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MANUFACTURING:

South Africas Greatest Opportunity for


Job Rich Economic Growth
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MANUFACTURING
employ | produce | prosper

CIRCLE

PROMOTING MANUFACTURING
FOR HIGHER JOB-RICH GROWTH

A strong and growing manufacturing sector is of vital importance for a prosperous South Africa:
FACT: The manufacturing sector in SA employs around 1.7 million people
FACT: Manufacturing output accounts for 15% of GDP
FACT: For every R1 invested in manufacturing there is R1.13 of value addition to the SA economy
FACT: Manufacturing is among the top three multiplier sectors in terms of value addition, job creation, export earnings and
revenue generation for every R1 invested.
FACT: Manufacturing provides the base load and scale for key national infrastructure such as electricity generation and
municipal services
FACT: Manufacturing provides the only viable means of beneficiating natural resources in SA
The positive contribution and potential of manufacturers is currently under severe threat in SA:
FACT: More than 300 000 South African manufacturing jobs have been lost or exported to other countries since the beginning
of 2008, with the majority going to China
FACT: More than 440 000 small business owners have closed up shop in 5 years between 2006 and 2011
FACT: In September 2012, South Africas Purchasing Management Index registered a three-year low gesturing at bad business
conditions and contraction in Manufacturing
FACT: South African Manufacturers foresee further decline over the next two years unless key domestic policy issues, and the
leveling of our trade situation are not addressed immediately
FACT: Conditions have deteriorated because while administered prices in other BRICS countries have decreased by over 36%
in the last decade, electricity costs have rocketed by over 170% in South Africa and predicted to continue to escalate at more
than double the forecasted inflation rate
FACT: At the same time our domestic market is under-protected against unfairly incentivised imports, while China, India, Brazil
and other countries offer much higher incentives and protection to their manufacturers
FACT: The imbalance in our trade situation is evidenced by our negative trade balance with China, which rapidly outstripped
the negative trade balance with all other trading partners. Our trade deficit now makes up 6.4% of GDP, which is cause from
great concern
FACT: There will be further decline over the next two years unless key domestic policy issues and the unfair trade situation are
addressed immediately. More companies will close down, more jobs will be lost, the Manufacturing contribution to GDP will
contract further and the balance of payments situation will weaken
FACT: Manufacturing output is supported by a more stable and competitive rand exchange rate, but this requires more
focused policy determination over the long term
FACT: Post-2009, South Africas manufacturing sector has not recovered to the extent its peers has, as our domestic policies do
not foster manufacturing competitiveness
FACT: To ensure its sustainability and its contribution to the growth of the economy and jobs in South Africa, Manufacturing
output must grow at least by 10% per annum
FACT: If the above is not addressed, more companies could close down, more jobs could be lost, the Manufacturing
contribution to GDP growth could contract further and the balance of payments situation could weaken terminally
The Manufacturing Circle believes that in order to put South Africa on a higher, job-rich growth path, and enable us to
compete and succeed as a manufacturing destination in the global economy, we need to prioritise four clear goals.

Visit www.manufacturingcircle.co.za for more information

Goal 1:

South Africa will offer a business environment that


attracts investment in manufacturing and nurtures existing
manufacturing companies
Get government coherent, coordinated and consistent on economic policy and
regulation
Government should embrace and lead business and labour together as Team
South Africa
Ensure efficient public infrastructure cost recoupment and productive spending
Contain electricity price increases to gradual increments, eliminate massive
municipal mark-ups and diversify market contestation for baseline electricity
generation
Promote and maintain a skills pipeline

Goal 2:

South Africa will be the gateway manufacturing destination


for exports to Sub-Saharan Africa and South African
manufacturers will compete domestically on an equal footing
with imports
Ensure fair trade through the necessary adjustment to tariff and non-tariff barriers
implemented timeously
Strengthen regional ties and ties with key export markets, both bilaterally and
multilaterally
Improve transport linkages to regional and other key markets
Promote a competitive and stable exchange rate

Goal 3:

South Africa will be a competitive beneficiator of its own


resources
Level the playing field with regards to intellectual property rights
Streamilne environmental measures that work against sustainable beneficiation
Promote investment in infrastructure and services that either directly beneficiates
or indirectly promotes investment in beneficiation activities
Identify preferential procurement opportunities for locally beneficiated products
Depoliticise and promote access to land and raw materials

Goal 4:

South African manufactured products will be preferred by


South Africans and have an excellent reputation around the
world
Address capacity issues, and lack of clarity around the designation of sectors and
products for local procurement for more swift implementation
Create understanding about differentials at which buying South Africa is deemed
beneficial for the domestic economy
Effectively promote the benefits of buying South African to consumers, private
and public sector decision makers and national investors

A WORD

FROM THE MANUFACTURING CIRCLE CHAIRPERSON


Unemployment is unsustainably high in South Africa. Manufacturing is the
sector that offers the greatest potential to create jobs at respectable pay levels
for unskilled and semi-skilled workers in other words, unlike many other
sectors, for the labour market that South Africa has rather than for a labour
market we do not have.
A strong and healthy manufacturing sector requires a strong and positive
approach to bring about an environment conducive for manufacturing
investment, to grow the economy and create jobs. For many reasons for
which we bear collective responsibility, that approach has materialized
timeously, leaving our manufacturing sector lagging after the recession of
2009.
The results: many people have lost their jobs, many small business owners
have closed their doors and the numbers of companies going insolvent or
liquidating is still far too high.
The good news is that there are many challenges facing manufacturing in
South Africa today that require only that we stand together in defense of
South Africas single most important imperative: to create jobs and have more prosperity shared by an ever-greater
number of South Africans.
This is true for how we lead the economy, make the necessary trade-offs and work with our trading partners to ensure
a level playing field for our industries. But it is also true for when we reap the benefits of more innovation, better
education, healthier communities and more opportunity for more South Africans.
Manufacturing has made a great contribution to the development of South Africas skills, our infrastructure, our
wealth and our innovativeness, but this base is disappearing. All that is required is for us to grasp the nettle and show
we understand that Manufacturings moment is now. The Manufacturing Circle does and it has outline four goals we
should pursue to realise Manufacturing as South Africas greatest opportunity for job-rich economic growth.
We therefore urge our policy makers to make the pursuit of the proposals outlined in this document their top priority.
For economic growth. For job creation. For the sake of a better life for all South Africans.

STEWART JENNINGS
Manufacturing Circle Chairperson

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Colour specifications: (BLACK: 100K; RED: 15C 100M 100Y; GREEN: 88C 20M 82Y 5K; BLUE: 95C 84M; YELLOW: 2C 23M 80Y)

MANUFACTURING
employ | produce | prosper

CIRCLE

Email: manufacturinginfo@pg.co.za
Website: www.manufacturingcircle.co.za

76600

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