Manufacturing sector in a crisis

2012-11-28 16:36

Johannesburg - The South African manufacturing sector is in a crisis which requires changes in the country's policies, the Manufacturing Circle said on Wednesday.

"The sector has lost 300 000 jobs since 2010. The recession has been biting; we have also had a recession in the construction sector which has hit us severely, and then the flood of imports," chairperson Stewart Jennings said in Johannesburg.

"Since 2010, we've seen an enormous flood of imports from China which affected our businesses. At the same time, our exports have been reduced because of the recession in Europe."

Jennings also attributed the loss of jobs to electricity price increases.

"We've had a 200% increase in electricity in five years. No manufacturer can... [deal with] a huge increase like that when your prices are actually coming down because of the rand. Most of the manufacturers use a significant portion of electricity."

He said Chinese imports came at over 40% less than the local market price.

"Some of the prices are ridiculous. They are below the raw material costs. It just cannot be done [competing with such prices]."

Jennings was briefing reporters on a meeting between manufacturers and the African National Congress economic transformation committee.

They discussed ways of growing the sector and creating new jobs, ahead of the ANC's national conference in Mangaung in December.

In the past, the manufacturing sector made-up 22% of GDP, but it has shrunk to "barely" 15% of Gross Domestic Product, said Jennings.

The government had to do something to curb the impact of Chinese imports on the manufacturing sector.

"First thing, our government has to put some duties on [imports], engage with China as part of Brics [the Brazil, India, China and South Africa group of developing nations] and say we are a developing economy.

"The most important part of our economy is employment, so please stop these cheap imports into the country," Jennings said.

"We have to do something, otherwise we are going to continue to have more and more unemployment."

Another change in the South African economy was that people were buying cars more than taking out mortgages.

At least 72% of the vehicles sold in the domestic market were imported. This did not improve the vehicle manufacturing sector, he said.

"Some of the orders for vehicles produced in South Africa have been cancelled because of the recession in Europe."

  • bruce.williams.1044186 - 2012-11-28 16:50

    It is impossible to keep up with the Chinese. Everything from materials to labour cost more in SA. As well as this, there is major unrest in all industries due to the strikes. We have to import to compete. It is unfortunate but true.

  • gary.desousa.5 - 2012-11-28 16:51

    We increase our imports from all over, export less, dumb down our skills, do away with appreticships largly,let our education levels drop to a 30% pass mark, what do you expect?

      antjie.vanstraaten - 2012-11-28 17:39

      Add to that poor labour legislation. Laws that make it impossible to compete. If we stop the cheap imports at this stage inflation will skyrocket and South Africa will become a place where it will be impossible to make a decent living.

      malcolm.james.macleod - 2012-11-29 08:18

      Heavy duties would just be trying to patch it with yet more poor legislation. The only real way to fix this is to get rid of our really dumb labour laws so that our labour force does become productive.

  • ian.mather.56 - 2012-11-28 16:52

    Sorry to say but by simply instituting duties on imported products will not solve the problem. We need more productivity from less workers - only then can SA compete. As a consumer I am getting tired of having to bear the brunt of constant price increases in South Africa - whether it be food, clothing, cars or white goods items or Government provided services like water, electricity and the list goes on and on.

      malcolm.james.macleod - 2012-11-29 08:18

      I think it will actually just make the problem worse, duties that is. Totally agree with you.

  • lunga.matsikechangu - 2012-11-28 17:07

    The solution is, buy s.a made goods and manufacturing to retooling to enable goods sold at competetive price and ban chineese made goods or asiatic made goods or the volume of proccesed goods to china epuals to the volume of goods from china - 2012-11-28 18:38

      How are we going to get the male whore out of bed with the Chinese? I agree with you Lunga.matsikechangu; but greed rules in this country - especially the politicians attitudes - they open their suitcases and you get whatever you can pay for - rhino horns, steel, perlemoen - the Chinese rape the whole of Africa and all the politicians are too greedy to think of tomorrow.

  • richard.zanner - 2012-11-28 17:28

    The Problem is not the Chinese or anybody else for that matter. The problem lies within SA itself. With the increase of electricity especially and other input costs SA cannot be competitive with the rest of the world. SA is simply out pricing itself which leaves us open for exploitation from outside. Government fails to see that by simply increasing prices due to their inability to work efficiently has this negative impact on the private sector who can no longer compete. SO now they go out of business and we start importing. So tax base gets smaller, rand devalues, foreign deficit increases, and slowly our private sector is dying. I heard that one Smelting Company is closing every three months due to the high electricity costs. We used to manufacture 80% of taps and now we only manufacture 20%. So with our weak rand we have to buy from strong currencies and still the ANC spend money like there is no tomorrow. And Zuma said he was going to create jobs. Big joke. The writing is on the wall in bold. How can the Government not see this.

  • michael.konings.7 - 2012-11-28 17:37

    South Africa is not in isolation

  • george.pito - 2012-11-28 17:52

    And still for the sake of BEE skilled whites dont get jobs then no taxes from them. In the end Chinese invation. The few tenders dont get awarded if not corrupt. The corrupt tenders get caught out halfway through the process and simply for the sake of BEE incompetancy rule the country.

  • willem.wulfse - 2012-11-28 18:16

    ANC is beginning to reap the fruits of their obstinacy and dishonesty. Foreign investors are seeing the R250,000,000 being squandered on Nkandla which is only the tip of the iceberg. 20 Years ago it used to be a no no in overseas investing countries to mention African corruption in our region. It has now become a reality and a deterrent for investment. The press is beginning to write critical articles

  • julio.sanfona - 2012-11-28 20:14

    This is the time for all those that have benefitted from the BEE deals to come to the fore and apply the experience that they have gained to the benefit of the country.

  • Zahir - 2012-11-28 20:50

    The anc with cosatu is toxic they will deny there is any problem in fact to them our economy is perfect as long as taxes roll in

  • RudiErnst - 2012-11-28 21:09

    If you think this a problem, read this article on the road to Zuma's Nkandla... I don't know if it is true, but it appears that there is more than R1.5 billion involved in this fraud - the R250 million for his house is petty cash:

  • altus.kirsten - 2012-11-28 22:40

    Manufacturing, minning, construction and agriculture will go bust sooner than we think. Simple economics: Stop slicing the cake in smaller pieces, increase the size of it!

  • kamogelo.majoe - 2012-11-29 00:20

    i also agree that our country should stop importing cheap products coming from china as they have a negative impact on our economy.let us rather support locally manufactured products in order to boost our own economy.

  • greggail.garnie - 2012-11-29 09:45

    1. Education, 2. Skills, 3. Technology, 4. Investment, 5. Good Policies = Competitive edge & growth potential.

  • moladi - 2012-11-29 12:56

    "Everybody is a genius. But if you judge a fish by its ability to climb a tree, it will live its whole life believing that it is stupid - But if the fish wants to climb the tree then the fish is stupid!!! Leave the job creation to the ones that can climb the tree and has the knowledge and know-how!

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