Trade, Industry and Competition Minister Ebrahim Patel has called for deeper partnerships and the use of both demand- and supply-side measures to strengthen South African manufacturing capability and enable the country to benefit from opportunities in the Brazil, Russia, India, China and South African (Brics) markets.
He spoke during the Brics Manufacturing Conference, which was hosted in Sandton last week.
“Over a number of years, manufacturing was seen as a sunset industry, a relic of an age that was passing, and policy-makers were urged to abandon efforts to support the industry and seek opportunity in other sectors of the economy.
“In the case of South Africa, the country rapidly opened its trade-exposed sectors to what was described as the bracing effects of global competition, but without supporting local firms to become stronger and more dynamic. The results were painful to see – we lost critical manufacturing capacity,” Patel said.
He added that it led to a wave of de-industrialisation pressures, and as core feeder-factories were closed down, they impacted on other parts of supply chains.
“Our localisation project is about working with the business community to rebuild the foundations of manufacturing [and] to strengthen industrial capacity that can supply both the domestic and export markets,” the Minister stated.
Manufacturing is a big driver of employment with the strongest employment multiplier. Research cited by the Industrial Development Corporation shows that for every one manufacturing job, another three jobs are created across the economy, in both supplier industries and services sectors.
The manufacturing sector is a significant earner of foreign exchange and a driver of innovation and of research and development; and, in times like the Covid-19 crisis, countries with capacity relied on their manufacturing industries to produce food, personal protective equipment and medical supplies, Patel pointed out.
He further noted that the country’s reimagined industrialisation agenda is based on building dynamic firms and economic inclusion: to retain and modernise traditional sectors, like steel, textiles and clothing; to expand advanced-manufacturing sectors such as automotive and chemicals; to develop national resilience through expanding sectors such as food and healthcare; and to nurture new industries such as the green economy and the digital economy.
Sector partnership agreements, known as master plans, have been put in place in five sectors, with a further one in the furniture industry nearing finalisation.
These initiatives have positively impacted on sentiment and investment and Patel pointed to the recent R16-billion investment announcement by the Ford Motor Company and a R1-billion investment in the poultry industry.
He also highlighted progress made in the early months of the Covid-19 lockdown in South Africa to repurpose manufacturing capacity, with the local production of hand sanitiser products having expanded greatly, supplying the domestic market and also exporting R1.7-billion worth of product to other African countries.
Additionally, the manufacture of medical-grade face masks was ramped up from a capacity of six-million to 16-million masks a month, while local innovation and manufacturing capabilities were combined to produce 20 000 continuous positive airway pressure, or CPAP, ventilators, used particularly during the second wave of infections in South Africa.
“New technologies provide significant opportunities, not only for new industries, but to retrofit established sectors to be more flexible and green. Additive manufacturing, the convergence of the physical and digital worlds, offers enormous opportunities for a location such as South Africa,” the Minister said.
He added that climate-change was another significant vulnerability for people and economies.
“To ensure we contribute to a more climate-resilient industrialisation, government will focus its efforts on identifying green economic opportunities in new products and sectors, as well as in greening traditional smoke-stack industries.”
Patel called on the manufacturing sector to work on opening export opportunities in Brics countries, through three measures.
First, to produce detailed export-opportunity studies for each Brics country, identifying the products that can be exported and the support infrastructure that is needed.
Second, to build greater cohesion within South African manufacturing, with sharing of ideas between industrialists on how to penetrate export markets; and greater use of manufacturing networking to address issues of technology innovation and marketing, besides others.
Third, to develop an innovation project to bring together product development and manufacturing people to identify new opportunities where South Africa may not yet have capacity, but for which there are significant markets in Brics and, indeed, beyond it.
He called on the manufacturing sector to work on attracting bright young people, who can bring energy and new ideas to the making of products.