Research on the performance of the manufacturing sector



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Table of Contents




Table of Contents 2

List of figures 4

List of tables 7

Executive Summary 13

SECTION 1: INTRODUCTION AND PROJECT OBJECTIVES 16

Introduction 16

Project Objectives 16

SECTION 2: INTERNATIONAL MANUFACTURING ENVIRONMENT AND THE IMPORTANCE OF SMMES 18

Importance of manufacturing – International experience 18

International importance of SMMEs 20

SECTION 3: THE MANUFACTURING SECTOR 22

Background trends to the SA manufacturing sector 22

Gross fixed capital formation in the SA manufacturing sector 27

Employment in the manufacturing sector 29

Imports and exports in the manufacturing sector 32

Forward and Backward Linkages in the Manufacturing Sector 36

Provincial Manufacturing Activity 36

Forecasting in the Manufacturing Sector 37

Manufacturing Sector by Enterprise Size and Employment Contribution 38

SECTION 4: POLICY & PROGRAMMES ON MANUFACTURING 45

Introduction 45

The New Growth Path 45

Policies at a Provincial and Local Level 49

Provincial and Local Economic Development Strategies 51

SECTION 5: MANUFACTURING SUB SECTOR ANALYSIS 93

The Agro – Processing Subsector 93

The Automotive Subsector 99

The Plastic Subsector 109

The Chemicals Subsector 116

The Textile Subsector 131

The Metals Subsector 136

Wood Product, Publishing and Printing 143

Furniture 150

SECTION 6: RELEVANT STAKEHOLDERS IN THE MANUFACTURING SECTOR 156

SECTION 7: TELEPHONIC PROFILING REPORT 164

7.1: Business Profiling 167

7.2: Awareness 180

7.3: Respondent Recommendations 186

SECTION 8: RECOMMENDATIONS AND POLICY INITIATIVES 188

Recommendations: Market Penetrations, Options and Strategies 191

Services and Product Market Sectors 193

Recommendations: Possible Working Relationships/Partnerships 194

SECTION 9: CONCLUSION 197




List of figures




Figure 1: Share of Worlds manufacturing of the top 10 manufacturing economies in 2010 18

Figure 2: Trend in manufacturing output in the top 10 manufacturing countries (US$, constant 2005 prices) 19

Figure 3: Distribution of employment in the manufacturing Sector by Firm Size 21

Figure 4: SA sector contribution to GDP in 2010, with a focus on the manufacturing sector 23

Figure 5: SA sector contribution to GDP in 1993, with a focus on the manufacturing sector 23

Figure 6: Manufacturing sectors, contribution to GDP, constant 2005 prices (R million) 24

Figure 7: Labour productivity and nominal unit labour cost (2000 to 2011) 26

Figure 8: Percentage utilisation of production capacity in the manufacturing sector 27

Figure 9: Gross fixed capital formation in the manufacturing sector (1990 to 2011) 27

Figure 10: Formal sector employment in the manufacturing sector (2000 to 2011) 30

Figure 11: Year-on-year percentage change in manufacturing employment 31

Figure 12: Provincial manufacturing activity (1995 – 2010) constant 2005 prices 37

Figure 13: A forecast of the manufacturing activity (2011 to 2014 are forecasted values) 38

Figure 14: Share of income by enterprise size in the manufacturing industry, 2008 41

Figure 15: Share of employment by enterprise size in the manufacturing industry, 2008 43

Figure 16: Agro Processing Value Chain 93

Figure 17: The automotive supply chain 103

Figure 18: Plastic Market Sectors (% Polymer converted) 110

Figure 19: The Plastics sub sector supply chain 110

Figure 20: Percentage Contribution by Subsector to the Chemicals Industry 118

Figure 21: Designation of Respondent in the Business 164

Figure 22: Gender: Male vs. Female 165

Figure 23: Respondents Split by Province 165

Figure 24: Respondents Split by Manufacturing Subsector 166

Figure 25: Educational Qualification 166

Figure 26: The Number of Years in the Manufacturing Sector 167

Figure 27: Business Conditions – Improved or Deteriorated 168

Figure 28: Businesses that have Procured Government Business Split by Government Level 168

Figure 29: Percentage of Government Business Procured. 169

Figure 30: Percentage of Full Time Staff Employed at Profiled Businesses 169

Figure 31: Percentage of Part time Employees 170

Figure 32: Total Percentage of Business Owners / Managers Previously Employed in the Manufacturing Sector 171

Figure 33: Total Business Owners / Managers that Received Formal Training & Education 171

Figure 34: Attendance of trade fairs 172

Figure 35: Business Owners/Managers Belonging to an Industry Body/Association 173

