SA manufacturing sector still up against it

SA manufacturing sector still up against it

FMCG SUPPLIER NEWS

Business Live - May 2nd 2012, 08:01

The South African manufacturing industry faces significant headwinds, probably more severe than a number of other manufacturing countries, Stewart Jennings, chairman of the Manufacturing Circle says. 

The circle comprises a number of SA’s leading medium to large manufacturing companies.

Jennings said a major challenge was what he referred to as a volatile and strong currency.

“We are the only country in the world advocating a strong currency, which negatively affects our manufacturing competitiveness due to our cost push environment, which is mainly through administered price increases such as electricity tariffs, port charges, toll fees and even natural gas costs,” Jennings told BusinessLIVE.

The World Economic Forum (WEF) cautioned in a recent report that exposure to currency volatility, sovereign debt pressure and emerging protectionist policies would be countervailing forces to global manufacturing value chains.

“Cheap Chinese imports” were also hampering the growth of local manufacturers. Those imports were receiving “very unfair incentives” from the Chinese government and “a manipulated currency,” said Jennings.

While Jennings acknowledged that the alignment with government was improving through the Trade and Industry department, there was, however, still a long way to go to ensure that government, business and labour were on the same page in respect of making manufacturing globally competitive.

He called on the private sector to participate in programmes meant for improving the sector.

“The preferential procurement programme is encouraging, but needs to be supported by the private sector,” Jennings said.

One of the solutions to ensure competitiveness of the sector, said Jennings was “for industry to be nurtured through duties, needs to be export led and local wholesalers and retailers need to support local manufacturing”.