South Africa’s manufacturing industry

Manufacturing industry - freeimages.com

The South African manufacturing sector contributed 15.2% to South Africa’s GDP in 2013, making it the third-largest contributor to the nation’s economy.

Manufacturing is dominated by industries such as agro-processing, automotive, chemicals, information and communication technology, electronics, metals, textiles, clothing and footwear. Below is a very brief snapshot of these industries.

Agro-processing

This industry spans the processing of freshwater aquaculture and mariculture, exotic and indigenous meats, nuts, herbs and fruit. It also involves the production and export of deciduous fruit; production of wines for the local and export market; confectionary manufacturing and export; and the processing of natural fibres from cotton, hemp, sisal, kenaf and pineapple.

World-class infrastructure, counter-seasonality to Europe, vast biodiversity and marine resources, and competitive input costs make the country a major player on the world’s markets.

Automotive

The automotive industry is one of South Africa’s most important sectors, with many of the major multinationals using South Africa to source components and assemble vehicles for both the local and international markets. The sector accounts for about 12% of South Africa’s manufacturing exports.

In 2013, the DTI introduced the Automotive Production Development Programme (APDP) aimed at increasing the volume of cars manufactured in South Africa to 1.2-million annually by 2020 as well as to diversify the automotive components chain. The National Association of Automobile Manufacturers (NAAM) said production will rise from 2014 onward because of the APDP.

According to NAAM, average industry employment figures rose by 441 jobs in the third quarter of 2013, therefore bringing the total to 30 344 positions within the industry.

Chemicals

South African chemical companies have only recently begun to focus on the need to be internationally competitive. The industry is the largest of its kind in Africa. It is highly complex and widely diversified, with end products often being composed of a number of chemicals that have been combined in some way.

In 2013, the sector was South Africa’s fourth-largest employer with 200 000 jobs and contributed about 5% to the country’s GDP.

Information and communications technology

The South African information and communication technologies (ICT) sector is the largest and most advanced in Africa, and is characterised by technology leadership, particularly in the field of mobile software and electronic banking services.

With a network that is 99.9% digital and includes the latest in wireless and satellite communication, the country has the most developed telecoms network in Africa. Export growth and internationalisation of South African companies is supported by the Department of Trade and Industry via the South African Electrotechnical Export Council (SAEEC).

According to the SAECC, the South African ICT market is estimated at US$ 42.6-billion (R468.4-billion) in 2013 with IT accounting for US$ 15.08-billion (R164-billion) and communications US$ 27.18-billion (R297.4-billion). The sector contributes approximately 8.2% to South Africa’s GDP.

Several international corporates, recognised as leaders in the IT sector, operate subsidiaries from South Africa, including IBM, Unisys, Microsoft, Intel, Systems Application Protocol (SAP), Dell, Novell and Compaq.

Metals

South Africa’s large, well-developed metals industry, with vast natural resources and a supportive infrastructure, represents roughly a third of all South Africa’s manufacturing. It comprises basic iron ore and steel, basic non-ferrous metals and metal products. The industries involve the manufacture of primary iron and steel products from smelting to semi-finished stages.

Primary steel products and semi-finished products include billets, blooms, slabs, forgings, reinforcing bars, railway track material, wire rod, seamless tubes and plates. This industry is a significant contributor to the economy and earns considerable amounts of valuable foreign exchange.

South Africa ranks 21st among the crude-steel producing countries in the world, producing around 1% of the world’s crude steel. It is also the largest steel producer in Africa, responsible for more than half of the total crude steel production of the continent. South Africa’s steel production bucked the global trend in 2013, increasing by 4.1%, from 6.9-millioon tonnes a year to 7.2-million tonnes. Of that amount, the South African Iron and Steel Institute stated that 1.74-million tonnes of primary steel products were exported.

South Africa’s non-ferrous metal industries comprise aluminium and other metals (including copper, brass, lead, zinc and tin). Aluminium is the largest sector but, as South Africa has no commercially exploitable deposits, feedstock is imported. Other non-ferrous metals have a lesser role, but are still important for exports and foreign exchange earnings.

Textiles, clothing and footwear

In 2013, textiles and clothing accounted for about 14% of manufacturing employment and represented South Africa’s second largest source of tax revenue. The textile industry is the most cost-effective way of creating jobs.

Owing to technological developments, local textile production has evolved into a capital-intensive industry, producing synthetic fibres in ever-increasing proportions. The apparel industry has also undergone significant technological change and has benefited from the country’s sophisticated transport and communications infrastructure.

With the US’ African Growth and Opportunity Act (Agoa) set to be renewed in 2015, the textile industry is set to benefit even more than before, but still remains vulnerable to cheap imports. Government’s rescue plan for the textile and clothing industry has done exceptionally well to recover the industry in recent years and is in the best position it has been in a last decade.

For the full article go to the Media Club South Africa website.