The Department of Trade and Industry (DTI) has reported strong uptake for its R5.8-billion Manufacturing Competitiveness Enhancement Programme (MCEP), which was launched in 2012 to sup-port a sector where output and jobs remained at risk owing to a range of international and domestic pressures.

Trade and Industry Minister Dr Rob Davies reported this month that, by the end of October, more than R3-billion-worth of MCEP approvals had been made, which would support industrial investments by 436 enterprises collectively valued at R13-billion. The projects would also sustain more than 116 000 manufacturing jobs.

The competitiveness-raising scheme was conceptualised after it emerged that 20% of the one-million jobs shed by South Africa during its 2009 recession had arisen in the manufacturing sector. It was also additional to the R12.7-billion 12i tax incentive for large manufacturing investments and a range of other specialised and generic incentive programmes being operated by the DTI.

Davies described the MCEP as a critical element of government's Industrial Policy Action Plan (Ipap), which has been designed to stem a deindustrialisation trend that had seen manufacturing’s contribution to gross domestic product decline from 20.9% in 1994 to only 12.4% in 2012.

Manufacturing Circle executive director Coenraad Bezuidenhout says it has been moni-toring the scheme and that, apart from some initial hiccups, it has been relatively impressive from the perspective of uptake, as well as with regards to approval and disbursement turnaround times.

He said it had also be designed in a way that lowered the emphasis on picking winners and responded instead to the need of domestic manufacturers to improve their competitive-ness. “In other words, it’s sensitive to the cur- rent realities facing the sector and the need to fight for competitiveness now so that manu-facturers can live to employ another day,” Bezuidenhout outlined

Cova Advisory director Duane Newman added that the MCEP had proved to be an attractive incentive as the percentages were higher, making it possible to recoup up to 80% of costs incurred. It has also taken account of more than only capital equipment, with incentives available for green investments and enterprise development.

Turnaround times of between six and eight weeks were also better than a number of other schemes, but Newman stressed that there was always room for improvement when it came to the administration of incentives.

But despite Ipap and the incentives on offer, confidence levels remained subdued, with the Manufacturing Circle’s third-quarter review citing recent strikes and ongoing instability in labour relations as a key area of concern, along with elevated labour and energy costs, currency volatility and sluggish consumer spending.

Statistics South Africa also reported a 3.3% decline in manufacturing production in September 2013 when compared with September 2012. The fall was mainly the result of lower production in the motor vehicles, parts and accessories sector, with the automotive industry having been adversely affected by strikes during August and September 2013. Seasonally adjusted manufacturing production for the third quarter of 2013 also decreased by 2.1% compared with the previous quarter.

Davies said that government remained committed to the reindustrialisation of South Africa and was willing to nurture, support and even protect industry.

However, he stressed that it would also press manufacturers to raise their overall competi- tiveness, including through the adoption of cleaner and greener production methods, which could emerge as a key area of com-petitive advantage.