Manufacturing

Is there a future for manufacturing in South Africa?

Frontier Forum Blog Image

Written by: James Ueckermann

“The country is in a negative head space, a fractious environment of low trust between stakeholders” – Martyn Davies

Manufacturing in South Africa has been a hot topic in recent times and there is some uncertainty around the future thereof. Are we able to react to the warning signs and obstacles facing our economy? What does the future look like and how will South Africa recover?

At the Frontier Forum a respected group of individuals engaged in a discussion to address these questions in order to provide comfort on the topic. Martyn Davies, CEO of Frontier Advisory, states that South Africa is the only country that sticks to reindustrialisation, which is clearly a setback as we are not moving forward, but repeating the same mistakes.

The biggest debate between the panel of astute individuals was around labour and how this negatively impacted the state of South African economy.

Jonas Mosia, Coordinator for Industrial Policy from COSATU, mentioned that we have to fix the issues of procurement as there is no coordination behind it. He wants businesses to employ more unskilled labourers in order to minimize the unemployment rate, but protecting and creating low-skill, low-pay jobs will simply be economically irrelevant in ten years’ time.

Raymond Padayachee, Head of the Industry and Manufacturing Sector SA and Africa from Siemens, challenged this statement. He feels that SA is an attractive market, but the level of unskilled workers is not of much value to the economy as there is no progression in the industry and therefore creating escalating costs which, SA cannot afford at this stage. The future of manufacturing will be limited if we keep heading in this direction and further contributing to the pandemonium.

Jeff Nemeth, President and CEO from Ford Motor Company of South Africa, added that his company has the fastest line of productivity in Africa, but the short term trends in South Africa has lead to 17% inefficiency because of the strikes. He also feels that we have to find a way to drive local demand as the African Customer finds safety in multi-national brands and not supporting its local economy.

Deloitte professional services group added some hope as they foresee an exciting future ahead regarding new developments in the manufacturing sector.

“Future jobs in successful economies will be high-tech jobs, not low-tech. To this end, Deloitte is globally spending time working with leading universities, and the public and private sectors in various countries to understand and shape the future of manufacturing, and what this means for local economies such as South Africa. We have no option but to play in this space – the only question is how soon we do so,” said Mr Pillay.

Bronwyn Kilpatrick, Automotive Leader and Assurance Partner mentioned exciting developments in the automotive industry such as the ‘Uber App’ (which is an easy to use transport service and thereby introducing mobility), the Google Car (that drives on its own) and also covered was 3D-printing (the move towards additive manufacturing).

Deloitte Advanced Materials System Specialist, Jason McPherson spoke about the need to deliver systems versus materials in order to lead the race in value creation. What this means is that a new materials development process should start at addressing unmet wants and needs and then working backwards to determine what materials would be required to deliver a solution for these.

Deloitte Audit Partner and Forestry, Paper Pulp & Packaging Leader – Roy Campbell, told of interesting facts about the forestry sector and the impact of the iPad (as many are now reading the news on tablets). This however does not mean the end of paper in our time as most of the cellulose in trees is used in manufacturing these iPads and even in the clothes we wear and the food we eat.

Dr Martyn Davies concluded that for South African economy to re-industrialise we are going to have to diversify and differentiate ourselves by focusing on what we’re good at.

If you have any questions, feel free to contact Antoinette Shand (Manufacturing Marketing Lead – Deloitte) at ashand@deloitte.co.za

About the author

David Graham

3 Comments

  • In as much as labour is proving to be an albatross to South African manufacturing I believe that the sector is still on a growth path for the next 15 – 20 years. The growth will be underpinned by a growing demand for finished goods within the Southern African region. The infrastructural and policy problems in Zimbabwe, the lack of economic diversity in Zambia, Namibia, Lesotho, Swaziland, Mozambique, Malawi and the high cost of operations in Angola will continue to make South Africa attractive.

    In my view, the biggest risk to South African manufacturing will be the emergency of the Zimbabwean economy from the doldrums. The labour market in Zimbabwe is rather stable and the country already has the capability of a manufacturing industry.

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