 25 Ford reported pub­licly in early 19 18 that 1t had about $In million in invest­ments with another $8 million to be spent in 1978. 26 Chrys­ler's investment at the time of the Anglo-American deal was put at $,1S million by the company. 27

Employment and Working Conditions in US Auto Firms

The three U_S auto firms in South Africa employed well over l l.000 workers in mid-1978. (See Table II.) This com­pares with a total of about 3S,OOO for all motor vehicle

4

TABLEI

1977 Car Sales Total Sales % of Market

Ford 27,739 16.63 vw 24,960 14.97 Datsun 19,298 11.57 Sigma 18,549 11.12 GM 17,836 10.70 Others with more tnan 2% but less than 10%: Toyota/Renault, Peugeot/Citroen, British Leyland, United Car, Fiat, BMW, Alfa Romeo Total 166,766 100.00

1977 Commercial Sales Total Sales % of Market

Toyota 18,943 21.04 Datsun 18,807 20.89 Ford 11,519 12.79 Sigma 10,212 11.34 GM 9 676 10.75 Others with more tli

1an 3% but less than 10% of the

total market: VW, Leyland, Peugeot/Citroen, United Car · Total 90,037 100.00

-Financial Mail Jan. 20, 1978

manufacturers in December, 197621'. a figure which was

probably up to 40,000 by mid-1978. Of these more than 11,000 workers, about 3,000 are Africans. 3,500 are Coloureds, and 4,700 are \Vhites. There are a few workers of Asian ( primarily Indian) background.

Out of these totals, Africans and Coloureds account for only a fraction of white-collar jobs. At best estimate. there were at most about 30 Africans in such jobs in 1978. or about 1 % of total Africans employed. and about 100 Coloureds, or about 3.5% of Coloureds employed. This compares with a figure of about 3.000 whites, or close to two-thirds of all white employes.

African workers are last hired, first fired. While GM had 6:33 African workers in August 1976, by January 1978, fol­lowing a business downturn, that figure had decreased to

TABLE II: EMPLOYES OF US MOTOR COMPANIES BY RACE

African Coloured White Total

hourly salaried hourly salaried hourly salaried Company

GM (January/July 1978) 371 4 1341 40 782 1119 3,900 Ford (June 1978) 1244 19 1986 55 674 1305 5,376 Chrysler/Sigma (May 1978) 1345 5 95 5 200 500 2,150 Total 2960 28 3422 100 1656 2924 11,426

N.B. Totals in far right column are slightly at variance with broken-down figures for reasons cited below. - The GM total figure is from testimony given by John Holmes Jr., persor:rnel director, GM Overseas Operations Division, July 12, 1978, to the House Subcommittees on International Economic Policy and Trade and on Africa. The breakdown is based on GM January 1978 employment figures in the General Motors Public Interest Report 1977-78. Total employment at that time was 3,657. -Ford figures are those reported to the Investor Responsibility Resource Center, and published in IRRC's South Africa Review Service-Ford, November 9, 1978. Totals and breakdown are slightly at variance, presumably because they were computed at slightly different times. Also, Ford reported 11 Asian workers not included in this breakdown. -Chrysler figures are the author's estimates, based on sources including The Star, May 13, 1978 (which provided total African and Coloured employment), IRRC figures for 1975, and old company reports. These estimates relate to the period before the Sigma 1978 takeover of Peugeot-Citroen and British Leyland, and thus reflect as nearly as possible the composition of the Chrysler workforce before the creation of Sigma.

375, a drop of more than 40%. Wage patterns show that in the auto industry, as else­

where. African workers are at the bottom of the scale. In 1976. average monthly wages for whites in the total trans­port manufacturing industry were $635. This compares with $193 for Coloureds and $152 for Africans. 29

In April, 1978. the absolute poverty line in Pretoria was estimated at $163.30 a month. 30 This figure, called the Household Subsistence Level. (formerly the Poverty Datum Line), is calculated regularly by the University of Port Elizabeth. It provides for only the barest essentials of life for an African family of six. and makes no provision for such basic items as medical treatment or education, which is free for white children but not for Africans.

Sigma, whose Chrysler plant employing 1,300 Africans is right outside Pretoria, was paying its lowest level African workers just under $30 a week at the time of the April calculation. 31 This amounts to about $130 a month-well below the absolute poverty line. Chrysler has declined to give out recent information on wages and job categories. but judging from the past, most of Sigma/Chrysler's African workers are in the lowest-skill jobs. Thus it seems likelv that a substantial number of African employes of Sig~a/Chrysler were working for poverty line or sub­poverty line wages in mid-1978.

The poverty line in Port Elizabeth in April. 1978, was calculated at $157. 32 According to data supplied by Ford to IRRC. which compiles company progress reports on the Sullivan principles, Ford's entry level wage in June, 1978. was $200 and its average African wage was $233. 33

(Ford figures for 1976 supplied to IRRC are substan­tiallv at variance with those for the same period supplied to the ·senate Subcommittee on Africa in preparation for a report. US Corporate Interests in Africa, published in J anuarv, 1978. The figures supplied to the subcommittee indicat~d that more than 65% of Ford's hourly African workers were earning poverty level wages. The company

5

attributes the difference to a variety of factors. the most important of which, it says, is that the figures supplied to IRRC were prepared by its South African subsidiary. as opposed to the home office. and therefore can be assumed to be more accurate.)

For GM. the latest figures are for July, 1978. Based on testimony delivered before Congress by a GM official. 250 of GM's 400 African hourly workers at that time were making between $211 and $214 a month, with none lower than S21 l. 34

While these figures indicate that Ford and GM are paying above the poverty line, it must be remembered that the HSL is hardly a realistic figure. The researchers re­sponsible for arriving at the HSL calculate that what they call the HEL-the Household Effective Level-requires a budget of 150% of the HSL. By this measure, in April. 1978. an African familv of six in Port Elizabeth needed about $235 a month. Th~ majority of Ford and GM African workers did not earn this amount.

In the past, the US auto firms in South Africa repeatedly have claimed that government laws prevent their doing more to train and promote black workers and require them to maintain segregated facilities.

These laws include the Factories Act of 1941. mandating separate facilities, and a variety of laws, including the Industrial Conciliation Act, which reserve certain jobs for whites and set limits on African employment.

In fact. however, whenever it has suited their purposes, the firms have found no problem in seeking dispensations from, or in ignoring, those laws. As one example of this. in response to a growing divestiture campaign and other pres­sures in the US, both Ford and GM already have integrated many eating facilities and GM announced in mid-1978 that it planned to spend $4.5 million on its training and on new, integrated facilities for its workers.

As for job reservation, then-GM vice-president A.A. Cunningham noted in testimony before the Senate Subcom-

-j

Rev. Leon Sullivan: GM board member

mittee on African Affairs that under a 1968 agreement between the auto manufacturers and the white trade unions. certain jobs are reserved for whites but deviations can be made informally based on shortages of necessary labor. "In fact." Mr. Cunningham said. "so many devia­tions have been made since the agreement was signed in 1968 that its provisions have become largely obsolescent. ··35

Henry Ford, citing one example of what can be done in this direction. noted in a statement following his return to the US from a trip to South Africa in early 1978 that since 1968. at which time Ford was legally limited to employing 16S Africans. the company has received approval to in­crease that number to 1.863. 36

The companies have made much of the Sullivan prin­ciples as an indication of their commitment. Henry Ford said at a press conference upon his return from South Africa: "I think the Reverend Leon Sullivan had a better idea ... The Principles have helped GM to focus more ef­fectivelv on the issues involved with improving the condi­tions fo'r non-whites in (South Africa). " 37 Viewed from the US. however. the principles-which were cleared with the South African government arid which did not even include a pledge to permit black workers to organize until con­siderable pressure prompted the addition of such a clause in mid-1978-appear primarily to be aimed at deflecting criti­cism rather than producing change. (For further discussion of the Sullivan principles. see "Too Little. Too Late." by Jennifer Davis. The Africa Fund. 1977.)

