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GM to Pull Out of South Africa : Cites Losses, Unwillingness of Regime to Dismantle Apartheid

October 21, 1986|JAMES RISEN | Times Staff Writer

DETROIT — In a move hailed by anti-apartheid activists as the most important American withdrawal from South Africa so far, General Motors said Monday that it will pull out of that strife-torn country by year's end and sell its auto assembly operations there to local managers.

Acknowledging that it has failed in its well-publicized effort to foster change by remaining in South Africa, GM said the unwillingness of the South African government to dismantle its apartheid system of racial discrimination and segregation--along with growing pressure on corporations in this country to pull out--were major factors in its decision.

The deterioration of the South African economy and the fact that GM has been losing money on its operations there for at least three years are believed to have made the decision easier.

'Disappointed in the Pace'

"We have been disappointed in the pace of change in ending apartheid," GM Chairman Roger B. Smith said in a statement. "This slowness of progress in ending apartheid has contributed importantly to the imposition of sanctions and other actions by governments at all levels in the United States."

He added: "The ongoing economic recession in that country, along with this lack of progress, has made operating in the South African environment increasingly difficult."

Opponents of apartheid in the United States applauded the action by GM--the world's largest industrial company and until recently the largest American employer in South Africa--as a major victory for the divestiture movement in this country.

Because GM has been a leader among those who have argued that American corporations should stay in South Africa in order to work for change from within, anti-apartheid leaders viewed GM's announcement as a sign that the American business community is giving up on the South African government.

'Most Significant' Pullout

"It's the most significant U.S. corporate pullout ever, not only because GM is one of the largest employers there, but also because this is an admission that GM's efforts to work from within for change have been met by a stone wall from the South African government," said Timothy K. Smith, executive director of the Interfaith Center on Corporate Responsibility, a New York-based coalition of religious groups that own stock in corporations. "It is the push that will turn the number of U.S. companies pulling out into a flood."

Jennifer Davis, executive director of the New York-based American Committee on Africa, an anti-apartheid group, added that the recent passage by Congress of sanctions against the South African government over President Reagan's veto may have finally forced GM to cut its losses in South Africa.

"GM opposed sanctions very strongly, and I think the passage indicated to them that the pressure in the United States was going to grow and not disappear," she noted.

"Now, I imagine this will shake up the whole American business community in South Africa," she said. "Some smaller companies that are still there . . . will no longer be able to point to GM as justification for staying."

No Official Comment

Meanwhile, Eli Bitzer, first secretary in the South African Embassy in Washington, said his government had no comment on GM's announcement.

GM joins a growing list of American businesses that have recently announced plans to pull out of South Africa, including Coca-Cola, which last month became the first American company to express plans to sell its operations to local black investors. So far this year, 22 American companies have pulled out and another six have announced plans to withdraw from the country, according to the Investor Responsibility Research Center, a Washington-based group that monitors American investment in South Africa.

But because of its size and visibility, GM has been perhaps the biggest corporate target of the anti-apartheid movement in the United States. In 1971, it became the first American company to be faced with a church-sponsored, shareholder resolution calling for divestment of South African operations, and its shareholders have voted on--and defeated--similar proposals every year since.

A Force for Reform

GM has responded by aggressively promoting itself as a force for reform within the country. The Rev. Leon Sullivan, a black minister from Philadelphia who authored a code of corporate conduct for American companies doing business in South Africa, is on GM's board, and GM has received praise for adhering to the so-called "Sullivan Principles" that call for non-discrimination in business dealings.

GM's Smith also helped form a council last year of more than 100 American businesses that has demanded specific changes in South Africa's racial policies. And last May, GM announced that it would no longer sell vehicles to the South African military or police forces, ending the most controversial aspect of its role in the country.

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