Pressure builds on US companies in South Africa
IBM's announcement Tuesday that it is pulling out of South Africa, one day after General Motors said it would do so, increases pressure on other American corporations doing business there. The pullouts by GM and IBM, which are ranked first and fifth, respectively, in the Fortune 500, bring to 29 the number of United States companies this year that have announced they are divesting their South African assets.
Anti-apartheid campaigners praise the moves. But some express concern that the corporations aren't making an effort to sell assets to black South Africans, as Coca-Cola announced it would do last month.
Social pressure and bottom-line economics have combined to accelerate the divestment movement in recent weeks.
``In the next few weeks, other kingpins will follow,'' says Richard Hull, senior adviser on South Africa at Frost & Sullivan, a political risk consulting firm. ``I'm forecasting a stampede out of South Africa.''
According to one source, at least three major companies will pull out in the next week or two. Mobil, the largest US employer in South Africa, and CalTex Petroleum (partly owned by Texaco and Chevron), are not said to be among the three.
USG Corporation, Goodyear Tire & Rubber, R. J. Nabisco, Allegheny Corporation, Johnson & Johnson, and United Technologies are the largest US employers remaining in South Africa. ``There are no changes in our plans for operations there,'' says a USG spokesman.
``As long as we can make a contribution in South Africa and operate our totally desegregated plant in a viable manner,'' a Goodyear official says, ``we will remain in that country. We still think this is the best decision for our South African employees and their families.''
Anti-apartheid campaigners lauded the divestment moves. ``We're delighted they're pulling out,'' says Loretta Williams of the Interfaith Center on Corporate Responsibility in New York. Dr. Williams notes that GM went beyond economic justifications, citing disappointment ``in the pace of change in ending apartheid.''
In explaining the pullout, IBM chairman John F. Akers noted ``the deteriorating political and economic situation'' in South Africa. That echoed a statement made one day earlier by GM chairman Roger Smith.
Richard Knight at the American Committee on Africa in New York praised the decision. But ``companies use economic conditions as a convenient excuse,'' he says. ``Since when has IBM or GM pulled out of a market because they're losing market share? They stay and fight. No, they're feeling the heat from grass-roots shareholders.''
Mr. Knight, noting that GM and IBM can still sell parts through licensing agreements or foreign affiliates, called for stiffer sanctions by Congress.
The sanctions passed by Congress last month are the catalyst for the latest divestments, says Mr. Hull, the Frost & Sullivan analyst. ``Congress has put its imprimatur on the whole divestment business. It's now the patriotic thing to do. It's what America wants us to do, and as good businessmen and Americans, we're going to do it.''
But he criticizes the extent of the pullout. ``I don't think you can call this a genuine moral decision. It's a function of falling profits and tremendous shareholder pressure. American companies will continue to make efforts to ensure that their products will be on the shelves, even if they're not present.
``If Coke, for instance, actually pulled its products off the shelves, that would really shock South Africans,'' says Hull. Coke announced it would sell its 15 bottling operations in South Africa, but it will still reap profits from the sale of its soft drink.
Until now, Coca-Cola, IBM, and GM have been advocating a reformation of South African racial policies by setting high work-force standards, upgrading black communities, and putting pressure on the government.
Indeed, the companies received high marks under the Sullivan Code, a set of guidelines for workplace, community, and, more recently, political desegregation. And IBM says it plans to continue its financial support for black education and development projects.
But change has not come quickly enough in the face of mounting opposition at home. These firms now join the 39 others that left in 1985 and the seven that departed in 1984, according to the Investor Responsibility Research Center, a Washington research group.