Localisation for Africa
What government initiatives , interventions and / or support programmes would the Manufacturing Circle recommend to industry ? The response to the Manufacturing Competitiveness Enhancement Programme ( MCEP ) has been very positive , with manufacturers seeing it as a flexible programme that tries to address competitiveness issues sincerely , rather than trying to pick winners . Many Manufacturing Circle members are still in the early stages of applications to the Manufacturing Competitiveness Enhancement Programme .
The Critical Infrastructure Programme ( CIP ), the Motor Industry Development Programme ( MIDP ) and the Enterprise Investment and Manufacturing Investment Programmes ( EIP / MIP ) are deemed to be accessible , with application turnaround times of between 3 and 8 months . These programmes are considered by our members to be structured effectively .
Where do we stand compared to China , as China ’ s demand seems to be slowing down ? Is this good or bad news for South Africa ? It is not good for our mining sector , as China imports a lot of raw materials from South Africa . As far as manufactured goods are concerned , we will first have to compete on a more equal footing with Chinese manufacturers in their domestic market , before it will become a real prospect for South African manufacturers .
What can we expect in the next 4-6 months ? According to the Q3 survey results , expectations are roughly divided between “ fragile ” and “ stable ” conditions for manufacturers over the next year , with the next six months still expected to deliver significant challenges .
Factors dragging the outlook down include : the effect of prolonged wildcat strikes on the South African economy , declining investment and activity in the mining sector , a proposed enormous hike in electricity tariffs by Eskom , unfavourable labour conditions due to the current industrial relations environment and most importantly , the rapid growth in unfairly incentivised Chinese imports .
During Q3 2012 , strikes in the mining and transport sectors shaped the economic landscape of South Africa , thereby resulting in the country ’ s credit rating being downgraded . The outlook for manufacturing activity in South Africa remains lacklustre , as suggested by a decline in the Kagiso purchasing managers ’ index ( PMI ) during Q3 2012 and the beginning of Q4 2012 .
Although economic activity seems to be on the rebound in South Africa ’ s major trading partners , structural bottlenecks such as high production costs will pose a drag on the recovery in manufacturing activity .
The number of jobs in the manufacturing sector increased by 49 000 during Q3 2012 , according to Statistics South Africa , the manufacturing labour market in South Africa remains under stress . The fact that the employment sub-component of the PMI remains in the contraction region attests to this .
Q4 2012 Manufacturing Circle Survey results show that conditions within the manufacturing sector were uninspiring and characterised by low export levels , high input costs , squeezed margins , poor labour market outcomes and a lack of adequate skills .
The quarterly average reading of the Kagiso Purchasing Managers ’ Index ( PMI ) corroborates the findings of the survey . The quarterly headline PMI landed in contraction territory in Q4 2012 . LFA
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