For South Africa to become a top-class manufacturing nation, South Africa needs to fix some fundamental problems while nurturing skills and driving demand.
Coenraad Bezuidenhout, executive director of the Manufacturing Circle, told delegates to the Siemens Future of Manufacturing in South Africa event being held today that government needs to create an environment where manufacturing can thrive.
This includes the provision of bulk infrastructure like power and waters supply, he says. Uncertain supply of these services costs manufacturers money, but they can be solved.
The prices of these infrastructure services is also an issue, Bezuidenhout says. “Manufacturing has come under pressure from prices in electricity, water and gas; as well as from systems that don’t work together to stimulate growth,. If these price increases continue, they will rein in growth.”
These macro-economic conditions join a lack of skills in the pipeline to stifle manufacturing growth, he says.
Labour relations are another issue working at odds with the goal of making South Africa a world-class manufacturing nation. “Maybe we need to start thinking differently,” Bezuidenhout says. “If centralised bargaining doesn’t work, we need to look at alternatives; while keeping it in circumstances where it does work.
“The same goes for NEDLAC: we have had 20 years of seeing how it doesn’t work. We need to either reform it or throw it out.”
These are some of the issues that the industry needs to think about and confront, Bezuidenhout says.
“We need to ensure that South Africa becomes a fair and competitive manufacturing gateway into Africa,” he adds. “At least 8-million people will become urbanised on the continent within the next decade. This is a huge opportunity for manufacturers. South African manufacturers already make the products that will be needed. But they need a secure environment for moving into Africa – and we need to ensure that other companies compete on an equal playing field in the local market.”
To grow and move forward, South Africa needs to become known as a market that can innovate and beneficiate, Bezuidenhout says. “We cannot have a particular section of the economy dictating to the others. We need leadership from the front, because we can beneficiate effectively. We do it in other markers and are known for our quality.”
Bezuidenhout suggests that government lead in the innovation drive. He points out that in the US, 3,5% of all government budgets are directed to innovation for the solution of specific problems. “We could do the same here,” he says. “And we can do the same with the patent system, making it more conducive to innovation.”
The private sector can also play a huge role in stimulating South African manufacturing. “South African-made goods must be preferred locally,” Bezuidenhout says. “We are known around the world to manufacture quality products at a good price; we do good precision work, respect intellectual property and have built quality relationships with our export destinations.
“We can do the same with new export destinations; and the domestic market needs to grow. The private sector needs to help with this,” He adds. “We need a strong above-the-line campaign, driving the message that buying local products has benefits to the fiscus, to service delivery and to job creation. These multipliers ensure that manufacturing will always be in the top three sectors of the economy, along with mining and financial services,”