That the US companies' efforts to improve conditions for African workers have been perceived by Africans, at least in the past. as less than adequate is attested to by a con­fidential memo written bv William Bowdler, then US Am­bassador to South Africa: in March, 1977. The memo, the subject of which was "Black Attitudes Toward Foreign Investment." noted that an embassy officer recently had visited Port Elizabeth and had held a confidential meeting with members of an unnamed workers' liaison committee which. from the context. appears to have been located either at Ford or GM.

According to Ambassador Bowdler, "Most of the workers complained of inadequate training. job reservation. lack of union status, arbitary promotions, abuse bv SA foremen and job insecurity ... Other com­munitv figures employed by motor·companies. also leaned toward withdrawal. Conceding that the immediate conse-

6

quence would be loss of US market share to foreign or local competitors. the main point. they claimed. was one of moralitv. In words of one student activist. 'just pull out ancl let us d;,al with the Japanese.' " 3"

During Henry Ford's January. 1978. visit to South Africa, a reporter for an American ne,vspaper asked. an African Ford employe how other company workers viewed the Ford Company's endorsement of the Sullivan mani­festo. According to the news account. the African Ford worker responded, "When the manifesto was announcf'd there was a general feeling of 'Good, this will force those white people in the management to do something for us.' But nothing has happened. Now, there's a lot of disap­pointment. People are saying, 'So, America hasn't got the power we thought it had' or 'They don't care after alL' " 39

Clearlv, Ford and GM have made some recent efforts to improve: But such steps have been taken only in response to great pressure, and they have been very limited. More­over. they do nothing to alter a fundamentally unjust, racially discriminatory system which assures that blacks will never be given equal treatment either politically or economically. The companies can attempt to evade certain laws, or seek dispensations from them, but as long as they remain, they are part of the apartheid labor system.

Why the US Companies Remain in South Africa 1977 was a very poor year for the motor industry in Sout,h

Africa. Car sales were down nearly 10% and commercial vehicle sales were down nearly 22% .10 It is estimated that the industrv as a whole lost $S5 million11 following a pre" vious subst~ntial loss the year before. GM reported that it barely broke even; Henry Ford reported that his company lost $8 million; and Sigma was reported to have lost about $~2 million. 12

Chris Griffith, managing director of Sigma, estimated in 1977 that industry capacity was two-and-a-half times cur­rent demand even based on a single-shift operation'3 and in 1978. Ford reported that it was running at only 60% of capacity.

Since 1971, return on investment in the auto industry has averaged a paltry 5.5'1ci. compared with S4r7o in the early I 960s and 19% in the second half of that de¢ade.H By con­trast, all US companies in South Africa reported an average return on investment of about 11 % in 1977 (vs. 12% in I 976) . 15 That means that the US auto firms did only half ~s well as US firms as a whole. Return on investment world• wide for all US firms in 1977 was just under 14%. meaning South Africa ranked below manv other countries.

But the US companies take ; long view in South Africa. One reason they stay, judging by their public comments, is that thev are convinced that the overall economic situation is bound to improve. Indeed, through 1978 there was a modest upswing in progress, though its strength and duration were impossible to predict.

The companies themselves are well-positioned to take advantage of this improvement. most particularly because of the shakeout now in process in the industry: the country has had too manv manufacturers for so small a market, and it appears likely. that the smaller, less profitable ones are going to be squeezed out. Chrysler's merge into Sigma and Sigma's subsequent takeovers of Peugeot-Citroen and British Leyland are part of this process, which stands to benefit the large. well-financed firms such as GM and Ford.

The US companies also recognize that they are in a posi­tion to serve as an export source, particularly for the

growing and potentially huge African market. GM, for example, is already exporting 1.000 vehicles a year.

There are other reasons for staying as well. The com­panies have substantial investments which they don't want to abandon or sell at a loss. Nor do they want to set a precedent of bowing to homefront pressure. It is interesting to note that GM left Chile after the Allende government came to power, citing impossible demands including the production of more parts locally.) .

It is also a fact that GM and Ford are engaged in a world-wide competition for new and expanding markets. In 1977, GM captured 46% of the US domestic market compar~d with 23% for Ford. But in the non-Communist world as a whole, GM had 8% to Ford's nearly 10%. Ac­cording to Arvid Jouppi. an American security analyst. "The world market is growing faster than the domestic market and for three generations Ford has outpaced GM abroad. As it strengthens itself overseas, Ford will become

GENERAL MOTORS

"We in the UAW don't believe that the hard-earned dues money of our 1.5 million members should wind up being used directly or indirectly to aid a country that practices such racist, repressive and undemo­cratic policies ... "

-Douglas A. Fraser, president, United Auto Workers, in announcing on March 3, 1978 that the UAW would withdraw union funds from banks and other financial institutions that participate in loans to South Africa.

History, Size and Reasons for Investment General Motors has been a major industrial power in

South Africa for many years. At the time of a 1975 survey bv the Financial Mail, GM ranked 17th in total ass~ts and s~les of all companies in South Africa and 34th in terms of employment.'

The_company began operations in South Africa in 1926. Currently, it has an auto assembly plant ~nd an auto manu-

General Motors plant at Port Elizabeth

7

more of a competitor domestically. "'16

Finally. there is the matter of the lucrativeness of govern­ment sales. While the extent of the companies' business with the police and military can only be guessed at. the firms' overall government business is clearly significant.

In a letter to ICCR in connection with I CCR criticism of GM's government sales. GM chairman Murphy wrote: "It would be impossible to maintain a viable concern in (South Africa), even as marginal as our business has been in recent years. without the small portion of government business which we do have. " 17

Management magazine noted in a discussion of South African motor industry competition: "A factor which must only be whispered about is the strategic one. Some auto­makers are undoubtedly locked into South Africa becat1se of lucrative defence contracts. which make it imperative to keep the auto business going and to maintain a public presence. " 1

"

facturing plant in Port Elizabeth and an engine manu­facturing plant and a locomotive plant in a nearby suburb. It produces several GM models including the Nomad, a utility vehicle; Bedford and Chevy trucks; buses; auto parts such as radiators and spark plugs; and locomotives. It also produces trucks from the line of the Isuzu company of Japan, in which GM holds a 35% interest. It was reported in mid-1978 that GM' s plans called for establishment of a separate bus and truck facility 2 but a company spokesman in Detroit said there are no plans for new facilities.

In 1977. according to testimony presented to Congress by John Holmes Jr .. a GM official, the company had sales of about S185 million: $156 million in vehicles and the rest in locomotives. earth-moving equipment and diesel engines. 3

Mr. Holmes also reported that GM's total investment in South Africa was about $119 million at the end of 1977, or about 7% of all US investment in South Africa. Subse­quently. the company announced plans to spend an addi­tional S4.5 million on training and on integrated facilities. 1

IRRC. in a report based on company information, esti­mated the value of GM's assets in South Africa at $220

million in 1976. 5 (Investment refers to actual outlays. e.g. monev for new machinerv. Assets-plants. machinery. etc._:tend to increase in val~1e over the years.)

