Financial Data
Updated 06 Dec 2020

How to create a more viable local manufacturing sector

Despite the local manufacturing sector hitting a plateau in recent quarters, there’s still room for innovation and growth; it’s just a matter of refining your approach. 

Duncan Pollock, 19 July 2016  Share  0 comments  Print

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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.

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.

Related: Niche manufacturers can add value to super manufacturing hubs

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.

Manufacturing -production

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

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.

Related: Raw material quality can make or break your business

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.

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About the author

Duncan Pollock

Born in Pretoria, Duncan spent 12 years working at Sun International in the casino marketing division ahead of re-locating to Cape Town in 2008 to take up a position in the Limited Payout Machine sector with Grand Parade Investments (GPI) where his key responsibilities were to oversee and expand operations. During his tenure there, and under his supervision, the GPI Group undertook the first true local manufacture of gambling machines in South Africa, in conjunction with Tellumat (Pty) Ltd. This venture ultimately resulted in GPI (51%) and Tellumat (49%) establishing Grand Tellumat Manufacturing (Pty) Ltd (GTM) in late 2014 where Duncan has held the position of Business Development and Marketing Manager at GTM since March 2015.

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