Mercedes-Benz SA is to enter a consultation process regarding the restructuring of its manufacturing operations which could affect about 700 jobs at its East London plant.
“Mercedes-Benz SA (MBSA) has reached the decision to enter a consultation process in accordance with section 189(3) of the Labour Relations Act,” the company said in a statement released on the JSE’s Sens news service on Thursday.
The section 189 consultations will involve discussions regarding the restructuring of its manufacturing operations, transitioning from the current 3-shift model to a 2-shift model.
The company said that in recent years, the automotive industry had faced several challenges that had also affected MBSA and its suppliers. Those included deteriorating macroeconomic conditions and prolonged port challenges.
Consumer sentiment had suffered as a result of fluctuations in the exchange rate, subdued household income, rising fuel prices as well as increased energy and logistics costs, it said.
The group has implemented various measures to address and improve the performance of its manufacturing operations, including cost-saving initiatives and efficiency improvements. However, despite these efforts, the operating environment remained challenging, necessitating further action to ensure the long-term sustainability of MBSA’s manufacturing operations.
Subject to the outcome of the consultation process, the company estimates that about 700 employees at the East London manufacturing plant could potentially be affected by the retrenchments and the transition to a 2-shift operating model.
The section 189 consultation process could see the number of employees retrenched though the implementation of early retirement, voluntary severance, and natural attrition measures, it said.
“In close collaboration with key relevant stakeholders, the company wishes to embark on this process responsibly, transparently, with integrity and empathy while ensuring labour stability and continuing manufacturing operations,” it said.
The East London plant is part of Mercedes-Benz’s global production network for the C-Class model.
C-Class sedan cars for right and left-hand drive markets are produced for export. The plant produced 90,000 models in 2023, according to the company's website.
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