As one indication of GM's impact on the local South African economv. in 1972 it was buving local components and services wor.th $35 million from 500 local suppliers. 6

Mr. Holmes told the congressional committees, in op­posing curbs on investment in South Africa. that GM South African purchases about $26 million worth of items a year from the US. accounting for 1 .200 jobs.

While GM remains a major factor in the motor industry in South Africa, in recent years both its relative position in the market and its profitability have seriously declined. In 1977. its share of the auto market was 10.7%. 7

• compared with 17.8% in 1969. 8

The company itself reported in its Public Interest Report 1977-78 that its operations have been "approximately break-even" over the past five years. And in response to a 1977 stockholder resolution regarding its South African operations;' GM said that it "has no present need for and has no intention of further expanding its productive capacity in South Africa." It cited changes in apartheid as "the single most important factor in the creation of a more promising investment climate."

In mid-1978. GM moved to improve its position in the South African market bv introducing a complete new range of passenger cars. Lou ~iilking. GM's managing director. described this move as intended to "bring back the good times for South African motorists and for GMSA and its dealers to take a more significant bite of the total car market. " 9

Wilking ~lso took the occasion to deny again that GM had anv intention of leaving South Africa. Previously. GM had said that its decision to remain "rests of its judgment that continued operation in South Africa is a prudent economic investment as well as the knowledge that. by its presence, the Corporation has been able to eliminate or mitigate many discriminatory practices normally associated with employment of Colored or Africans in South Africa. " 10

Ties to and Attitude Toward the South African Government

In the past, GM has insisted that it had no official knowledge of the final users of vehicles it sold to the South African government. In a letter to ICCR. chairman Murphy said. "General Motors does not sell directly to any military. para-military or police force in South Africa. However, General Motors, as do most other vehicle manu­facturers in South Africa. sells commercial-type vehicles to the centralized purchasing agency of the government." 11

Apparently GM did have at least some indication of its military sales. As previously noted, later in 1978 it told IRRC that it had been selling about l.500 units annually to the police and military. It told Presbyterian church officials it planned to continue sales that did not violate Commerce regulations.

It is known that the company provides police and trans­port vehicles for the Department of Prisons, among others. According to the banned South African Congress of Trade Unions, for more than IS vears GM has "had a huge con­tract to supply Bedford. trucks to the South African Defencf' Force. These trucks are the main means of transport for the army. " 12

The secret GM memos written in 1977 give a further

8

Chevy Nomad: Billed as a utility vehicle, the Nomad has obvious military uses.

indication of the size and importance of government, and partic1{larly. defense sales. One of the memos states: "GM South African has, for ei.ample-, been requested to supply vehicles such as the K25. K31, 4x4 LUV (various types of trncks-ed.) for Defence Force purposes and refusal to offer such might be interpreted as reflecting doubt on the motives of the Company. Such interpretation or a variation thereof could lead to direct loss of other government business and seriouslv affect GM South Africa's share of the vehicle market and very likely threaten its viability.';

The two secret GM memos. one written on May 6, 1977 by W .C. Mott. then managing director of GMSA, and the other on July 20, 1977, by L.H. Wilking, the new managing director. both addressed to D. Martin, regional director for Africa in the US. contain much additional information shedding light on GM's attitude toward coop­eration with South African authorities. Both memos were hand delivered from South Africa to Detroit to preserve their secrecy.

In the introductory section of the May memo, GMSA notes that its Port Elizabeth operation has been designated as a National Key Pqint, meaning that in an emergen~y it would be guarded by a citizen commando force.

Noting that all white South African males up to age 65 are liablP for military reserve service, the memo suggests that white personnel be encouraged to join local units. "It is envisaged, for example. that plant personnel could be en­gaged in a composite function, i.e. part normal work and part guard duty in such situation," the memo states.

Under related assumptions. the memo adds, "It is assumed that almost 100% of · White Employment at GMSA would not be party to creating or stimulating civil unrest ·and that the population groups would be African or Coloured." It concludes the Assumptions section by assuring the US parent that Africans in South Africa are unlikely to sustain their struggle for any length of time because they traditionally "lack purpose."

The memos further reveal that up to and including a time when GM plants would be guarded by military personnel and plant production dictated by the government, produc­tion would continue. Onlv in the event of an actual effort bv the Ministry of Defense· to take over total control of th~ plant would GM feel it necessary to examine the situation. In a full emergency, the memos state, " ... it would be fair to assume that ... the major elements of this industry would be taken over by an arm of the Ministry of Defence ... which would completely regulate output and coordinate it ,vithin the entire industrial effort."

-Bedford trucks, produced by General Motors of South Africa,. roll down the highway in a South African Army convoy.

Publicly. GM's parf'nt in the US has defonded the plans as iritendPd only to prf'SPrvP lifP and property. In a lf'ttf'r to GPorgP HousPr. Pxf'cutivP dirPctor of tlw American ·com­mittP(' Oil Africa. GM chairman Murphy Pxplainf'd that "To thP PxtPnt that coopE'ration with thP govf'rnnwnt is considPrPd in our conting-;'ncy plan. it is for purposps of aiding in controlling local civil unrPst or riot. " 13 Murphy went on to say. "It is apparPnt to us that manufacturing plants involvPd in such basic industries as fWtro]pum pro­duetion and rf'fining. mining primary mf'tals. transporta­tion. machinpry-industriPs which genf'ratP the lifrblood of any P_conomy-also assunw Pqually stratf'gic importancp in timP of PmPrgpncy. Any of our plants can bP _conyprtPd to war production as c!Parly dPmonstrated iri · the United Statesinl941." 13 .

In a latpr lrttPr to ICCR. Mr. Murphy said that the rnn­vPrsion process would take onp to two years. 1 '

As a further f'xamplP of GM's attitudP toward the governmPnt of South Africa. in 1 ()-;-6. the 241 Chevrolet df'alers in South Africa decidf'd to nm a campaign to raisP money for holiday facilities for army pPrsonnel "rpturned from border duty" ( i.P. Namibia. Angola. Rhodesia-Pd. I and to othen,·ise assist army rwrsonnel and thPir families. An ad n1n in conjunction with the campaign said. "Tlwy arp our South African soldiPrs ... Nation-wide. ChevrolPt DPalers bPliPvP WP can nPVf'r do pnough for them ...

In responsP to criticism of tlw ad. a GM spokPsman maintainPd in a lettPr to the Interfaith Center on Corporatf' Responsibility that GM had playPd no rolP in the dPalprs · actions. The official added. howPvPr. that GM beliPvPd that the dealer organization felt it was acting "in a socially rPsponsiblP way by trying to contribute to the bettPrmPnt of nePdy families of army personnel. " 15

US and South African GM units rpfused in any way to censure the dealers for running the ad or to dPmand that they pledge no further similar actions.

Work Force, Wages and Working Conditions For many yPars GM hired almost no black workers at

9

all. citing gowrnment quotas and job reservation agree­ments with white unions. In recent vears. however. it has sought and obtained permission t~ increasP its African workforcf' significantly. and. as noted earliPr. it has statPd publicly that many changes have been made in job reser­vation agreements. Such increases suggest that the hiring and promotion of Africans by GM was possible earli_er. but that the company found the various restrictions an Pasy excuse for inaction. When GM did use its power. restric­tions wPrf' lifted.

