Feb 25, 2013
New survey confirms SA’s waning manufacturing competitivenessBack
Africa|Education|Industrial|Systems|Africa|China|Egypt|Germany|Greece|Ireland|South Africa|United States|Energy|Manufacturing|Manufacturing Competitiveness|Product|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
A well-documented challenge facing the construction industry is the across the board skills shortage, which has the potential to seriously affect the sustainability of the sector. “Within construction people are our greatest assets and the Stefanutti Stocks group is...
Article contains comments
Recent Research Reports
Defence 2014: A review of South Africa's defence industry (PDF Report)
Creamer Media’s Defence 2014 report examines South Africa’s defence industry, with particular focus on the key participants in the sector, the innovations that have come out of the sector, local and export demand, South Africa’s controversial multibillion-rand...
Road and Rail 2014: A review of South Africa's road and rail infrastructure (PDF report)
Creamer Media’s Road and Rail 2014 report examines South Africa’s road and rail transport system, with particular focus on the size and state of the country’s road and rail network, the funding and maintenance of these respective networks, and the push to move road...
Real Economy Year Book 2014 (PDF Report)
This edition drills down into the performance and outlook for a variety of sectors, including automotive, construction, electricity, transport, steel, water, coal, gold, iron-ore and platinum.
Real Economy Insight: Automotive 2014 (PDF Report)
This four-page brief covers key developments in the automotive industry over the past 12 months, including an overview of South Africa’s automotive market, trade figures, production and the policies influencing the sector.
Real Economy Insight: Construction 2014 (PDF Report)
This five-page brief covers key developments in the construction industry over the past 12 months. It provides an overview of the sector and includes details of employment in the sector, infrastructure and municipal spending, as well as insight into companies’...
Real Economy Insight: Electricity 2014 (PDF Report)
This five-page brief covers key developments in the electricity industry over the past 12 months, including details of State-owned power utility Eskom’s generation activities, funding and tariffs, independent power producers and prospects for the sector.
This Week's Magazine
Integrated energy and chemical company Sasol has partnered with Unisa Graduate School of Business Leadership (SBL) professor and founder and CEO of PanAvest Partnership Dr Douglas Boateng to publish a series of books on executive supply chain management aimed at...
The World Wide Fund for Nature’s (WWF’s) 2014 Living Planet Index (LPI) indicates that there has been a 52% decline in vertebrate species since 1970. The Index tracked the trends of 10 000 discrete populations of over 3000 vertebrate species between 1970 and 2010.
Rwanda has joined a number of East African countries seeking to import electricity from Ethiopia as its demand grows. After it became apparent several generation project it is implementing will not come on stream early enough, now plans to import 400 MW from Ethiopia...
Metrorail’s first new passenger train will arrive in November next year, says Passenger Rail Agency of South Africa (PRASA) CEO Lucky Montana. “Next year we will be able to put our hands around the infrastructure and equipment we have been talking about for so long.”
The Competition Commission has launched an investigation into what it says are “price fixing, market division and collusive tendering in the market for the manufacture and supply of automotive components to original equipment manufacturers” (OEMs, or vehicle...