Manufacturers fight to stay ahead

Isuzu ,manufacturing ,production, bakkie.Photo Supplied 4

Isuzu ,manufacturing ,production, bakkie.Photo Supplied 4

Published Jun 15, 2016

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Johannesburg - Grappling with rising input costs, higher electricity prices and weak demand, South African manufacturers are accessing new export markets and increasingly using technology to stay competitive, according to Manufacturing Circle chief executive Philippa Rodseth.

Read also: Manufacturing casts doubt on 2% growth

Manufacturing, which is South Africa’s second-largest contributor to growth, accounting for 13 percent of gross domestic data, has increasingly come under pressure, with many manufacturers reflecting deterioration in sentiment.

The first quarter of the 2016 Manufacturing Circle Survey – released last month – showed that manufacturers experienced falling sales, rising unsold inventory levels and increasing costs.

While the weaker rand against the dollar did not affect competitiveness, it pushed imported costs higher, thus negatively impacting the sector, the survey said.

Weak demand

Speaking ahead of the Manufacturing Indaba later this month, Rodseth said South African manufacturers continued to face numerous challenges due to weak domestic and global demand. On the supply side, she said, electricity pricing remained an issue, in addition to an increase in input costs.

She said: “Respondents to our quarterly Manufacturing Circle survey bulletin show that manufacturers are acting to meet the challenges they face by increasing the use of technology, and other efficiency measures to stay competitive. Accessing new export markets, particularly into Africa, is a trend that we are witnessing.”

She said the government had identified the small, medium and micro-sized enterprises (SMME) sector as a key growth sector in the country’s manufacturing industries.

“SMMEs are the engine of economic growth and are essential for competitive and efficient economic growth. Global data show that small, medium and micro enterprises play a critical role in boosting job creation, economic competitiveness in the global market and economic development.

“Manufacturing needs to be seen in a holistic way that understands upstream and downstream linkages in a process. Once the context is understood, it is possible to see how an SMME could fit into this process and where the business opportunities lie.”

Commenting on expectations from the upcoming indaba, Rodseth said the sector acknowledged the importance of tangible outcomes “and that we have reached the point where we need less talking and more action”.

She said: “The panel discussions have been designed to address current issues and generate immediate, concrete action plans.

“The networking opportunities that the event presents will also hopefully generate new connections, linkages and business opportunities.”

Manufacturing Circle members include some of the country’s well-known companies, Actom, ArcelorMittal South Africa, Aspen Pharmacare, Columbus Stainless, Denel and Sappi Southern Africa.

Technology

Meanwhile, research by KPMG International and The Consumer Goods Forum has shown that consumer goods retailers and manufacturers were using advanced data analytics and smart technologies to track and anticipate consumer behaviour.

“The customer is the new point of sale. To compete in a global marketplace with shifting demographics, even today’s best-in-class consumer goods retailers and manufacturers require a deeper, multi-dimensional understanding of their customers,” Willy Kruh, the global chair of consumer markets at KPMG International, said yesterday.

BUSINESS REPORT

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