Even then, however, GM has not hired or promoted Africans to any significant degreP. In January 19-;-8, GM's African em loY d 3-;-s out of 3.6S-;-. or about 10'7,, o tota employnwnt. Out of this. only our Africans were employed at salaried jobs (compared-with three in 19-;-61: an

. industrial nnrsP. a printing clPrk. a pPrsonnel officer and a computer operator."' Considering GM's professed devotion to the Sullivan principles. this figure-four salariPd Africans out of more than 3.(i00 employees~is quite remarkable.

Moreover. GM has slashed its African ,rnrkforce when it found it economically expedient to do so. Between Augmt 19-;-(J and the end of}()-;--;-, a period of recession. the com­pany's African Pmployment dropped by more than 40%. ,vhich is to say that two out of every five African workPrs \\Wf' laid off. (See Table ITil By comparison. GM laid off 30% of its Coloured ,rnrk force and only I 4 % of its WhitP work force. The company. ,vhile avoiding specific com­parisons. attributPd the mwven nature of its layoffs to seniority.

Since almost all of GM's African and Coloured workers are members of the hourly wage force. it is useful to look at the m1gP pattern in that area. As of July 19-;-3, :!SO of 400 GM hourly workers then employed ,vere at the.bottom.four hourly IPvels. They earned between $21 l and S:!14 a month. based on a 4S-hour wePlc (See Table-IV}

TABLE Ill: GENERAL MOTORS EMPLOYMENT 1976 and 1978

African Coloured White Total

August 1976

633 2,012 2,208 4,853

December 1977/ January 1978

375 1,381 1-,901 3,657

% Change

-41% -31% -14% -25%

-August 1976 figures derived from data presented by A.A. Cunningham to the Senate Subcommittee on African Affairs, September 22, 1976. December 1977/January 1978 figures derived from GM Public Interest Report 1977-78.

TABLE IV: GM HOURLY WORKERS BY RACE AND GRADE (July 1978)

White African

Number Av. hourly wage Number Av. hourly wage Work Grade

· Iowest -1 0 0 74 $1.04 2 0 0 55 1.05 3 0 0 16 1.08 4 5 $1.18 105 1.12 5 8 1.29 34 1.17 6 11 1.54 53 1.25 7 11 1.43 12 1.39 8 26 1.69 22 1.51 9 65 1.87 19 1.63

10 182 2.27 8 1.94 11 326 3.22 2 2.73

highest - 12 137 3.47 0 0

N.B. According to the company, wage differences between white and black workers in the same work grade reflect seniority in that grade.

- Testimony of John Holmes Jr. before House Subcommittees on International Economic Policy and Trade and on Africa, July 12, 1978.

While 60% of white hourly workers made $3 an hour or more. over 90% of African workers made $1.51 an hour or less.

A look at employment distribution also shows some interesting facts about African "upgrading" efforts. In October, 1972, of 1,072 whites employed hourly, none was in the top grade category and only 92 were in grade 11. In July 1978, about 60% of the total 771 white hourly employes were in the top two grades. (See table V)

Meanwhile, the distribution of African workers also had changed.)n October 1972, of 551 African hourly workers, well over 50% were in grades one and two. In July 1978, of 400 employed, only 32% were in these two grades. "Up­grading" had occurred.

However, the upgrading did not benefit Africans nearly as much financially as it did whites. For what appears to have happened is that all employes were pushed up a grade or two into higher paying categories. And while a jump from grade 11 to grade 12 for a white meant 25 cents more hour more in average wages based on July 1978 figures, an African moving all the way from grade one to grade six-a jump from entry level to a semi-skilled job-made only 21 cents more an hour.

General Motors has not at this point recognized an African union. It says, however, that it will do so if it can be shown that 50% of African employes want such a union. In a letter to William Winpisinger, president of the Inter­national Association of Machinists and Aerospace

TABLE V: GM HOURLY WORKERS BY GRADE DISTRIBUTION AND RACE 1972 and 1978

White Black

Oct1972 July 1978 Oct. 1972 July 1978 Work Grade lowest -1 0 196 74

2 3 0 98 55 3 2 0 110 16 4 32 0 99 105 5 5 8 24 34 6 35 11 5 53 7 50 11 4 12 8 139 26 5 22 9 268.. 65 10 19

10 446 182 8 11 92 326 2

highest - 12 0 137 0

Totals 1,072 771 551 400

-1972 figures from testimony of A.A. Cunningham to Senate Subcommittee on African Affairs, Sept. 22, 1976. 1978 figures from testimony of John Holmes Jr. to House Subcommittees on Inter-national Economic Policy and Trade and on Africa, July 12, 1978.

Workers. RobPrt McCahP, a GM official. said that almost :~0%, of African workers now ha,·p chosPn reprpsentation by tlH' union and that GM is making payroll deductions for each. 17 However, there are still questions as to just what powPrs such a union would havP. (See Ford on this issue I

In its 1977-78 Public InterPst report GM states: "All signs restricting accPss to GMSA plant and office facilities on the basis of race havp been removed. and all working areas are open to all employes. ·· It adds. "Eating areas are non-segregated. with the exception of onP facility now usPd by hourly non-white employes. ··

Fortune magazine. in a June 1978 article which was very positive toward US investment in South Africa. had this to say about the GM plant: "In line with the Sullivan code. GM duly removed the offending written signs from the lavatory doors in its Port Elizabeth plant. only to replace them with ·color-keyed doors: blue for whites and Chinese (tlH' latter considered honorary whites for lavatory pur­poses). orange for black and coloreds. Far from 'lessening the insult.· as one GM official in Detroit tried to explain to Fortune. it infuriated a number of black trade unionists. for it seemed to confirm their worst suspicions that Gl\1 was using the code as mere window dressing. 'Who do tlH'y think we are?' fumed one black shop steward. The fact that black hourly ,rnrkers at Gl\1 eat in a segregated cafeteria. while white hourlv workers are allowed to use the cafeteria for salaried empl~yees ( pending the planned construction of a new. integrated facility). has built up further resentnH'nt. which threatens to obscure GM's good record in training and upgrading black employees. " 10

·

GM announced in August. 1918. that it would spend

11

S4.~ million to upgrade and integrate dining and other facilities and to provide additional training facilities.

INTFR-ll!TIC:l' t,\Et-ll)I

lo M':' n. ?\1:,rtin, Jr.

fm:n L. i!_ ·wilhni!

Tel hm

D,1~ LO J,:Jy, l 'J77

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of ,ou1i,t·

th,· l1t•twiit ,,[ :,ny <'1'J><'ri,·n,r 11[ ,.11, h , <ondili,1110,.

