Training and Development in the Agro-Processing subsector

Challenges and Barriers Facing the Agro Processing Subsector

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  Rural retailers are mainly affected by the depressed state of rural economies, overtrading, the lack of finance and financial infrastructure, the lack of business training, ageing infrastructure and the weakness of local government and of social capital.
  
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  Informal traders’ main challenges include the poor quality of their equipment and infrastructure, competition, cash flow and stock shortages.
  
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  For independent, small wholesalers stumbling blocks arise from vertical integration and wholesaler consolidation, price pressures, the tendency of market giants to expand their ranges of products and services, the lack of skills relating to technological improvements and the lack of integrated supply chain management techniques.
  
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  E-tailers are severely confronted with the difficulty of setting up a competitive business model under the price pressure exerted by shop-based retailers, Web site design and marketing challenges, customer gaining and delivery and logistics are complex tasks. The low penetration of the Internet in South Africa, especially the lack of affordable access to broadband, currently strongly restricts the business opportunities of e-tailers, causing them very low profits and low life expectancy.
  
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  Finance, i.e. scope and allocation of financial resources;
  
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  Human resource capacity, i.e. the number of people and level of skills available in critical technological sectors;
  
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  Technology, i.e. lack of access, affordability, appropriateness and lack of a coordinated innovative culture;
  
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  Lack of information on opportunities;
  
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  Competition barriers;
  
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  Distribution barriers;
  
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  Regulatory barriers; and
  
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  Price of raw materials.
  

The Job Creation Ability of the Agro Processing Subsector

Sector	Synopsis	Job Creation Ability
The Agro processing Subsector	The agro processing sector is potentially the strongest driver for job creation, especially in the primary and secondary phases. The weaker rand makes the market attractive to foreign investment. Due to the current local and international demand for convenience foods (canned products and processed foods) the impact is positive for south African companies in the agro processing sector. In the primary phase the has been initiatives to form cooperatives to supply the large food processing companies with produce / raw materials, by communities in rural areas in the process creating employment in large rural communities. In the food processing sector smaller existing companies require access to the international market to expand and grow.	High potential for job creation due to foreign investment and expanding markets as well as the increase in demand for processed foods.

The Agro Processing Sector: SWOT Analysis

Strengths Alternative season production Low power costs Labour availability Integrated production systems Technology institutions Government support organisations Potential for diverse production Presence of multi-nationals Sector-specific incentives Water quality and availability	Weaknesses Lack of infrastructure for perishables Transport inland/port charges/long distances Small domestic market Production volumes are small Distances to global markets Skills (Management) Access to local markets Value adding technologies
Opportunities Biotechnology Sustainable utilization of indigenous and other genetic resources SADC Smart farming Sector specific incentive schemes Technology Shift to less intensive natural resource use production system Competition Commission Support partners	Threats Environmental issues Soil degradation Resources planning and management Water quality and availability Cost of entry into markets Subsidised production/exports in developed nations Trade barriers Compliance with target markets Cheap imports

Table 9: SWOT analysis for Agro processing sub sector

The Automotive Subsector

Automotive Manufacturing

Overview

The Automotive industry is classified into four major segments:

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  Passenger Vehicles;
  
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  Light commercial vehicle (LCV), including bakkies and minibuses;
  
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  Medium commercial vehicle (MCV); and
  
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  Heavy commercial vehicle (HCV) comprising of the truck/bus segment
  

Sector Operations:

Various sectors contribute to the final product and the manufacturing process involves:

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  Foundry Operations, whether they are integrated with motor vehicle assembly facilities or independent shops, cast metal products that play a key role in the production of motor vehicles and motor vehicle equipment;
  
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  Metal Shaping and Machining where vehicle parts, including bumper bars, hubcaps, and body parts are manufactured in metal galvanising and electroplating shops;
  
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  Metal Coating to inhibit oxidation, prevent corrosion and extend the life of the product;
  
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  Motor Vehicle Assembly
  
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  Motor Vehicle Painting and Finishing
  

There are several well established original equipment manufacturers or OEM’s that produce well known brands of high quality.

South Africa currently has manufacturing facilities for the following vehicle brands which are located in Gauteng, KwaZulu-Natal and the Eastern Cape:

Table 15: Vehicle brands that have manufacturing facilities in South Africa

Manufacturer	Location	Recent Investment
BMW	Rosslyn, Pretoria	R2.2 Billion
Ford Motor company South Africa	Pretoria, Silverton & Port Elizabeth , Struandale	R3 Billion
General Motors South Africa	Port Elizabeth	R4 Billion
Mercedes-Benz SA	East London	R2.2 Billion
Nissan / Renault	Pretoria, Rosslyn	R1 Billion
Toyota	Durban, Prospecton	R8 Billion
Volkswagen South Africa	Uitenhage, Nelson Mandela Metropol	R5.5 billion

Source: South African Business 2010/2011

Table 16: OEM’s which manufacture other types of vehicles and not LCV’s such as:

Manufacturer	Location	Recent Investment
Man Truck & Bus	Durban & Gauteng	Trucks and Busses
Bell Equipment	Richards Bay	Articulated Dump Truck loaders and other heavy duty vehicles
BAE Systems	Gauteng	Armoured and Tactical vehicles

Source: South African Business 2010/2011

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