• U.S.

Life After the Americans Leave

4 minute read

As they withdraw from direct ownership of South African businesses, corporate giants like General Motors and IBM are striving to extricate themselves from a moral and economic slough of despond. Yet their actions have been raising questions in both South Africa and industrial nations around the world about just what the pullouts can hope to achieve. Some critics charge that the companies are merely retreating to the ethical high ground while continuing to operate in South Africa through licensing and sales arrangements.

Little on the surface will change when the two companies leave. General Motors cars that are assembled at South African plants will still be in showrooms, and IBM will continue to market and service computers that are imported from Europe. Both companies will sell their operations to the local managers of their South African businesses, presumably at fire-sale prices. In a full-page ad in major South African papers, the computer maker promised that a “full range of IBM products and services will continue to be available.” The ad assured customers that the new company will have “even greater flexibility than a wholly owned IBM subsidiary.” The equipment will carry the standard IBM guarantees for new products.

For such reasons, many South Africans view the pullouts as a windfall. Editorialized the Citizen, a pro-government Johannesburg daily: “The Americans are out, the products remain, and South Africans run the show. So who benefits? Only the South Africans who take over.” Since they are mainly drawn from executive ranks, most of those South Africans are white. While Coca-Cola in September promised to sell to black-owned businesses when it decided to leave, neither IBM nor GM has made such arrangements.

The new owners normally do not feel penalized by the pullouts. If anything, they are frequently happy to see the foreigners go home. Barry McCurdie, managing director of a firm that bought out Bell & Howell’s holdings six months ago and continues to market its products, contends that business has never been better. MGX, the new company, has been able to raise productivity and make its marketing decisions based solely on local conditions rather than as part of a global strategy, says McCurdie. At the same time, he adds, the company benefits “by having access to all the latest technology from Bell & Howell.”

Some apartheid critics fret that black workers may suffer because the new owners will be less scrupulous than U.S. firms about following the equal- employment practices spelled out in the Sullivan Principles, which most American firms support. Black leaders also fear that corporate contributions to housing and education programs may fade. The pullout also threatens the future of Pace College, a technical school in the black Soweto township that is funded by the U.S. Chamber of Commerce of South Africa. Boycotts by student militants forced the school to close last week, but Chamber President Kenneth Mason hopes to see it reopen in January. He warns, though, that a continued exodus of American companies could keep the college closed.

While many South African whites are trying to dismiss the impact of the U.S. pullouts, the departures can eventually hurt. The new owners may initially leave facilities and work forces untouched. In fact, GM last week announced plans to hire immediately 200 new workers for the launch of an upcoming model. But that often radically changes later. In Port Elizabeth, which once styled itself the “Detroit of South Africa,” employment nose- dived in 1985 when Ford sold its majority share to local owners, who then shifted operations to Pretoria. Last week many Port Elizabethans doubted GM’s assurances that no jobs will be lost when the automaker leaves. Like American workers whose firms have been swallowed up in mergers, white South Africans have reason to view disinvestment with concern.

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