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f1t"<" ,,,,,l,j]i\y c,f dp.,. 1ilc·11tr. .u1t\ tlif' .tl,il!ly lo oq:.u,i•;,• laq!•' '"""1,,-r, .,( llf•ll•\\hi!t•,; ;,n,l 1:,·ui•r:,!(• .,<\H>ll is IH>I th(• r.a111t·

111 :;,,,,ti, !1frir.1. ;,· 11 if. in tl,r ll. ~~ Ai: in•liralt'r! in

1\tt. 11 J,,,, "' ·•11'" ,,1,;,1, prnvi,l<•:, r.,>1nf' wiol,•r l,:,cl.g~ronnrl to

tlw :·u\,j,·,·t, 1.,w ,·11fl,rc,·11H·nt ;pti,m i,. ]'!"dty f.11:t :,nrl ai1nr.

at confn,ing <li,.lurl,~,iH c•:, tn rt•d,k11ti:i! ;,rc-;in,

T1> lllll>i"ii ,:,• ,J,,: 1·11nr; 1t;, I rf{(•r\ nn f'!npl<>)'<'{' ,nornlc· and to

:,,·oi,l g1viuJ: lh,· ill'!•r,·rsi"n 11,.,t Wt' ,., }'f't I tlw:.,· thi11gs lo J.·,pp•·n, ;,ll pr,·1•-•r.1l1>ry work].,,\ \,,·,·, ,.,1·ri1·J 1•11\ <\llit•lly

,.,,,1 ,i:,.,·n·tt'ly.

The GM secret contingency plan gives evidence of how GM intends to cooperate with South African military forces in the e,vent of "civil unrest."

'

t

Henry Ford examines the controls .of a pickup truck at a Ford plant in Port Elizabetll during a 1978 trip to South Africa.

FORD

"For us we think our fight is the same as the fight of our South African brothers, the same as Ford workers all over the world, and the same as workers in general. We're after the same thing: freedom from an oppressive system."

-Lincoln Williams, Ford worker, Mahwah, N.J., plant (US Guardian May 24, 1978)

"Gentlemen, (the foreman) says we must remem­ber, when Mr. Ford walks in, that we are South Afri­can monkeys, not American monkeys. South African monkeys are much better trained."

-Styles, in the play "Sizwe Banzi is Dead"

History, Size and Reasons for Investment Ford Motor Company of South Africa is a subsidiary of

Ford of Canada, which in turn is 88.S% owned by Ford of the US. (Canadian groups repeatedly have attacked Ford for using its Canadian subsidiary as a conduit for South African investment while all decisions regarding South Africa are made in Detroit.)

Ford began distribution and retail operations in South Africa in 190S. and it built the country's first auto assembly plant in 1923. Operntions in Port Elizabeth include an en­gine and car assembly plant; a car and van assembly plant: and a truck assembly plant. Ford also produces tractors. Car models generally are the same as those produced by Ford of Great Britain. Ford dealers in South Africa sell Lamborghini and Lotus cars in addition to Ford models.

As of early 1978. Ford was the biggest US employer in South Africa. 1 In June 1978. Ford reported it employed S.376 pe~ple.

In a 1976 report to the Senate Subcommittee on African Affairs. Ford said its South African sales amounted to abm{t l % of ,,·orldwide sales. Based on a $28.8 billion worldwide figure for 1976. Ford's South African sales for that vear amounted to about $280 million. In 1977. Ford had ~bout E% of the South African car market and was n'i1mber one in.car sales. It also boasted the top-selling car model. 2 Previously. Ford had said in a company report that

12

if its South African subsidiarv were a US firm, the si1b­s1diary 's 1971 sales of $166 million would have qua_lified it as the 526th largest company in the US. 3

Although Ford's market share has been fairly steady over the past several years, in contrast to GM's, Ford has been hurt substantially. as have other companies, by reduced demand.

Henry Ford reported at the time of his visit to South Africa in January: 1978, that the comp.iny had lost $8 mil­lion in 1977. and that it had made only "negligible" profits for four years including 1977.' In 1976 Ford reported that after-tax return on its sales in South Africa over the past seven years had been one-tenth of one percent, compared with 3.5% worldwide. 5

·

This poor performance, however, has not dampened Ford's expectations of future growth. Henry F{)rd said at the time of his 1978 visit that Ford had about $127 million invested in South Africa, with plans calling for an addi­tional $8 million to be invested in 1978. A 1977 report by IRRC, based on company figures. valued Ford assets ·in South Africa at $254 million. but a Ford official gave a figure of $167 million in 1978.

The stir caused by Mr. Ford's announcement ofthe $8 million 1978 investment gives some indication of ho,v sen­sitive the company is to world opinion. A Ford official in Port Elizabeth, asked to elaborate on how the $8 million would be spent, cited production and containerization fa­cilities. This information was picked up and reported widely as representing a significant Ford expansion. In South Africa, then experiencing a· critical drop in much­needed foreign capital as a resuft of both an economic downturn and the political events in Soweto and elsewhere. Ford's announcement was seized on by both the govern­ment and the press, which hailed it as a clear. indication that US businesses continued to have faith in South Africa.

Following his return to the US. Henry Ford issued a lengthy denial of expansion plans and indeed. his original remarks make clear that the $8 million was not considered an expansion. Mr. Ford maintained that. instead, the $8 million would go for necessary upkeep and tooling only. and for a needed headquarters building. Any reference to political issues, however, was carefully avoided: Mr. Ford said the company had no need to consider expansion be­cause it was operating at only 60% capacity. 7

One interesting further point about the $8 mill.ion is Ford Company's own admission that. because of Ford's poor performance in South Africa. the improwments could not be financed out of local earnings. That means yPt another infusion of outside capital. mtwh to the satisfaction of tlw South African government.

Ford's Ties to and Attitude Toward the South African Government

Ford's traditional attitude toward the apartheid system has been one of quiet acceptance and cooperation. as evi­denced in the remark by Ford executives in 1970 that "We had no Bantu at all until recently in cooperation with tlu• government policy of no mixing of the races:""

The South African government, for its own pm·t. lhi;;11.,,: demonstrated that it is more than willin~ tn iri.'tt;;11ilf4!a,, against companies which don't play by its rut,,,-. h~ ttJhi.., mii~~-1960s, Ford bid on a contract to suppl~ foulf'-\\ Jhi..-.,ij i~in, ,, vehicles to the government. But tlw Camh!i~nn ~~~,~-inmwnt refused to issue an export permit to Fnl"l(f,- C .. :m~hforn sub­sidiary. which was to supply tilt' n'hid,, s\ln alw 1-!'rounds that the items might Yiolah' tlw tlh'n tn,'!Hmmdatory UN

arms embargo against South Africa. In retaliation, the South African government refused to allow Ford to bid on contracts for the next two years.

Since then, it appears, Ford has regained its position as a major government supplier. In 1973, Ford reported that sales to the South African government including the police and military had amounted to about 1 % of total sales over the preceeding decade. 9 Based on estimates of sales during that period, the 1 % would equal up to $2 million annually. With the addition of indirect sales, e.g. those made by a central purchasing office, these figures could be much larger.

As previously noted, Ford told ICCR that between 1973 and 1977 it sold 128 cars and 683 trucks directly to the South African Ministry of Defense and 646 cars and 1.473 trucks to the South African police. 10 Later that year, Ford told IRRC that the new commerce regulations forbidding direct sales of items made in the US or containing US-made parts to the military or police had had only a marginal effect on sales.

In addition to assisting South Africa by supplying " . - capital. technology. and needed equipment. Ford has given

the economy a further boost through a contract under which it was to purchase an estimated $160 million worth of platinum from South Africa's Rustenberg mine between 1975 and 1977. The platinum was to go into catalytic con­verters for all Fords made in the US and Canada. 11

Work Force, Wages and Working Conditions It is only in the past few years that Ford has begun to

hire Africans in any significant numbers in its South Afri­can operations. In 1%2. Ford had only 40 African employees, and as late as 1973 the company was still n·­cruiting specifically for white artisans in England.

