Ford Discussing Plans to Divest in South Africa : Firm Would Give 24% Stake to Workers, But Maintain a Presence

Ford Motor is discussing a plan to divest its 42% share of a South African automobile manufacturing operation and transfer a “major” portion of that ownership to its predominantly black work force, the company said Sunday.

The plan, however, would not mark a Ford “pullout” from South Africa because the company would continue to sell automobile components for assembly and sale in that country under the Ford name.

A total withdrawal from the market, Ford officials said, would result in the elimination of 16,000 jobs held predominantly by blacks at the South African auto manufacturing operation and at dealerships that sell Ford products.

Under a plan that would differ markedly from the withdrawal of other U.S. firms, Ford would “donate” what it describes as a “major” portion of its 42% ownership to a trust set up for the benefit of the firm’s employees.

Newspaper reports in South Africa indicated that Ford plans to transfer a 24% stake to a workers’ trust and sell the remaing 18% share to its partner, the Anglo American Corp., a major South African conglomerate. That would give Anglo American a 76% stake in the operation.

In addition, workers would get representation on the board of the automobile operation, known as the South African Motor Corp. or Samcor, according to Samcor Chairman Leslie Boyd. It would mark the first time that workers would have representation on the board of a major South African corporation, according to South African business executives.

Ford spokesman William J. Goodell said in Detroit that he did not have information about the value of Ford’s 42% share of Samcor.

Ford executives estimated the value of Samcor at $345 million in early 1985. Based on that figure, the company’s 42% share would be worth $145 million, and the 24% stake being considered for donation to the workers would be worth $83 million.

Anglo American, which has taken relatively liberal social positions along with other South African corporations, indicated its support for the Ford plan. Some black groups, however, have sought to go beyond reforms advocated by some major corporations. The outlawed African National Congress, the most important armed group fighting apartheid, has advocated nationalization of private businesses under a post-apartheid government.

“Anglo American Corp., as the the majority stockholder, is confident about Samcor’s future and intends to give the company its full support,” Boyd said. “Samcor, which is now in a profit position, is a strong contender in the South African market, and we are confident that it will maintain and strengthen its position as one of the country’s foremost vehicle manufacturers.”

Samcor was formed two years ago when Anglo American and Ford merged their auto manufacturing operations. Notwithstanding Boyd’s claim regarding Samcor’s profitability, the South African auto industry has been in chronic trouble, with production capacity double the size of market. When Ford merged with Anglo American, it consolidated its operations and eliminated thousands of jobs at its Port Elizabeth plant on the Indian Ocean.

In forming the joint venture, Ford had hoped that removing itself from direct control of a South African company would quiet criticism within the United States, but the issue has continued to dog the company.

Scores of U.S. firms, including International Business Machines, General Motors and Eastman Kodak, have pulled out of South Africa since 1984, when riots on an unprecedented scale erupted in black townships. More than 2,500 people have died in disturbances since then.

Most U.S. firms have withdrawn from South Africa through a management buyout that placed control of the companies in the hands of mostly white South African managers who have had to invest very little of their own money. Coca Cola tried to do it differently, offering major portions of its equity share in a local bottling company to black managers, employees and entrepreneurs, but it has run into financing problems. IBM vested its equity in a trust for all its employees, black and white, but left control in the hands of local managers, largely white South Africans.

Last month, Ford shareholders voted down a resolution calling for total withdrawal from South Africa. Ford officials do not consider its current plan a total withdrawal, Goodell said.

Ford’s talks with unions and anti-apartheid activists in South Africa have been going on for several months.

“The purpose of the private discussions is to establish a consensus among black South African labor and other leaders as to the alternatives, because what we are doing is unique,” Ford Vice President L. Lindsey Halstead said in a statement.

The National Union of Metalworkers of South Africa, formed last month through the merger of nearly a dozen predominantly black industrial labor unions, reportedly has reservations about the Ford plan. The union loses members and economic and political clout every time a foreign company leaves.

But sources in South Africa say that the company feels it has won sufficient acceptance of the black community to proceed with the divestment plan.

“Samcor needs Ford’s participation to be a viable company,” Goodell said. “They produce Ford-designed vehicles. They need the Ford name on vehicles to sell them.”

In addition to the Ford vehicles, Samcor assembles and sells several Japanese models of car in the South African market, Goodell said.

Ralph Vartabedian reported from Los Angeles and Michael Parks reported from Johannesburg.