GM Halts Production in South Africa - Analyst Blog

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General Motors Co. ( GM ) announced the temporary stoppage of production at its Port Elizabeth assembly plant in South Africa. A strike by the components suppliers forced the automaker to undertake this strategy as a last resort.

A strike by 220,000 metal workers turned violent and the police had to arrest 26 people after reports of several attacks, threats and damage at factories around Johannesburg. Wage negotiations between the National Union of Metalworkers of South Africa (Numsa) and the Steel and Engineering Industries Federation of Southern Africa (Seifsa) also failed to resolve the issue.

Seifsa offered a 10% hike in payment for the lowest paid workers. However, Numsa demanded a 12% raise.

Apart from General Motors, Bayerische Motoren Werke Aktiengesellschaft (BMW) also faced similar challenges and was compelled to halt production at its plant located outside Pretoria, effective Jul 1. BMW expects the plant to resume operations from Jul 8. However, it will be operating in two shifts instead of the regular three. This will lead to a decrease in production by 120 vehicles.

Other companies affected by this strike include Bell Equipment Ltd., Evraz Highveld Steel & Vanadium Ltd., units of Murray & Roberts Holdings Ltd. and Aveng Ltd. together with Eskom Holdings SOC Ltd.'s Medupi and Kusile power plants.

Separately, General Motors announced that it will be recalling 27,051 Spark mini cars in South Korea. The automaker is recalling the cars due to faulty transmission mounts. The gearbox mount might destabilize and lead to a drop in transmission power.

The recalled vehicles were produced in South Korea in the Jun-Dec 2013 period. However, this recall will not affect the vehicles which were exported to the U.S. and Europe. The automaker plans to undertake suitable measures to cover this issue in other markets.

There is no report of casualty related to this defect. Previously, General Motors had recalled 4,848 Spark minis in January.

General Motors currently holds a Zacks Rank #3 (Hold). Some better-ranked automobile stocks worth considering are Fox Factory Holding Corp. ( FOXF ), Gentherm Inc. ( THRM ) and Wabash National Corp. ( WNC ). All of these stocks sport a Zacks Rank #1 (Strong Buy).


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: GM , THRM , WNC , FOXF

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