In response to 'queries about its activities in-South Africa. Ford routinely maintained during these years that its poli­cies were dictated ,by South African government regula­tions, not by the company's own wishes.

Henry Ford described these regulations in a statement on his return from a trip to South Africa in January. 1978. as including the Environmental Planning Act of 1968, which limited the company to employing 165 black workers. the number employed in that year; and Work Reservation Determination No. 16, which mandated that not less than 45% of all employees be white and that all welding. super­visorv and control work be reserved for whites. 12

As· Henry Ford himself pointed out. however. in his statement and in a previous press conference in South Africa. the company managed to bring about substantial alterations in these rules when it chose to do so. Ford said that since 1968, the company had obtained approval to in­crease its African workforce to 1.863. As of 1978. he said. it could employ 75% Africans. Coloureds or Asians in the total hourly workforce, and 32% in supervisory and control work. plus 46 African, Coloured or Asian welders. He also noted that Ford had urged a government inquiry panel to "repeal all forms of racial discrimination found in various labor laws."

Discussing Ford's lack of training efforts in the past. Henry Ford said, "I think that's been a failing of our management, myself. and I think that's what we've got to step up to." He added, "We've got the same problem in the United States. " 13

Adding to Mr. Ford's comments, Brian Pitt, the For-d managing director in South Africa, said the company be-

13

Ford's biggest truck, introduced to South Africa in 1978, dwarfs a one-ton truck which Ford produces in its South African plant.

lieves "there are no restrictions to promoting blacks in the company.

According to Roger Williams, writing in the Saturday Review, African labor leader regard Ford as making serious efforts to improve. "Ford gets high marks Jor pay­ing blacks decently, promoting them to better jobs, and recognizing their right to organize," Williams writes on the basis of interviews in South Africa. He quotes a high offi­cial of Ford as saying that an African will be at the managerial level "within a year, and he won't be a 'show nigger.' a guy whose picture we can put in magazines back in the States. He'll be somebody who can and will do his job."1i

Such remarks sound impressive, until one takes a close look at figures supplied by Ford itself. They indicate the company has a long way to go.

For one thing. Ford has not made a true commitment as yet to wiping out discrimination. The company told the Senate Subcommittee on African Affairs in 1976 that it had not a single African in sales or customer service and no pians to move anyone into these categories. What this sug­gests is that Ford does not want to irritate white South Africans by putting Africans into visible (also better paying and more pleasant) jobs.

There is also, apparently, no intent on the part of Ford to irritate white workers within the company. Such workers were cited by Ford in its report to the Senate Subcommittee as a major obstacle to African advancement. While Afri­cans may be moving into some supervisory positions. they are supervising only Africans. Henry Ford said in January, 1978, that there was not a single black above a white in the company.

In June 1978, according to information Ford supplied fo IRRC. Ford had 1278 African, 2004 white and 2083 Coloured workers. (See Table VI) It had 21 salaried Afri­cans and 65 Coloureds, compared with 13 Africans and 38 Coloureds in 1976. The 1978 figure for Africans amounts to considerablv less than 2% of all African workers. At that ' . time, there were no Africans in the top category-managers and officials. There were three African professionals of 131; seven African supervisors out of 294; four African artisans out of 260; one African technician out of 149; and 24 Afri-

-----------------------------------

I,

~

. TABLE VI: FORD EMPLOYES BY RACEAND JOB CATEGORY 1972 and1978

HOURLY WORKERS

Job Category 1972 1978

. lowest -1 191 594 312 310 2 10 756 297 463 3 133 294 234 172 4 23 473 42 5 188 5 6 1 305 63 165 6 3 5 79 125 6 217 7 3 7 84 19 15 83 8 4 69 67 43 32 123 9 12 289 65 91 161 203

10 470 14 147 39 11 116 4 239 17 12 no category in 1972 69 6

SALARIED WORKERS 1-4 1 165 5 188 10 5-8 881 3 16 875 55

9-16 225 242 Total 386 2310 2720 1278 2004 2083

N.B. The small number of Asians is included in with Coloureds in company reporting on hourly employes. Small discrepancies between breakdowns and totals presumably are attributable to records being compiled on different dates.

cans out of 519 clericals. Only in the management trainee category did Africans fare a little better: 14 out of 59. (See Table VIII

Until 1970, the company had no training program for Africans. Henry Ford said in remarks early in 1978 that more than $1 million would be spent on the training and de­velopment of Africans and Coloureds in 1978-an increase of almost 150% over 1976.

In December 1976, Ford reports to IRRC show. the company had a total of 26 Africans in training programs other than safety programs. This number increased to 304 in mid-1978, but 261 of these were at the very lowest level of training. being shown how to operate machines. Looking at a few other categories, there were three African techni­cians in training, compared \Vith none, and 21 artisans. compared with 11. (See Table VIII)

According to Ford's responses to IRRC. the company's entry level wage in mid-1978 was $200 a month and the average hourly wage was $233. This African average com­pares with average Coloured wages of $258 a month and average white wages of $488. In 1976, average African hourly wages were $200 and average white wages were $437. This means the gap between African and white wages actually rose during that period-from $237 a month to $255.

Ford's decision in March. 1977, to withhold dues for African workers whQ belonged to the United Auto and Rubber Workers Unio,n. ari African union. won the com-

-South Africa Review-Ford, IRRC, November 9, 1978

14

pany much notice and approval in the US. While Africans in South Africa are not forbidden to join unions, under South African law their unions have no standing as bar­gaining units. Ford's action was interpreted as company recognition of the African union, a first in labor relations for US firms in South Africa, which generally have gone along with other employers in refusing to grant any legit­macy to African unions.

However, a closer look reveals that what Ford has done falls far short of true recognition. Ford, along with other auto firms in South Africa, negotiates overall industry con­tracts with an industrial council on which no black union is permitted to be represented. What Ford has done is to per­mit some black union officials to go to this all-important council as observers. It has not pushed to let the black union be permitted to engage in the actual bargaining process.

Within its own operations. Ford management, as gleaned from company reports and South African press ac­counts, discusses matters such as interpretation of the council-set wage agreements with a liason committee, made up of representatives of employes within the company. Black union leaders are not permitted to sit on the liason committee as official union members, but they can, and do, sit as worker representatives, as they have done for a num­ber of years.

The only place in which the union actually does function, it appears. is in individual grievance proceedings. Here,

TABLE VII: HIGHER LEVEL AFRICAN AND WHITE WORKERS OF FORD 1976 and 1978 Africans Whites

1976 1978 1976 1978 Category Managers 0 0% 0 0% 235 100% 281 100% Professionals 3 2.2% 3 2.3% 128 96.2% 123 93.9% Supervisors 7 1.9% 7 2.4% 326 90% 251 85.4% Artisans 2 0.8% 4 1.5% 237 96% 239 91.9% Technicians 1 0.8% 1 0.67% 126 94.7% 139 93.3% Clericals 13 2.9% 24 4.6% 301 65.7% 311 59.9% Management Trainees 3 8.8% 14 23.7% 26 76.5% 23 39%

-South Africa Review Service-Ford, I RRC, November 9, 1978

union shop stewards are permitted to represent workers. What all these arrangements amount to is that true

power has in no way passed to a black union at Ford, at least as of late 1978.

One other gesture by Ford toward its black workers which gained considerable attention in the US was its announcement in early 1978 that it would give $575,000 over five years to the Urban Foundation. This foundation was set up by white business leaders after the Soweto up­risings, ostensibly to improve the lot of blacks.

