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Local manufacturing spotlight
© RACA Journal
ABC Ventilation Systems’ Hardline on display at ElectraMining 2024.
Addressing a point raised about the significant presence of international companies at the ElectraMining expo, it was noted that while 94 % of the exhibitors were South African or local manufacturing companies, the remaining 6 % of foreign entities often have a substantial impact. A stark statistic was presented regarding imports from China alone, totaling a massive USD98- billion annually – encompassing a wide range of goods beyond consumer products. Converting this figure, the potential to employ an estimated 1.3 million people overnight in South Africa if these imports were localised was highlighted, underscoring the immense job creation potential within domestic manufacturing.
The discussion then shifted to the fundamental principles of fostering local manufacturing growth. It was emphasised that while protection and demand are crucial, providing opportunities for smaller businesses to integrate into the supply chains of larger OEMs is paramount. The success stories of small enterprises growing into significant contributors through such opportunities highlight the potential for a ripple effect throughout the economy. Cultivating a culture of mutual support and recognising the interconnectedness of businesses within the local ecosystem was deemed essential.
The ease of becoming an importer versus the risks associated with manufacturing locally was also addressed. The need for government and state-owned entities to lead by example through a‘ buy local first’ policy was strongly advocated, suggesting that legislation should prioritise domestic procurement when local manufacturing capabilities exist.
A panellist highlighted the critical need for improved government support for industry, particularly concerning regulatory hurdles and reliable, affordable power supply. Drawing parallels with the historical success of mining, the importance of subsidised input costs, especially electricity, to enhance
commodity production and facilitate beneficiation and secondary manufacturing industries was emphasised.
The increasing presence of international – particularly Chinese – car brands in South Africa served as a tangible example of the evolving global competitive landscape. The panel agreed that a multi-faceted approach is necessary to support local manufacturing. While individual business acumen is crucial, effective industrial policy is paramount in driving the growth of the manufacturing sector. A critical assessment of current industrial policy and its effectiveness in fostering value addition within the South African economy was deemed necessary, especially given the shrinking percentage of manufacturing in the GDP.
The escalating cost of electricity was identified as a significant impediment to manufacturing competitiveness. The over 40 % increase in tariffs since the start of 2021 represents a substantial burden on businesses. The role of industrial policy in potentially shielding strategic sectors from such cost increases was raised as a crucial consideration. Simultaneously, the significant spending power of the government, nearing R2-trillion annually, presents a strategic opportunity to support local manufacturing through targeted procurement policies. RACA
“ It was emphasised that while protection and demand are crucial, providing opportunities for smaller businesses to integrate into the supply chains of larger OEMs is paramount.”
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RACA Journal I November 2025 www. refrigerationandaircon. co. za