South Africa the Big Pullout Goes On

By Wayne Svoboda.

After IBM and General Motors announced last month that they planned to sell off their operations in South Africa, speculation quickly began over which big U.S. manufacturer would be next to go. Last week Eastman Kodak joined the growing list of departing companies, but Kodak went further than any other firm. The world's largest film and camera maker said it will not only sell its South African business, as other companies have done, but will refuse to sell any products to South African customers. Word of Kodak's withdrawal came one day after a three-week strike ended at a GM plant that is being sold to local managers and on the same day that Hong Kong announced new sanctions. At week's end Canada-based Bata, a major shoe manufacturer, said it would sell its South African operations to foreign investors.

Kodak's decision stung. For the first time, a major U.S. company had said it was selling its assets and simply walking away. Western firms that leave South Africa typically continue selling products there, often through local companies that buy the assets of the departing corporations. According to Kodak, its South African revenues were less than 1% of its $10 billion worldwide sales last year. Said Kodak Chairman Colby Chandler: "We cannot see with any certainty a time when South Africa will be free from apartheid. The implication of that situation is a degree of business risk that we do not consider prudent." Kodak's 466 local employees, 61% of whom are nonwhite, have been told that they will lose their jobs.

At the GM plant in Port Elizabeth, already one of South Africa's most economically depressed cities, striking workers had sought severance pay from departing GM and two seats on the new board. The walkout ended when GM threatened to fire employees who did not return to work. Although 785 of the 1,800 strikers eventually lost their jobs, GM said that most of those dismissed could reapply.

Hong Kong, which earlier this year banned imports of South Africa's gold Krugerrand coins, extended the sanctions to iron and steel. Imports of South African coal and diamonds, however, will still be allowed. Hong Kong also asked firms in the British crown colony to halt voluntarily new investments and loans to South Africa. Said Piers Jacobs, financial secretary of Hong Kong: "The measures would bring Hong Kong in line with those governments that are our principal trading partners."

In the wake of the latest punitive measures against South Africa, State President P.W. Botha charged that his government's efforts to reform apartheid were being ignored by other countries. In a ceremony that opened a medical center in Cape Province, Botha called sanctions "anti-South African legislation." He added that "the U.S. has already declared an economic war against us for the most absurd and sanctimonious reasons. In doing so, they have yet again taken up the sword against us on behalf of the Soviet Union and its goals in this region. I find it revolting." As others find apartheid, which is why the corporate exodus from South Africa is certain to increase.

With reporting by Bruce W. Nelan/Johannesburg