The Foundation has been completely rejected, however, both by the Black Peoples Convention and by the banned South African Congress of Trade Unions. Both groups de­scribe the Foundation as designed to placate a small num­ber of blacks, thus helping to perpetuate the current sys­tem. Even The Star, a moderate white newspaper in South Africa, has described the foundation as "designed to help keep the country stable so that businessmen can preserve and extend their businesses." 15

CHRYSLER

"Chrysler products are still on South Africa's roads. The only difference is that they're now made by

· Sigma." -Financial Mail April 21, 1978

Size, History and Reasons for Investment Chrysler was a latecomer to South Africa compared with

GM and Ford. It began operations in 1958 outside Cape Town, but closed that plant after building a larger facility near Pretoria in 1967 which is capable of assembli_ng 24,500 cars and 6,000 light trucks a year. It also produced air con­ditioners, and trucks of the Mitsubishi firm, in which Chrysler has a 15% holding.

In 1976, after trying to sell its entire South African operation, Chrysler joined with Illings, a subsidiary of Anglo-American of South Africa, to form a new company, Sigma. The move was doubtless prompted mainly by Chrysler's poor performance both within South Africa and worldwide (The company estimated that it would lose $120 million in 1978). By the company's own admission, public pressure for change in its South African operation was also a factor.

15

TABLE VIII FORD EMPLOYEES IN TRAINING 1976 and 1978

African White Category 1976 1978 1976 1978 Operator 7 261 1 6 Clerical 5 Technician 3 4 6 Artisan 11 21 55 51 Sales nla nla nla nla Professional nla nla n/a nla Managerial 3 14 26 23 Safety 211 215 230 237 Literacy nla nla nla nla Other* 5 nla 135 nla * two-day personnel development course and a five-hour report writing course.

-South African Review Service-Ford, IRRC, November 9, 1978

Chrysler's assets included plant and equipment valued at Ht least $45 million. In addition, it offered a means of ob­taining the latest US technology and a foothold in the South African market.

These were more than enough to interest Anglo-Ameri­can, a large conglomerate headed by Harry Oppenheimer. In return for forming the new company with Illings, which already produced Mack trucks and Mazda cars under li­cense, Chrvsler received 25% c,f the shares in the new Sigma vent~1re, which was established with assets of more than $100 million. According to news reports, Chrysler also received three seats on the Sigma board and a promised 35% of profits.

Chrysler, as a minority partner, obtained other impor­tant benefits as well: it was able to disclaim any technical responsibility for conditions at Sigma, to remove the public spotlight from its South African operations, and to ward off calls for divestment. Its capital could stay in South Africa, accruing profits to the parent company, but the parent could avoid all responsibility for its use.

Chrysler, since the merger, has declined to give out any information on its South African operation. In response to a request for such information from the Senate Subcommit­tee on Africa, it maintained that its holdings were too small

Chrysler/Sigma plant in Pretoria

to be of concern. It ignored a request in connection with this report.

The new Sigma, equipped with Chrysler know-how and Anglo money, soon proved itself a force to be reckoned with. After increasing its share of the auto market to 14% by early 1978, it began casting about for addition~l com­panies to buy. As noted previously, within a few months it acquired the right to produce the Peugeot-Citroen lines and a controlling interest in British Leyland, as a result of which it held just under 30% of the auto market and nearly 25% of the commercial vehit:le market, thus making it the largest motor company in South Africa. To help sell all these vehicles, Sigma has the services of the McCarthy group dealership, in which Anglo-American also has a 33% stake.

Ties to ·and Attitude Toward the Government Sigma can be expected to increase the level of coopera­

tion with the government previously established by Chrysler, which reported in March 1974 that its govern­ment sales were less than one-half of one percent of total sales of commercial vehicles. To cite one example, British Leyland was among companies talking with Pretoria offi­cials in mid-1978 about building a plant capable of pro­ducing diesel engines for heavy vehicles and machinery. In fact. of all the aspects of the Chrysler deal with Anglo­American, the most objectionable is that Chrysler has abdi­cated responsibility for its plant by selling out to a South African firm.

Work Force, Wages and Working Conditions Chrysler traditionally has had a reputation for paying

poorly and trying to thwart organizing efforts. During the time its operations were located in Cape Town, it was criti-

16

cized by both whites and non-whites for discriminatory and arbitrary practices. Following its move to Pretoria, a white trade union official was quoted in 1975 as charging that Chrysler and other foreign-owned motor firms in the Transvaal were trying to keep wage levels below those in Port Elizabeth. 1

Following the Sigma merger, there was a strike at the Pretoria plant in May, 1978, involving most of the plant's 1,350 African and 100 Coloured workers, according to new accounts. At that time, the company reported that average black pay was 75 cents an hour with a minimum of 58 cents. The minimum in Port Elizabeth at that time was 78 cents. In other words, Sigma was paying a minimum equal to 70% of the Port Elizabeth minimum. Chris Griffiths, the managing director, was quoted as saying that the lowest paid worker earned just under $30 a week2

, well below the absolute poverty line of $163.30.

With regard to training and advancement of blacks, the latest figures available are for 1973. At that time, Chrysler said in a report on its South African operations that it employed 1,632 Africans, 173 Coloureds and 254 whites in hourly positions. All but two Africans and two Coloureds were in the lowest seven of 10 job categories while all but 14 whites were in the top three. The company reported that there were five blacks among its 650 salaried employes. 3

As for unions, The Star reported at the time of the 1978 Pretoria strike that Sigma declined to recognize a black union at the plant because it estimated potential member­ship at less than 200. Mr. Griffiths was quoted elsewhere as saying the company didn't oppose a union, but the unrecognized black union maintained that it was not even permitted to have a member on the employe-management liaison committee, contrary to company claims.

ACTIONS AGAINST APARTHEID

US auto firms' activities in South Africa have been the subject of protests for many years. To cite only a few among a vast and varied number of such actions, as far back as 1971, groups of Catholic and Protestant institutional stockholders have been introducing resolutions at annual meetings dealing with South Africa. Acting through what is now known as the Interfaith Center on Corporate Responsibility, these groups have called on the companies to give an accounting of their activities in South Africa, to halt expansion, to cease sales to the police and military, and to withdraw from the country.

At the GM annual meeting in May, 1978, Timothy Smith, executive director of ICCR, accused GM of engaging in "calculated doublespeak" and described the company as "a partner in apartheid, a friend of discrimination, and not a force for peaceful change."

In 1977, a new round of campus opposition to apartheid began when Stanford University students held a sit-in to demand that the university vote its shares of Ford stock in favor of a withdrawal resolution. Nearly 300 students were arrested in that May 9 event.

Subsequently, groups at many universities have demanded that their institutions divest themselves of stock in GM, Ford, Chrysler and other companies which do business in South Africa. Such divestments have been approved in Massachusetts and several other states.

Other groups also have become involved. The United Auto Workers announced in early 1978 that it would withdraw funds from any banks making loans to South Africa. Both the AFL-CIO and the NAACP came out in favor of withdrawal.

Following a January, 1978 report of the Senate Subcommittee on African Affairs which concluded that "the net effect of American investment has been to strengthen the economic and military self"sufficiency of South Africa's apartheid regime;" several bills seeking to end or limit investment were introduced in Congress. This legislation was opposed by both Ford and GM.

