How to overcome the challenges that face SA Manufacturing – Part 3

Over the last two months, we’ve highlighted JB Switchgear’s Managing Director, Johan Basson’s thoughts on the challenges facing companies in the electrical panel-building industry in SA. Having explored both the internal and external challenges facing the industry, let’s now take a look at Johan’s thoughts on the solutions and way forward to overcome the challenges highlighted.

Manufacturers need to create jobs

SEIFSA (Steel and Engineering Industries Federation of Southern Africa) circulated a document in 2018 which was titled the “Map to a Million”. It was produced by a corporate association of manufacturers, called the manufacturing circle. The document addressed the efforts of industry groups to create a million new jobs over the next decade. They strongly recommended that business prioritise the importance of local procurement both within industry and by end-users.

Our growing levels of unemployment need to be turned around. The most effective way to create jobs is to increase our manufacturing capacity and capability.

Support local

The manufacturing circle also felt that business should support ‘proudly South African’ initiatives in doing what some labour unions are achieving – tracking and flagging those tenders that can be executed locally but are designed for imports. They encouraged business to work with consumers to understand better the importance of supporting local manufacture.

In some instances, for example, BBBEE accredited suppliers have been awarded contracts for which they import the products, while existing local manufacturers with a lower accreditation level but higher employment numbers have been compromised.

Creating demand for locally produced goods

Creating additional demand for locally manufactured goods will promote economic growth. Whilst domestic demand is not sufficient to sustain industry, it is a good base from which to build a dynamic export industry.

The manufacturing sector employed 1.8 million people in 2nd quarter of 2017 which represents 12% of the country’s 16.1 million total jobs. Manufacturing has the highest job multiplier of any sector.

Manufacturing’s contribution to GDP has fallen from 24% in the early 1980’s to less than 13% in 2017. This trend threatens prospects for continued economic upliftment, transformation and growth. SA Manufacturing performance is lagging when compared to countries such as Malaysia, South Korea and even the DRC. For its stage of economic development, RSA manufacturing should be contributing at least 50% more to GDP than it currently does.(±20%)

Incentives should be put in place to encourage, promote, empower and incentivise local manufacturing.

Encourage SABS to make type testing more accessible

Given the fact that we need to grow local manufacturing, it follows that type testing should be more accessible and affordable for South African manufacturers. This will stimulate the necessary initiatives for growth.

Job creation is our best bet

We know that imports kill local manufacture, which results in high unemployment and political instability. Manufacturing has the best potential and leverage for new job creation, but in order to achieve that we need to:

  • Increase productivity and quality
  • Uplift skills levels
  • Introduce incentives to encourage and promote local manufacture
  • Initiate a manufacturing culture at schools
  • Encourage local companies to commit to more in-house training and development

We should initiate a manufacturing culture awareness at schools and other learning institutions.

As local manufacturers we should commit ourselves to do more in-house training and skills development.

Final thoughts

As a country we need to put urgent remedial measures in place to establish ourselves as a respected and competitive manufacturing force in the global context.

We should strive towards increased productivity, better quality and a more positive approach towards the potential which lies dormant in our country. Now, more than ever we need to dig deep to find inspiration and motivation. Most of us have our roots here, we are children of this land, and I want to encourage you all to remain resilient, innovative and a positive ambassador for South Africa’s manufacturing industry.

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