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How to create a more viable local manufacturing sector
19 July 2016
BizConnect

Manufacturing offers both skilled and unskilled job opportunities; if correctly managed. Sadly, however, the local manufacturing sector is showing flat growth due to multiple competitive challenges.

Local versus BEE  

South Africa focuses strongly on Black Economic Empowerment (BEE), which economically liberates indigenous individuals and groups. Together with ‘localisation’ of products and services, it can also liberate local ideas and inventions, bringing a much-needed growth dividend to transformation. manufacturing-sector-management

Let’s take a typical international manufacturing company with a South African subsidiary. It can be wholly black-owned locally, with a large BEE staff component and consider itself empowered. But, if it doesn’t include locally manufactured components, intellectual property or skills in its processes, products and/or services, it doesn’t foster innovation.

This kind of manufacturing doesn’t create anything new, it merely assembles. The South African government designates certain products it purchases to require a specific percentage of local content, in order to support local manufacturing.

The set-top boxes required for South African television’s digital migration is such a product. If more electronic consumer products such as cellular phones, computers and communication network elements are designated by government to require a defined percentage of local content, dormant SA manufacturing opportunity will be unlocked, leading to job creation, local industrial capacity development, innovation and wealth creation.

However, true ‘localisation’ should not only be focused on local content, but also drive greater local innovation and entrepreneurship with the desired result allowing an increase in locally developed products – from design through to the manufacturing process.

Can-do and make do

South African innovation and entrepreneurship exists; just look at Ronnie Apteker, Elon Musk and Mark Shuttleworth. And, there are many more of their kind, even if the specific skills of the latter two figureheads of SA innovation are lost to us. When the next Musk or Shuttleworth comes to the fore, no amount of hardship will quell their innovative drive. It comes down to making the best of what is available.

Build with BRICS  manufacturing-production

South Africa is part of the BRICS trading group, but, the opportunity for exporting duty-free products into other BRICS nations is limited. For example, if a South African company exports slot machines to Brazil there is no duty break-even, even though both countries are members of BRICS. This is a potential area for the South African government to explore, if we are to create an international trade arena that works in favour of local innovation.

DIY – with friends  

In the end it’s all about innovation, with increased local innovation bringing with it a knock-on increase in local design, which would result in a much needed boon to the local manufacturing sector. Developing local inventions, manufacturing and exporting them is the only way to compete globally.

And, being South African, we are of course inclusive. I’m looking forward to the day when more contract manufacturers will work with start-up entrepreneurs, and promising students, through incubation programmes and scholarships, thereby unearthing the next big South African innovation.

For more information contact Duncan Pollock, Grand Tellumat Manufacturing, +27 (0)21 710 2911, dpollock@grandtellumat.com

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