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Enhancing Manufacturing Competitiveness in South Africa

How do you remain competitive as a manufacturing company in South Africa?


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In the recent 2013 Global Manufacturing Competitiveness Index, South Africa was placed 24th on the global competitiveness ranking, and is expected to move down a further position in the next five years. These results (together with an overall decline in South African global competitiveness, as per the World Economic Forum’s 2012–2013 Competitiveness Index) led Deloitte South Africa to partner with the Manufacturing Circle to conduct our own local Manufacturing competitiveness survey.

Using the Top 10 drivers indicated by the Global Manufacturing competitiveness report, we asked the Manufacturing Circle member companies to rate how important they think each of these are to their ability to compete on a global scale. 76 South African Manufacturing CEO’s and Senior Executives ranked these drivers of competitiveness from a South African perspective. The results are shown in the table below.

Manufacturing Rankings

While the SA rankings vary compared to those of their global peers, local market attractiveness and energy costs and policies were the most significant movers up the standings. While talent-driven innovation and legal and regulatory system were the biggest movers down the rankings.

The top three drivers are surmised as follows:

Cost and Availability of Labour:

It is common cause that labour costs in South Africa have increased at a faster rate than is the case with global peers, and there has not been a commensurate increase in labour productivity. Education, skills development, spatial development and community safety are social factors that have impinged on South Africa’s ability to be competitive.

Local market attractiveness:

Respondents felt that the South African Manufacturing sector is currently in survival mode as a result of many factors, including the small size of the domestic market, the threat of cheap imports, policy uncertainty, high input costs and limited skills base.

Energy Cost and Policies:

The impact of the recent cost increases envisaged by the power build programme initiated by Eskom can be felt in the high ranking of this driver. While the importance of this factor is dependent on the power demands of the individual respondents, its impact will be felt across the sector.

If you require a more detailed discussion on the contents of this article, please contact the Deloitte Manufacturing team at zamanufacturing@deloitte.co.za

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