US divestment bankrupts aid programs for S. Africa blacks. Pullouts seem to have no influence on Pretoria policy
Johannesburg — The John Fluke Company of Everett, Wash., has pulled out of South Africa. Sort of.
About a year after the move, Fluke's high-technology products remain on the South African market. Gone, however, are most of the 25 jobs Fluke provided; and the company's longtime commitment to an education program for blacks in Alexandra township, near Johannesburg.
Fluke is one of some 65 American companies that have left South Africa since the beginning of 1985. They are part of a ``divestment'' trend cheered on by anti-apartheid activists who see this as a means of pressuring Pretoria to speed an end to white-minority rule. The trend has gathered new momentum during the past month, with the announced departure of the giant General Motors Corporation and International Business Machines.
In the short run, this trend seems to do as much damage as good for blacks here.
The departing companies' product lines are, typically, still marketed. But social aid and employee-advancement programs are gone. And the South African government, for its part, seems no more inclined to meet the political demands of black opponents.
Many black leaders contend that black poverty and unemployment can't get much worse than they are; and divestment is the best of few peaceful options for outside pressure on Pretoria.
Local political writers note that divestment has furthered an overall downturn in foreign business and banking confidence in South Africa. This will exact an economic price, analysts say. But they differ on whether it will bring government concessions - or more defiance.
In a number of other ways, John Fluke - although it had only a small office here - is representative of the departing companies. The company, which makes sophisticated testing equipment, opted to leave largely for economic reasons. The politically related collapse in the value of South Africa's currency, the rand, had shaved the value of its repatriated profits. ``The unsettled [political] situation'' also had business implications, said company spokesman Frank Partin, in a phone interview.
Fluke sold distribution rights for its products to a Johannesburg company. ``We made a tax loss out of the arrangement, injected new capital, and we're now doing extremely well with marketing Fluke products here,'' says an official at the distributor company.
But she says the jobs of 17 of Fluke's South African workers - ``secretarial staff, and black warehouse employees'' - have been eliminated in the takeover. Also shelved were the obligations Fluke had taken on as a member of the so-called ``Sullivan Group'' - an organization of some 185 American companies committed to a set of equal-employment and community-aid principles.
``The people at Fluke were wonderful to us,'' says Cynthia Hugo, director of a Johannesburg literacy and educational aid campaign called READ. Fluke had played a key role since 1982 in organizing reading competitions in Alexandra. The company also ``adopted'' a school in the township. ``The company's contributions ... involved moral support, effort, and caring - the qualities so important for our country,'' she says.
PNI, the South African company that bought Fluke's distribution rights, passed on the company's final contribution to READ - some $2,500 worth of T-shirts and school books - a few months ago. There will be no more installments, it appears. ``We are not actively in South Africa any more,'' explains Mr. Partin.
Says READ's director: ``I don't see how we can continue the reading competition program without Fluke's contribution.... The fact is that American companies here have shown a lead in such endeavors.''
Divestment advocates note that despite such programs, US companies here have had little effect in spurring Pretoria toward political concessions. Relative to their US earnings, Sullivan companies here earmarked a modest $50 million for social programs from July 1985 through June 1986.
But in a South African context, declares local Sullivan Group coordinator Lionel Grewan of New York's Citibank, the social programs contribution has had a major effect. He deplores the departure of American companies for a further reason. ``Almost all of the departing companies have sold out either to their own South African managers, or to South African companies. In both cases, this means the control of the company shifts to white South African hands. From our point of view, that is an entrenchment of economic apartheid.''
Compared with Fluke, GM and IBM are titans. Together they employ some 5,000 South Africans, many of them blacks. GM is turning over its operations to a group of local executives. IBM says it is handing over to local employees. Jobs, both firms indicate, are not at risk.
But one GM official acknowledges that, with the auto industry bearing the brunt of a South African recession, layoffs may occur later on. Workers in GM's assembly plant reacted to the US corporation's pullout by going on strike, demanding ``severance'' benefits, pension-fund payouts, and a say on the new management board. Yesterday, GM closed the plants - at least temporarily.
IBM has vowed to continue its program of black-community aid. GM says it will also provide community help, although no longer within the framework of the Sullivan Group. But GM's new South African management has indicated it will no longer feel constrained by a US presidential order that barred sales of its vehicles to the South African government, police, or military.
Other US departures have, almost without exception, meant an end to the companies' social aid programs here. Marriott Corporation has recently turned over its airline catering business to the South African Fedics Company. Marriott, says a Fedics official, has given a leave of absence to allow one of its American executives to stay behind and help run things. When asked about the company's commitment to the Sullivan code, the Fedics official, who asked to remain anonymous, replied, ``I don't think this really applies to us.'' He did stress that Fedics has a fair employment code.
Asked whether the agreement included provisions for a continued South African profit share for Marriott in the US, the official replied: ``That is fairly confidential. Maybe you can put two and two together ....'' A spokesman for Marriott in the US said, however, that as far as he knows there is no such arrangement.'' Some departing US firms have secured at least nominal guarantees for the employees left behind.
Mr. Grewan sees a wider pattern of retrenchment by South African managers taking over such concerns. Listing names of departed former Sullivan signatories, he says, ``Virtually all of the companies to which they sold their interests stopped being active [in Sullivan programs] almost immediately. I haven't heard a peep from them.''
This report was filed under South Africa's emergency regulations, which prohibit reporters from being ``within sight'' of any unrest, any ``restricted gathering,'' or any ``police actions''; from reporting on arrests made under the emergency regulations; and from relaying information deemed subversive.