17

FOOTNOTES: THE MOTOR INDUSTRY IN SOUTH AFRICA

1. HansardJune2, 1977 2. Financial Mail July 29, 1977 3. Financial Mail April 15, 1977 4. Management October 1977 5. Ibid. 6. South African Digest M:arch 14, 1975 8. Financial Mail Special Supplement March 26, 1976 8. Financia/Mai/July7, 1978 9. Financial Mail July 18, 1975 10.US Business in South Africa: Pressure from the Home Front,

Investor Responsibility Research Center, October 1978, pp. 44-45.

11. Letter of Sidney Kelly, Ford Co. Secretary, February 13, 1978 12. US Business op. cit. 13. Ibid. 14. Southern Africa November 1978 15. "US Corporations in South Africa," by Donald McHenry,

quoted in United States Corporations in South Africa, Catalyst Project, p. 38.

16. Financial Mail, November 18, 1977 17. Chrysler, Ford and General Motors in South Africa, Council

on Economic Priorities, October-November 1970, p. 12, quoting from newspaper of June 17, 1967.

18. Letter of Thomas Murphy to ICCR, September 21, 1978. 19. Christian Science Monitor April 24, 1978 20. To the Point October 31, 1977 21. Financial Mail Special Supplement March 13, 1970 22. Financial Mail July 14, 1978 23. Financial Mail Special Supplement March 13, 1970 24. Wall St. Journal July 20, 1978 25. Testimony of John Holmes Jr., personnel director, GM

Overseas Operations Division, before House Subcommittees on International E:conomic Policy and Trade and on Africa, July 12, 1978.

26. Transcript of press conference held January 19, 1978 27. Wall St. Journal November 3, 1976 28. Survey of Race Relations in South Africa 1977, South African

Institute of Race Relations, p. 242. · 29. Survey, op. cit., p. 243. 30. Financial Mail May 19, 1978 31. Financial Mail May 12, 1978 32. Financial Mail May 19, 1978. 33 South Africa Review Service--:Ford, IRRC, November 9, r978 34. Testimony of John Holmes,,-0p, cit 35. Testimony of.AA Cunningham, GM Vice President, before

the Senate 0S'uJ:foommittee on .African Affairs, September 22, 1976 . )#:"\-' ·

36. $tate~i1f ot~Henry Forct,,tJ!an::h &/1978 37. Transcrtptof press conference held January 19, 1978 38. Southe;nAfticaAptH,"1978 39. New York UfflesJ¥Jiary 13, 1978 40. FinanciarfvthltQii.'n.cia(y 20, 1978 41. Financia(IJfiiei{Jint1'a}y 16, 1978 42. The E'ifQ()Oint~fJuly'tf1978 43. Manag~men~bf~b{ffe(;1977 44. Ibid. \.\ ·,.!~"{.} 45. Survey of Curretft=)/J(lsiness, August 1977 and August 1978,

US Commerce De'paftment 46. New York Times June 16, 1978 47. Letter of Thomas Murphy to ICCR, September 21, 1978 48. Management October, 1977

18

FOOTNOTES GENERAL MOTORS

1. Testimony of A.A. Cunningham, GM Vice President, before Senate Subcommittee onAfrican Affairs, September 22, 1976

2. South African Digest Septernbef1, 1978 . . 3. Testimony of John Holmes Jr. before the House ·subcommit­

tees on l~ternational Economic Policy and Trade and on Africa, July 12, 1978 . . .·

4. Washington Post August 30, 1978 5. US Business and South Africa: The Withdrawal Issue, Investor

Responsibility Research Center, November, 1977 6. South African Digest December 8, 1972, quoted in White

Wealth and Black Poverty, by Barbara Rogers, p. 128 7. Financial Mail January 20, 1978 8. Financial Mail March 13, 1970 9. Windhoek Advertiser July 11, 1978

10. General Motors Public Interest Report 1977-78, GM Co. 11. Letter of Thomas Murphy to Interfaith Center on Corporate

Responsibility, January 20, 1978 12. Workers Unity, South African Congress of Trade Unions,

January, 1978 13. Letter of Thomas Murphy to George Houser, American Com-

mittee on Africa, July 14, 1978 14. Letter of Thomas Murphy to ICCR, September 21, 1978 15. Letter of Thomas Pond to ICCR, August 31, 1978 16. General Motors Public Interest Report 1977-78 17. Letter to Robert McCabe to William Winpisinger, May 30, 1978 18. "The Case for Doing Business in S_outh Africa," by Herman

Nickel, Fortune, June 19, 1978

FOOTNOTES FORD

1. New York Times January 13, 1978 2. Financial Mail January 20, 1978 3. Ford and Public Concerns, Ford Co. 1973 4. Transcript of press conference held January 19, 1978 5. Ford annual report 1976, quoted in Investor Responsibility

Research Center's Analysis E Supplement 12 6. Testimony of J. Wayne Fredericks before House Subcommit­

tees on International· Economic Policy and Trade and on Africa, July 12, 1978

7. Statement of Henry Ford March 8, 1978 8. Ford in South Africa, T. Hultman, R. Kramer and T. Smith,

Corporate Information Center 1973 9. Ford arrd Public Concerns, Ford Co. 1973

10. Letter of Sidney Kelley of Ford to Interfaith Center on Cor-porate Responsibility, February 13, 1978

11. SouthAfricanDigestJuly14, 1972 12. Statement of Henry Ford March 8, 1978 13. Transcript of press conference held January 19, 1978 14. "American Business Should Stay in South Africa," by Roger

Williams, Saturday Review, September 9, 1978 15. The Star, December 31, 1977

FOOTNOTES CHRYSLER

1. TheStarOctober18, 1975 2. Financial Mail May 12, 1978 3. Operations in South Africa, Chrysler Corp., 1974

••■■TIEii--------. SEPARATE AND UNEQUAL The apartheid political system decrees that blacks have no rights except in the reserva­tions set aside for them by the white govern­ment. These areas, known as "Bantustans," comprise but 13% of the land. Africans are defined as "temporary sojourners," in the "white" urban areas. Thus, by definition, they are deprived of all political and economic rights in 87% of their country.

South Africa is a police state denying basic human rights and freedoms to most of its people. African men and women must carry passes; they may live or work only where the stamp in their passbooks - put there by a white official - decrees. In fact, one half million people are arrested and jailed each year for infringement of the pass regulations. There are about one million migratory laborers in South Africa, men who are forced to leave their families behind in the Bantustans to live in prison-like, single-sex compounds, often 16 to a room. Whites vote and make laws in Parliament; blacks cannot.

Those accused of participating in "illegal political activities" are detained without trial and, often, tortured.

19

THE UNITED STATES ROLE This is a brutal picture, but true. It is also true that the United States helps to maintain this system of apartheid. United States corporate investment in South Africa has grown dramati­cally from $286 million in 1960 to over $1.5 billion today.

US investment and trade has played a critical role in developing manufacturing in South Africa. US involvement provides not only much of the capital for development of key indus­tries, but also the licenses, technology and personnel, which, in many cases, are even more important than the capital itself. With the approval of the US government, weapons­grade uranium, aircraft and electronics tech­nology have gone to South Africa to assist the military build-up against the majority of its people.

Some argue that economic growth and indus­trialization will automatically bring in their wake an improved life for black people. But time has made a mockery of this belief. After years of industrialization, Soweto and the other black townships near major industrial areas remain desperately poor shanty-towns. In fact, the gap between white and black is growing.