Publications
Partners
PRASA should have manufactured its locomotives locally, Manufacturing Circle executive director Koenraad Bezuidenhout said yesterday.
In what may be one of South Africa’s biggest tender debacles, the passenger rail transport authority is alleged to have ordered 13 diesel locomotives worth R600 million from a Spanish company that exceed the height restrictions for diesel locomotives on our long distance rail lines.
Bezuidenhout was interviewed by The Witness at National Efficiency Conference in Durban.
Department of Trade and Industry chief director of industrial procurement: industrial development Tebogo Makube said at the conference that rolling stock was a “designated” item in the government’s procurement policies.
As such, rolling stock purchased by any government agency should be 100% produced locally.
Bezuidenhout said South Africa had the capacity to make the locomotives, including manufacturing capacity that was owned by black entrepreneurs.
“They would have been able to get immediate service back-up, they would not have to transport them over long distances, it would have been much easier to deal with,” said Bezuidenhout.
Stavros Nicolau, an executive at Aspen Pharmacare, said: “Sadly many ministries and government departments don’t follow the procurement policy guidelines on designated goods.”
These agencies often incorrectly claimed they had no mandate to advance industrial policy.
He said the recent penicillin shortage in the country would have been avoided if the government had not decided to import penicillin. The decision not to procure locally had caused the closure of the three penicillin production facilities in SA, said Nicolau.
He said businesses, government and consumers tend to unnecessarily be “pessimists” when it comes to locally produced goods, and will often prefer to buy imported or cheaper products from China. This needed to change, he said.
He cited as an example how Aspen, on the acquisition of SA Druggists in 1999, had to ponder a recommendation from advisers to close down its manufacturing plants.
Aspen instead opted to work with trade unions as stakeholders, and staff (by making them all part of a share scheme).
Over 16 years this decision had led billions of rands of shareholder wealth creation and has established Aspen as the fifth biggest generic pharmaceutical product group in the world.
Nicolau said his experience from many acquisitions in both developed and emerging markets was that Aspen’s Eastern Cape employees were often more skilled and equipped than in the other plants.
He said the global experience was that over the past 50-60 years, the only countries that had managed to lift themselves out of poverty had done so by establishing “a strong parochial manufacturing sector”.
The fortunes of SA’s manufacturing sector mirrors that of the economy and the sector was facing tough headwinds from challenges that include rand depreciation, electricity issues, cheaper product imports and low economic growth.
However, he believed the sector will revive and “manufacturing jobs will return to South Africa”.
Production and other costs were increasing for competing manufacturers in China.
SA was likely to gain access to cheaper energy sources from Africa. The continent would also provide a booming market for all manner of consumer goods over the next 30 years, he said.
To make this possible, coherent economic policy and regulation, and efficient public sector spending to support manufacturing growth was required.
In addition, a supportive trade regime and the advancement of the reputation of South African manufactured products was needed, said Nicolau
