Exxon Joins Exodus of Firms From S. Africa

Exxon Corp., the world’s largest oil company, Tuesday joined the exodus of major foreign companies leaving South Africa, saying that the country’s mounting political and economic problems have made it less and less profitable to do business here.

Exxon said it has sold its interests in two small South African affiliates to an independent local trust that will continue marketing its petroleum and chemical products. It said the trust will use future profits to benefit employees and to finance community activities and charities.

Lawrence G. Rawl, Exxon’s president, said in New York, “The deterioration of the South African economic and business climate caused by the continuing internal and external constraints has affected our business and the potential for growth.”

An Exxon spokeswoman said the subsidiaries’ combined sales accounted for less than 0.2% of the company’s worldwide consolidated revenues of $93.2 billion last year, or less than $185 million. Exxon has no refining or chemical manufacturing facilities here, she said, and its operation is the smallest of any multinational oil company in South Africa. Together the two Exxon subsidiaries have about 200 employees, half of them black.

Will Stop Using Name

Exxon had tried but failed to sell the subsidiaries, Esso South Africa Ltd. and Exxon Chemical Ltd., to South African interests, and it decided on the trust arrangement rather than simply close them, Rawl said.

The companies will stop using Exxon’s name, according to the spokeswoman, and after a transitional period, local Exxon managers will relinquish overall control to independent trustees. Exxon will have no further financial interest in the companies and no “buy-back” agreement with them, she said.

Rawl said: “This decision was reached after thorough consideration of the interests of our employees in South Africa and the corporation’s shareholders. In view of the fact that we were not able to sell our operations, we did not want to shut them down and abandon our employees.”

The economic impact of Exxon’s withdrawal will be limited, but the move constitutes yet another expression of no confidence in the ability of the government here to lead South Africa through its deepening crisis, and it is certain to add to a feeling by whites of increasing isolation.

Political Effect Doubtful

But it is doubtful that this will translate into political concessions by the white-led minority government toward the country’s black majority, according to most political observers, and in the short term it could add to the belligerent defensiveness increasingly evident here.

Asked for comment on the Exxon action, a government spokesman in Pretoria remarked Tuesday evening, “We have nothing to say--except that we won’t miss them.”

In recent months General Motors, IBM, Coca-Cola, General Electric, Eastman Kodak, Procter & Gamble and Revlon, among others, have announced their withdrawal from South Africa, and the American companies have been joined by Barclays Bank of Britain and the Canadian shoe manufacturer Bata.

Xerox Corp. said earlier this week that it is still considering whether to withdraw from South Africa. David T. Kearns, the Xerox chairman, said that a decision to pull out would be “irrevocable” and that the firm needs more time to study the impact on its employees and the community as a whole. The real sticking point, business sources said, is ensuring the subsidiary’s sound management without head office direction. The firm markets office equipment here and has about 800 employees, 40% of them black.

260 U.S. Firms Remain

At least 25 other American companies, most of them said to be ranked high in the Fortune 500 list of industrial companies, are believed to be preparing to leave South Africa in a matter of weeks, according to the American Chamber of Commerce here, and the actual number could be three times that. About 80 companies have announced their withdrawal from South Africa in the past two years, taking more than $1.3 billion in capital with them, and 260 U.S. firms remain.

Frank Lubke, the chamber president, said earlier this month that political pressure on the remaining firms to withdraw, in the form of threatened consumer boycotts in the United States, was mounting daily.