Why SA should not put all its manufacturing eggs in China’s basket
24th March, 2020 — Dilley Naidoo, CEO of Madala & Associates, and Director of RSPH says, “Currently, South Africa has over 20% of its manufactured goods imported from China. This is one of the largest dependencies compared to other countries globally.” Given that China has until now been the hardware manufacturing capital globally and is no longer operating, this should highlight our over-dependency on imports. The outbreak of Covid-19 internationally should be a wake-up call on the impact of our dependency on imported products in general.
Since the initial outbreak of Covid-19 in Wuhan, China, almost all manufacturers in China have closed indefinitely, which means our deliveries are unpredictable and may not even happen at all, and the downstream consequences of this uncertainty could be devastating.
South African distributors and consumers in the supply chain have not escaped this over-reliance on Chinese imports of manufactured products, and in addition to the economic impact, the lack of materials is impacting operations, end customer delivery and overall satisfaction, which is why we should not ‘put all our manufacturing ‘eggs’ in the China basket.’
The point is we can use this situation to our benefit if we act now. By manufacturing locally right now, using what we have, we could effectively reduce the reliance on imports drastically.
The South African government, via the DTI’s automotive Transformation and Localisation policy aims to ensure 60% of Automotive parts are sourced and manufactured locally by 2035. This should be prioritised and accelerated immediately for implementation to create much needed jobs and contribute toward growing the economy substantially. Parallel policies should be implemented in mining, steel, rail, engineering and agri-processing sectors to stimulate and expedite overall transformation and localisation in South African business. Expanding and growing the supply-chain eco-system, is one of the globally proven ways of growing small and medium-sized business that desperately need guaranteed customer off-take.
Of course we need to be vigilant and careful to protect our citizens, but while the rest of the world is watching live news, we should be looking forward to how we will out-prepare the rest of the world in terms of being ready for the upswing when it comes. In addition to the traditional export markets to Europe, USA and Australasia, South Africa could become a manufacturing hub for export to other African countries, which are forecasted to have the highest consumer growth potential globally. The quality and value of our locally manufactured products is equivalent to internationally produced brands. We need to change our negative habit of under-valuing ourselves. We should be taking pride in our efforts and be more patriotic, and Proudly South African.
Covid-19 is a catastrophe, there is no denying that. However, it does present an opportunity to accelerate the local manufacturing sector, including mining, steel, automotive, engineering and agri-processing, which are the only sectors with a ten times downstream multiplier effect. When we come out of this, we should be ahead of the pack, but we have to take action now.
Together with Brand SA, we should be implementing joint awareness campaigns around how to ensure South Africa thrives post the Corona pandemic. Over the past 7 years, RSPH has developed the Manufacturing Accelerator Programme (MAPTM) as a methodology for best practises in local manufacturing. Developed with the intention of maximising the long-term wealth of South Africa by more effectively utilising its local skills and manufacturing resources, MAPTM aims to make local manufacturers more competitive and profitable, with the added benefit of facilitating job-creation in our communities.
By using world-class business and operational management tools combined with the expertise of world-renowned specialists, MAPTM creates growth by addressing the fundamental components of competitiveness, improved customer service, business visibility and control, and better production planning and operational controls to reduce costs and increase profitability. In addition to the MAPTM methodology, RSPH has created ENZA Manufacturing as an implementation blue-print for manufacturing. ENZA is a Zulu word, meaning “Do”. ENZA Manufacturing is a Methodology to accelerate the IMPLEMENTATION to achieve this goal supported by Automotive OEMs, NAAMSA, NAACAM and AIDC. Effective implementation of this goal would result in additional business development, artisanal skills development and increased job creation, starting with the Automotive Sector.
In addition, the South African Excellence Movement (SAEM) is encouraging all willing participants to contact us on 011 463-5073. This has to be a collective effort, and active organisations and businesses are welcome to join the movement for South African Manufacturing Excellence.
RSPH achieves business excellence with their clients by combining the skills and experience of our Resultants® (trusted advisors) in combination with the use of modern best-of-breed Digital Enterprise Management, ERP and MES software technologies, allowing organisations to digitise, execute, control, monitor, measure and continually improve their business and operational processes across the entire business ecosystem.
Whilst RSPH’s extensive pool of expertise and technologies can address the needs of virtually every business and industry sector, RSPH specialises in solutions aimed at our key industries i.e.: Agribusiness; Automotive; Chemicals; Energy; Food & Beverage; Manufacturing; Mining & Metals; Oil & Gas.