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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