“South African manufacturers urgently need government to pursue solutions to enable the country to fulfil its manufacturing potential,” said Manufacturing Circle executive director, Coenraad Bezuidenhout, at the Siemens Future of Manufacturing event held recently in Johannesburg.
Manufacturing has lost more than 300 000 jobs since the global financial crisis because these goals have not been pursued with resolute and coordinated action. At 11% of GDP, manufacturing still employs 1,6 million people, is the second biggest sector of the economy and is one of the top three multipliers in terms of value addition, job creation, export earnings and revenue generation.
“Siemens’ vision is for South Africa to become a competitive manufacturing country with a revitalised industrial sector that builds skills and creates quality jobs,” said Siemens VP process industries and drives, southern and east Africa, Raymond Padayachee.
This requires industry, government and organised labour to work towards a common goal. “South Africa needs to follow the lead of countries which are pouring massive political and economic resources into improving their competitiveness through advanced manufacturing capabilities,” explained Padayachee. “Siemens’ intelligent digital engineering software and drive technology combines the hardware and intelligent software functionality designed to make industry more productive, efficient, flexible and competitive.”
Bezuidenhout outlined four goals to stem deindustrialisation and grow manufacturing. He described how coordinated action to pursue these goals was required to narrow our account deficit and bring stability and sustainability to our economy.
1. Establish the right macro-environment to grow and attract dynamic manufacturers
This entails disciplined macro-economic policy execution, adequate bulk infrastructure in terms of transport, water and electricity provisions and adequate maintenance to ensure security of industrial water and electricity supply. Bezuidenhout emphasised that in addition to policy and policy execution, institutional barriers to growth in South Africa’s social dialogue and labour relations need to be confronted if manufacturing was to move the economy forward.
2. Make South Africa a fair and competitive gateway to Africa
South Africa needs to encourage fair trade through necessary adjustments to tariff and non-tariff barriers. It needs to focus on enhancing access and integration with African markets, while pursuing more equal trade relationships with Asia and South America and better leveraging its established trade connections with the US and the Eurozone.
3. South Africa must competitively beneficiate its own resources
Bezuidenhout explained how beneficiation offers a route to manufacturing growth, but the country needs to promote such innovation through a more conducive intellectual property regime and better leveraging of government budgets to help fund private sector solutions to government problems. Policy certainty and predictability in upstream mining and agriculture is also key.
4. South African goods need to enjoy preference locally and recognition across the world
In many cases, South African manufacturers produce quality at very competitive prices. While government improves its traction in terms of local procurement, the private sector and consumers need to dovetail with these efforts. Manufacturers believe a strong above-the-line campaign to educate consumers about the benefits of ‘Buying Local’ is an urgent necessity.
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