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Cape Town - Influential stakeholders in all sectors of South Africa's economy should stop leveling accusations and rather help to find a solution for sustainable growth in the manufacturing industry, according to Coenraad Bezuidenhout, executive director of the Manufacturing Circle.
On Tuesday the industry body said a strong and growing manufacturing sector is beneficial to consumers and retailers and essential for sustainable growth and shared prosperity.
Bezuidenhout was reacting to statements made by Whitey Basson, CEO of Shoprite Holdings [JSE:SHP], in the company's latest annual report.
"Fifty million people cannot be held to ransom by manufacturers that are unable to compete effectively in a world market," Basson said in the report.
He is concerned about the decline in the South African manufacturing sector and "by its lack of innovation and competitiveness".
"Many manufacturers complain that, due to high input costs, they cannot compete with imports and therefore beseech the government to limit those imports by imposing higher duties on imports," said Basson.
In his view this attitude places the retailer in a difficult position.
"The dilemma is that at the same time the retailer owes the people of this country the opportunity to buy what they need at the lowest prices," Basson said.
Bezuidenhout, in turn, claimed that SA is globally recognised for the quality and reliability of its manufacturing in key areas, including beneficiated goods.
"We will, however, lose these competencies if we allow our domestic manufacturing capacity to be further hollowed out," said Bezuidenhout.
Capacity hollowed out
Fairtrade arrangements are needed, according to Bezuidenhout "to stop the import of unfairly incentivised goods". In some instances the prices of these imported goods are lower than what one would have paid to import the raw materials for manufacturing here.
"We also call on all sectors to recognise that in order to achieve this, we need a level playing field for SA's manufacturers and processors with regards to our trade arrangements and quality standards. We also need competitive industrial policy support," said Bezuidenhout.
"To suggest that such a level playing field currently exists in all respects would be to ignore the reality."
He admitted that it would be detrimental to SA's economy to adopt a protectionist stance, but said there is a distinct difference between being protectionist and pursuing a level playing field in relation to trade partners.
"In many respects the situation is currently not level and the department of trade and industry (dti) and the International Trade Administration Commission (Itac) should be lauded for the work they are doing in this regard," said Bezuidenhout.
Bezuidenhout cited the recent actions in respect of chicken and sugar imports.
"To not have taken action there, would have been to send jobs overseas and decimate the local industry, leaving local consumers vulnerable to price gouging by importers in the future," said Bezuidenhout.
Long term interest of consumers
"It is, therefore, in the long term interest of consumers and not to their detriment as importers suggest."
Bezuidenhout said manufacturers would any day support positive attempts to address the plight of poor consumers.
"It would, however, only bring short-term relief and long-term misery if we did so solely to the benefit of retailers and importers and at the cost of sustainable growth," he said.
"The balance of payments situation alone would push inflation way beyond the capability of average consumers."
SA's purchasing managers' index (PMI) fell to an eight-month low in September as a strike in the auto sector hurt new sales orders, suggesting a slowdown in the manufacturing sector.
The PMI, a measure of factory activity, was at 49.1 in September from August's 56.5, according to Kagiso Tiso Holdings.
"Intermittent mining sector disruptions and fears about future industrial action may also be weighing on manufacturers," said Abdul Davids, head of research at Kagiso Asset Management.
- Fin24
On Tuesday the industry body said a strong and growing manufacturing sector is beneficial to consumers and retailers and essential for sustainable growth and shared prosperity.
Bezuidenhout was reacting to statements made by Whitey Basson, CEO of Shoprite Holdings [JSE:SHP], in the company's latest annual report.
"Fifty million people cannot be held to ransom by manufacturers that are unable to compete effectively in a world market," Basson said in the report.
He is concerned about the decline in the South African manufacturing sector and "by its lack of innovation and competitiveness".
"Many manufacturers complain that, due to high input costs, they cannot compete with imports and therefore beseech the government to limit those imports by imposing higher duties on imports," said Basson.
In his view this attitude places the retailer in a difficult position.
"The dilemma is that at the same time the retailer owes the people of this country the opportunity to buy what they need at the lowest prices," Basson said.
Bezuidenhout, in turn, claimed that SA is globally recognised for the quality and reliability of its manufacturing in key areas, including beneficiated goods.
"We will, however, lose these competencies if we allow our domestic manufacturing capacity to be further hollowed out," said Bezuidenhout.
Capacity hollowed out
Fairtrade arrangements are needed, according to Bezuidenhout "to stop the import of unfairly incentivised goods". In some instances the prices of these imported goods are lower than what one would have paid to import the raw materials for manufacturing here.
"We also call on all sectors to recognise that in order to achieve this, we need a level playing field for SA's manufacturers and processors with regards to our trade arrangements and quality standards. We also need competitive industrial policy support," said Bezuidenhout.
"To suggest that such a level playing field currently exists in all respects would be to ignore the reality."
He admitted that it would be detrimental to SA's economy to adopt a protectionist stance, but said there is a distinct difference between being protectionist and pursuing a level playing field in relation to trade partners.
"In many respects the situation is currently not level and the department of trade and industry (dti) and the International Trade Administration Commission (Itac) should be lauded for the work they are doing in this regard," said Bezuidenhout.
Bezuidenhout cited the recent actions in respect of chicken and sugar imports.
"To not have taken action there, would have been to send jobs overseas and decimate the local industry, leaving local consumers vulnerable to price gouging by importers in the future," said Bezuidenhout.
Long term interest of consumers
"It is, therefore, in the long term interest of consumers and not to their detriment as importers suggest."
Bezuidenhout said manufacturers would any day support positive attempts to address the plight of poor consumers.
"It would, however, only bring short-term relief and long-term misery if we did so solely to the benefit of retailers and importers and at the cost of sustainable growth," he said.
"The balance of payments situation alone would push inflation way beyond the capability of average consumers."
SA's purchasing managers' index (PMI) fell to an eight-month low in September as a strike in the auto sector hurt new sales orders, suggesting a slowdown in the manufacturing sector.
The PMI, a measure of factory activity, was at 49.1 in September from August's 56.5, according to Kagiso Tiso Holdings.
"Intermittent mining sector disruptions and fears about future industrial action may also be weighing on manufacturers," said Abdul Davids, head of research at Kagiso Asset Management.
- Fin24
