South Africa can build manufacturing capacity; pandemic is proof of potential, says Rodseth

12th March 2021

By: Schalk Burger

Creamer Media Senior Deputy Editor

     

Font size: - +

South Africa can halt is premature deindustrialisation trend and grow the value of the manufacturing sector and its beneficial impact on jobs if all stakeholders commit to its development, manufacturing industry advocacy body the Manufacturing Circle executive director Philippa Rodseth said this week.

South Africa's economy has not developed sufficiently to move to an industrialisation trend, and the result of the pressure on manufacturing is that its contribution to gross domestic product and its role in providing decent employment have shrunk.

"A decline in manufacturing means a decline in manufacturing jobs and we have been losing manufacturing jobs for more than three decades. However, if we can address certain issues and blockages - and we believe this is possible - there is no reason we cannot stabilise the sector, arrest its decline and, in time, grow it to the extent that is appropriate for our economy," she said during a webinar hosted by business development advisory and consultancy firm Isibani director Zanele Salman.

Even before Covid-19 restrictions impacted on the economy, manufacturing was under duress and experiencing declining production and business confidence and rising unemployment.

"This contributes to a vicious cycle of underused capacity reducing economies of scale, eroding efficiency and driving up costs, as well as reducing returns on investments, which means that future investments are deferred. This leads to fewer exports and shifts, and retrenchments, as well as proportionally reducing training and skills development, and demand for skills in the sector."

Despite this, the Manufacturing Circle believes this trend can be turned around, owing to significant lessons learned during the sector's response to the worldwide crisis precipitated by the spread of Covid-19.

At the time of the first local infection, South Africa was worried that it would not be able to secure even basic medical goods and products. An example was that it did not manufacture paracetamol, but sourced it from India. India moved to protect its own supplies of medicines.

Similarly, South Africa had only 5 000 intensive care unit beds in public and private healthcare facilities at the start of the pandemic. The country also had to prioritise the protection and support for frontline and healthcare workers.

The disruptions to supply chains highlighted the country's reliance on imports, with prices and lead times having risen owing to the pandemic.

"Planning was very difficult because of constant changes and new challenges presenting moving targets to planners. However, this did provide us with a big lesson that improvisation was key to survival and agility was required to manage the challenges," said Rodseth.

In March, the country did not manufacture breathing apparatus, but mapping out the need for such equipment across public and private hospitals enabled industry, government, unions and individual citizens to understand the requirements.

A local manufacturing partnership was established, which led to the ramping up of production of medical consumables, such as personal protective equipment in partnership with the textile sector and the South African Clothing and Textile Workers Union, and rapid prototyping, development and production of continuous positive airway pressure (CPAP) breathing apparatus.

"As of today, we are producing more than 60 different healthcare products, including isolation gowns, surgical masks, aprons, filtering facepiece Class 2 masks and sanitisers, and are producing 20 000 CPAP devices. We are mostly self-sufficient in this category," she emphasised.

"We can come up with innovative solutions and, by working with government, labour and companies, identifying which companies can produce inputs and products, we can remove the blockages to greater production and help to ramp up production."

The response from industry, labour and government was crucial, and illustrated what a coalition of the willing can achieve.

"Our economy has changed and economic recovery is critical, but challenges also present opportunities and there is an opportunity to reset the course of our economy. This needs strong leadership and different ways of thinking. Additionally, we must act to determine whether there is a vibrant manufacturing industry in South Africa in ten years, or continuing decline."

Manufacturing has an important role to play in the economy, and identifying opportunities to manufacture goods that can compete against imports is important to determine focus areas and where jobs can sustainably be created.

Further, there are opportunities for growth and development in the energy, transportation and agricultural sectors, and manufacturing plays a key role in providing inputs and products for these sectors.

"It will be hard work, and no one-size-fits-all approach will work. We have to understand the needs of each subsector and their value chains and identify opportunities to produce inputs; not only end products. But the work done during the pandemic demonstrated how effective this approach is to focus efforts and drive progress."

Local procurement was a key demand pull-factor that would help to stimulate local demand. Better baseline local demand, and/or more exports, will increase capacity utilisation, improve economies of scale, efficiency and competitiveness, and provide sustainable jobs. A stable, transparent and long-term policy framework was fundamental to supporting manufacturing, Rodseth said.

Manufacturing sector jobs are decent and most manufacturing jobs provide well above minimum wages. Manufacturing has one of the highest multipliers in terms of job creation from a value chain point of view, as almost all products will require packaging, transportation and service. Manufacturing skills are very beneficial for the economy, supporting growth and development, are developed on the job and are suitable for workplace training, she pointed out.

"Renewing the manufacturing sector is something we can do; we have the industrial capacity, particularly in light manufacturing, and, if we can enable demand through local procurement and trade, we can pivot to growth. The change in industry worldwide presents further opportunities to capture new jobs, improve efficiencies and produce products in new ways," she concluded.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

Comments

The content you are trying to access is only available to subscribers.

If you are already a subscriber, you can Login Here.

If you are not a subscriber, you can subscribe now, by selecting one of the below options.

For more information or assistance, please contact us at subscriptions@creamermedia.co.za.

Option 1 (equivalent of R125 a month):

Receive a weekly copy of Creamer Media's Engineering News & Mining Weekly magazine
(print copy for those in South Africa and e-magazine for those outside of South Africa)
Receive daily email newsletters
Access to full search results
Access archive of magazine back copies
Access to Projects in Progress
Access to ONE Research Report of your choice in PDF format

Option 2 (equivalent of R375 a month):

All benefits from Option 1
PLUS
Access to Creamer Media's Research Channel Africa for ALL Research Reports, in PDF format, on various industrial and mining sectors including Electricity; Water; Energy Transition; Hydrogen; Roads, Rail and Ports; Coal; Gold; Platinum; Battery Metals; etc.

Already a subscriber?

Forgotten your password?

MAGAZINE & ONLINE

SUBSCRIBE

RESEARCH CHANNEL AFRICA

SUBSCRIBE

CORPORATE PACKAGES

CLICK FOR A QUOTATION