A major manufacturing company in South Africa has lost R750 million in contracts overnight due to the introduction of the 30% tariff by the United States.
Jendamark Automation is a Gqeberha-based manufacturer of automated assembly lines and production software that supplies major car brands such as Ford, BMW, VW, and Mercedes-Benz – all of which have factories in South Africa.
According to its Managing Director, Siegfried Lokotsch, in a statement to City Press, the company has lost R750 million in contracts due to the tariffs.
Many of these contracts were in the final stages of negotiations, some on the verge of being finalised in the next two to three months, and their loss represents an immense blow to the company’s interests.
This could also risk the company’s 500 employees and 3,000 workers in its local supply chain, along with impacting local factories that rely on its goods.
While the 30% tariffs have already been a heavy blow to many companies, the Trump Administration has also threatened to add a further 10% to goods from BRICS nations in the future.
The Nelson Mandela Bay Business Chamber CEO, Denise Huyssteen, has warned that the Eastern Cape could be the most adversely impacted by the ongoing trade issues.
“The Eastern Cape economy is likely to be the most adversely affected in the country by these developments. This is not just an issue which affects companies that trade with the US; it is a global issue,” she said.
“The global trading system has been upended, and relationships between longstanding trading partners will shift as countries move to protect their own interests and domestic economies.”
The Nelson Mandela Bay Business Chamber represents 700 businesses in the region, including the automotive sector.
Van Huyssteen also warned that global multinationals were already changing their strategies to accommodate the tariffs by shifting their operations to markets where goods can be sold with fewer risks.
She noted that this could lead to South Africa losing its role in global supply chains, especially in the automotive sector.
“We are deeply concerned about the impact any reduction or shifts in the automotive landscape may have on the ecosystem which surrounds the original equipment manufacturers (OEMs), which undertake complete knocked-down (CKD) assembly in South Africa,” Van Huyssteen said.
“These OEMs are responsible for creating well over 100,000 jobs at their own operations and within their component supplier networks. The broader employment impact across the supply chain exceeds 500,000 formal jobs.”
Looking to government
The National Metalworkers’ Union of South Africa (Numsa) general secretary Irvin Jim recently wrote a letter to President Cyril Ramaphosa and members of the economic cluster, warning of the potential for a national jobs crisis.
“Manufacturing sectors are facing a job loss bloodbath from the dumping of products that are competing directly with the automotive sector, components supplier value chain, the tyre sector, the steel and engineering sector,” Jim said.
“This has been worsened by tariffs imposed against us by the United States of America.”
He noted that key companies in the component supply chains are already beginning to shut down, retrenching hundreds of workers and putting thousands of connected industry jobs at risk.
Jim has called upon the Presidency to take the necessary steps to protect the manufacturing industry and its jobs.
“In manufacturing, if you allow a company to close, such jobs will never come back,” he said.
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