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When Foreign Firms Leave South Africa, Business Goes On

June 29, 1987

JOHANNESBURG, South Africa (AP) _ Disinvestment from South Africa has yet to bring an end to apartheid, as its advocates predicted, nor has it meant that thousands of poor blacks would lose their jobs, as its opponents said it would.

But the withdrawal of 113 foreign firms over the past two years - most recently Citibank and ITT - has had some clear consequences. It has angered the government, reduced available corporate funds for community development programs, and left most of the companies operating as usual while major black unions grumble that the pullouts are inadequate.

Only Eastman Kodak’s withdrawal is directly costing jobs. The U.S. photo products company is shutting down its operation and has forbidden the sale of its products in South Africa thereafter. Kodak’s 480 employees were given up to a year’s severance pay and job counseling.

Virtually all other withdrawals have entailed the sale of the company, often at bargain prices, to its local management or to another South African concern, with contracts for designs, parts and products intact.

″We haven’t seen a loss of jobs outside Kodak. It’s just taking down one sign and putting up another sign and business as usual,″ said Lionel Gruen, former coordinator of the Sullivan Code, a guideline for American businesses in South Africa.

The code requires signatories to run non-segregated plants, provide equal pay for equal work, contribute to their black employees’ housing, education and training, and participate in community development projects.

Gruen said those efforts ″are struggling because the American community has backed off from it.″ When a U.S. company sells to a South African firm, the local company withdraws from the Sullivan Code.

The code’s author, the Rev. Leon Sullivan of Philadelphia, said recently he no longer feels that compliance with his principles was an adequate weapon against apartheid and called for all U.S. companies to leave South Africa by next year.

George Stegmann, director of personnel and public relations for Delta Motor Corp., said his company has changed its philosophy since local managers bought General Motors’ Port Elizabeth auto plants in January.

″In trying to comply with the Sullivan principles we focused on too broad an area in order to score points on a rating system designed to satisfy overseas scorekeepers,″ he said. ″You had to spread money over a variety of activities. We are now concentrating more on our employees, their dependents, our retirees and the local community from which we draw our people resources.″

For instance, instead of contributing to the PACE business college established by the American Chamber of Commerce in Soweto, the black township near Johannesburg, Delta will probably concentrate on helping schools around Port Elizabeth, many of which were closed by last year’s school boycotts, Stegmann said.

He added that less money is available for social programs now that General Motors has gone.

The Congress of South African Trade Unions (COSATU), the largest black labor federation with a claimed membership of 750,000 in 20 affiliates, resolved to support all forms of international pressure, including sanctions and disinvestment, when it was formed in December 1985. Calls for disinvestment are now illegal, and union leaders will only say publicly that they stand by their previous resolution.

The congress’ leaders make it clear, however, that they want total withdrawal - closure of plants, selling off of assets, and negotiation with the workers on compensation.

The Sullivan Code ″has never been important to us,″ said Jay Naidoo, general-secretary of the congress. ″We believe it has meant nothing to the rights we have won as workers, by the sacrifices we have made and the struggles we have fought.″

IBM, Coca-Cola, Exxon, and Dun and Bradstreet arranged for employees to get shares or management voices in the new South African-owned firms, but Naidoo said these companies announced their plans without consulting the unions first.

The congress’ affiliates could not negotiate to keep a plant running, Naidoo said.

″A local union can’t negotiate a policy different than COSATU’s and our policy supports international pressure,″ he said, using the euphemism for total disinvestment.

However, one affiliate, the National Association of Metal Workers, is negotiating on how black employees of South African Motor Corp. will share in profits and management of the company if the Ford Motor Co. follows through with a plan to divest its 42 percent interest in the local firm. The assembly lines will keep running and Ford products will remain available in South Africa.

Spencer Stirling, managing director of South African Motor Corp., said that in dealing with the metal workers, ″I haven’t been exposed to any of that rhetoric (about total withdrawal) and I think that’s what it is, rhetoric. It has not been an element of negotiations on the plant level.″

End Adv Monday AMs June 29

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