Feb 25, 2013
New survey confirms SA’s waning manufacturing competitivenessBack
Africa|Education|Industrial|Sustainable|Systems|Africa|China|Egypt|Germany|Greece|Ireland|South Africa|United States|Energy|Manufacturing|Manufacturing Competitiveness|Product|Solutions|Systems|Coenraad Bezuidenhout|Infrastructure|Mike Vincent|Stewart Jennings
© Reuse this
The country slipped two places from 22 to 24 between 2010 and 2013 in the 38-country global index, compiled by Deloitte Touche Tohmatsu and the US Council on Competitiveness. China, Germany and the US top the index, which was propped up by Greece, Ireland and Egypt.
The South African survey, which was released on Monday, also forecast that the country was poised to fall further in the coming five years, owing to a range of constraints, ranging from chronic skills shortages, through to low labour productivity and rising input costs.
The local survey, which was compiled separately by Deloitte, in collaboration with the Manufacturing Circle, indicated that the 76 domestic manufacturers surveyed were losing ground on a range of indicators.
The enterprises were involved in a diverse cross section of activities and varied in size from firms turning over less than R100-million a year and employing about 100 people, through to large companies with revenues exceeding R10-billion and employing up to 5 000 people.
The leading concern for local manufacturers emerged as the ‘cost and availability of labour and materials’ – a result that represented a marked deviation from the global survey, where ‘talent-driven innovation’ was perceived as the most pressing challenge.
Outgoing Manufacturing Circle chairperson Stewart Jennings said the nominal cost of labour was not the chief concern, but rather low levels of productivity and the lack of technical skills.
He added that there was also still union resistance to linking wage agreements to productivity indicators, which, coupled with a lack of industrial peace, was a key concern for industrial investors.
Deloitte’s South Africa manufacturing industry leader Karthi Pillay said there was an urgent need for government, business and labour to deliberate on ways to reverse the current deindustrialisation trend, as well as to deal with the underlying causes of the country’s declining manufacturing competitiveness.
The sector’s contribution to gross domestic product had fallen from a peak of 22% in the 1980s to below 12% currently.
Pillay reported that Deloitte planned to follow up the release of the ‘Enhancing Manufacturing Competitiveness in South Africa’ report with an effort to facilitate a stakeholder colloquium, where possible remedies could be discussed.
Besides industry’s labour-market concerns, the survey found that domestic manufacturers were also anxious over local market attractiveness; energy costs and policies; economic, trade and tax systems; and the adequacy of physical infrastructure.
By contrast, respondents to the global survey ranked energy costs and policies only seventh in the factors affecting their competitiveness, while placing emphasis on talent-driven innovation and economic, trade and tax systems, which ranked first and second respectively.
Deloitte’s strategy and innovation director Mike Vincent argued that, besides a proactive engagement between the social partners on the key productivity constraint, other important considerations related to education, incentives, industry collaboration and supportive incentives.
Manufacturing Circle executive director Coenraad Bezuidenhout concurred, arguing that incentives could offer critical short-term relief, while sustainable solutions were found to the issues currently undermining South Africa’s manufacturing competitiveness.
Edited by: Creamer Media Reporter© Reuse this Comment Guidelines (150 word limit)
Other Labour and Skills Development News
Recent Research Reports
Steel 2015: A review of South Africa's steel sector (PDF Report)
Creamer Media’s Steel 2015 report provides an overview of the key developments in the global steel industry and particularly of South Africa’s steel sector over the past year, including details of production and consumption, as well as the country's primary carbon...
Projects in Progress 2015 - First Edition (PDF Report)
In fact, this edition of Creamer Media’s Projects in Progress 2015 supplement tracks developments taking place under the Renewable Energy Independent Power Producer Procurement Programme, which has had four bidding rounds. It appears to remain a shining light on the...
Electricity 2015: A review of South Africa's electricity sector (PDF Report)
Creamer Media’s Electricity 2015 report provides an overview of State-owned power utility Eskom and independent power producers, as well as electricity planning, transmission, distribution and the theft thereof, besides other issues.
Construction 2015: A review of South Africa’s construction sector (PDF Report)
Creamer Media’s Construction 2015 Report examines South Africa’s construction industry over the past 12 months. The report provides insight into the business environment; the key participants in the sector; local construction demand; geographic diversification;...
Liquid Fuels 2014 - A review of South Africa's Liquid Fuels sector (PDF Report)
Creamer Media’s Liquid Fuels 2014 Report examines these issues, focusing on the business environment, oil and gas exploration, the country’s feedstock supplies, the development of South Africa’s biofuels industry, fuel pricing, competition in the sector, the...
Water 2014: A review of South Africa's water sector (PDF Report)
Creamer Media’s Water 2014 report considers the aforementioned issues, not only in the South African context, but also in the African and global context, and examines the issues of water and sanitation, water quality and the demand for water, among others.
This Week's Magazine
While economic forecasts for the African continent are most favourable, African airlines may not be able to benefit from the expected growth in the region’s gross domestic product (GDP), International Air Transport Association VP: Africa Raphael Kuuchi has warned....
The Automotive Production and Development Programme (APDP) will need to change substantially post 2020, says Metair Investments South African operations COO Ken Lello. “We must not make tweaks. We have to change. What we are doing is not sustainable.”
Banking group Absa’s forecast is for the rand to end the year at around R13 against the dollar, weakening further to R13.50 by 2016, says Absa sectoral analyst Jacques du Toit. He warns that possible interest rate hikes in the US may see capital being pulled from...
The Dispute Resolution Centre at the Bargaining Council for the Civil Engineering Industry (BCCEI) is now open to handle party-to-party disputes. The BCCEI represents the interests of all level four to nine Construction Industry Development Board companies.
Communications technology firm Ericsson sub-Saharan Africa head Fredrik Jejdling says the company’s commitment to sustainability and corporate responsibility has been integrated into all facets of its operations, which has provided it with sustainable revenue...