South Africa is underprepared for the Fourth Industrial Revolution, also known as Industry 4.0. However, it is not badly underprepared. This was reported by AT Kearney Associate Mark Saunders at the sixth Council for Scientific and Industrial Research Conference, in Pretoria, on Friday. Industry 4.0 embraces mobile connectivity, artificial intelligence, the Internet of Things, next-generation robotics, additive manufacturing (3D printing), wearable technologies, and genetic engineering.
AT Kearney is carrying out studies on behalf of the World Economic Forum on the readiness of countries for future production technologies and processes. Countries are not been ranked in terms of their readiness, but rather assigned to one of four categories or archetypes. These are: Global Leaders, Legacy Champions, Followers, and High Potential.
Global Leaders have a strong current manufacturing base and are well positioned for the future. Legacy Champions have a strong current manufacturing base but are at risk for the future. Followers have a limited current manufacturing base but are underprepared for Industry 4.0 and are at risk for the future. High Potential countries have a limited current manufacturing base, but are positioned well for the future.
"Based on preliminary results, South Africa is a follower," reported Saunders. But the country lies closely to the intersection of all four categories, so it could relatively easily advance, or slip back, into one of the three other categories. But it is somewhat underprepared. "South Africa is in a bit of a limbo situation. It isn't in a very clear position."
"Countries ... should rather focus on existing strengths, not on weaknesses," he affirmed. "It makes more sense to focus on strengths and prepare those strengths for emerging technologies."
He pointed out that South Africa had a strong manufacturing sector. Industry represented 13% of the country's gross domestic product. Construction represented 4% and electricity gas and water another 4%. The country's manufacturing base is established and diversified with a well-developed and efficient supporting infrastructure. It is also close to the rapidly growing markets in other African countries.
Local manufacturing sectors that are currently doing well are radio, television and professional equipment; food and beverages; petroleum, chemical products, rubber and plastic products; motor vehicles and parts; and wood and wood products and paper. The electrical machinery sector is neither growing nor declining. Sectors that are doing badly are basic iron, steel and metal products and machinery; textiles and clothing; and furniture.
However, its weaknesses included rising costs of production, relatively low productivity levels, lack of highly skilled labour and uncertainty about government policy. Moreover, manufacturing is the only sector of the South African economy which has been shedding jobs since 2010 (job losses in the mining sector have started much more recently; until recently, they were still rising).
"Human capital is important," emphasised Saunders. Without adequately prepared human capital, a country will not be able to harness the new production technologies. And if South African manufacturing is not ready for Industry 4.0, the result will be only more job losses, as markets will be lost to foreign competitors using the new technologies.