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Continued Labor Unrest Spreads Across South Africa

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It seems as though labor unrest is becoming a concerning theme across certain industry supply chains.  Our previous commentary noted the second incident of recent labor unrest involving the world’s largest contract manufacturer in its China production facilities. Readers may have also noted that multiple incidents of labor unrest, some of which has been deadly, are impacting industry supply chains originating in South Africa.

What began as a pay dispute at the mines of Impala Platinum and Lonmin PLC, escalated to a reported massacre of 45 strikers at the Lonmin Marikana mine. Major labor unrest has now spread to the broader gold mining and other industry in the form of wildcat strikes or work stoppages. Last week, Anglo Platinum, the world’s largest platinum producer fired 12,000 wildcat strikers.

Reports indicate strikes and labor unrest threatening manufacturing related industry, and include incidents involving long-distance truck drivers and auto workers at Toyota and General Motors.

Thus far, the government of South Africa has been unable to quell the tide of current labor unrest that is sweeping the country. The country’s currency has dropped over 5 percent to the U.S. dollar, while Moody’s Investors Service has downgraded the credit rating of the government.

It may be a short matter of time before broader industry supply chains become impacted both internal and external to South Africa.

A recent Financial Times editorial write-up describes the current incidents as a “South African Spring” and that statement alone should be concerning to firms whose supply chains involve materials sourced in South Africa, as well as the supply chains of South Africa and the rest of the continent.

Bob Ferrari

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