Figure 36: Association to a Business Chamber or Network 174

Figure 37: Growth Opportunities in the Manufacturing Sector 174

Figure 38: Employment Opportunities in the Manufacturing Sector 175

Figure 39: Promotion of Growth and Employment in the Manufacturing Sector 176

Figure 40: Constraints facing SMME Businesses in the Manufacturing Sector 177

Figure 41: Challenges facing SMME Businesses in the Manufacturing Sector 178

Figure 42: Attendance of Trade Events 178

Figure 43: Seda’s Role in the Manufacturing Sector 180

Figure 44: Services Seda can Offer 184

Figure 45: Association and Industry bodies that Businesses belong to 184

Figure 46: Recommendation 186




List of tables





Table 1: Manufacturing share of gross value added in the top 10 manufacturing countries and South Africa from 2004 to 2010 18

Table 2: Manufacturing, disaggregated industries and percentage growth between 1993 and 2010 (in constant 2005 prices) 23

Table 3: Annual Manufacturing production at current prices (R million) (2005 – 2010) 24

Table 4: Annual Manufacturing production at constant 2005 prices (R million) (2005 – 2010) 25

Table 5: Gross capital formation in manufacturing for 2007 – 2010 (nominal values) 27

Table 6: Employment output ratios (including informal sector) at constant 2005 prices by industry, 2001 to 2010 31

Table 7: Exports and Imports in the manufacturing sector (2010) 32

Table 8: Year-on-year percentage change in manufacturing industries and forecasted percentages for 2011 to 2014 37

Table 9: Percentage contribution of small and medium enterprises in the SA economy (2010) 38

Table 10: Income by enterprise size in the manufacturing industry, 2008 39

Table 11: Employment by enterprise size in the manufacturing industry, 2008 40

Table 12: Employment ratio per R1 million income per enterprise size in the manufacturing industry, 2008 42

Table 13: Subsidies and incentives received by different enterprise sizes from government in the manufacturing sector between 2006 and 2010 (in rand millions) 43

Table 14: Subsidies received by different enterprise sizes as a percentage of total turnover per year in the manufacturing sector between 2006 and 2010 43

Table 15: Vehicle brands that have manufacturing facilities in South Africa 98

Table 16: OEM’s which manufacture other types of vehicles and not LCV’s such as: 99

Table 17: above indicates the automotive component sales by product type from 2006 to 2010. 100

Table 18: List of major plastic sub sector manufacturers 111

Table 19: Business linkage opportunities for the South African Manufacturing sector 120

Table 20: End market segments 121



Table 21: Input-output table for SA for 2010 with reduced primary and tertiary sectors 200

AsgiSA Accelerated and Shared Growth Initiation in South Africa

APDP Automotive Production and Development Plan

BBBEE Broad Based Black Economic Empowerment

BEE Black Economic Empowerment

CFTL SETA Clothing, Textiles, Footwear and Leather Sector Education Training Authority

CIACM Competitiveness Improvement of Automotive Component Manufactures

COTII Council of Trade and Industry Institutions

CoCT City of Cape Town

CoJ City of Johannesburg

DAFF Department of Agriculture, Forestry and Fishery

The dti Department of Trade and Industry

DBSA Development Bank of Southern Africa

DPLG Department of Provincial and Local Government

EMM Ekurhuleni Metro Municipality

EC Eastern Cape

FMMCG Fast moving consumer goods

FoodBev Food Beverages Sector

FS Free State

FDI Foreign Direct Investment

FSGDS Free State Growth and Development Strategy

FBO Food Business Operators

GPG Gauteng Provincial Government

GOS Gross Operating Surplus

GEDA Gauteng Economic Development Agency

GDP Gross Domestic Product

GDS Growth and Development Summit

GVA Gross Value Add

HRD Human Resource Development

IPAP 2 Industrial Policy Action Plan

ICT Information, Communication and Technology

IDC Industrial Development Corporation

IDT Independent Development Trust

IDP Integrated Development Plan

IDRC International Development Research Centre

IDZ Industrial Development Zone

ISA Investment South Africa

ISF South African International Steel Fabricators

IT Information Technology

ITC Information Technology Centre

JSE Johannesburg Stock Exchange

KFC Kwa Zulu Finance and Investment Corporation

KZN CTC KwaZulu-Natal Clothing and Textile Cluster

KPA Key Performance Area

KPI Key Performance Indicator

KSP Knowledge Sharing Programme for local government

KZN KwaZulu-Natal

LED Local Economic Development

LEDS Local Economic Development Strategy

LEDF Local Economic Development Fund

LGMSA Local Government Municipal Systems Act, 2000 (Act No. 32 of 2000)

LGTA Local Government Transition Act, 1993 (Act No. 108 of 1993)

LM Local Municipality

LRA Labour Relations Act, 1995 (Act No. 66 of 1995)

MIDP Motor Industry Development Programme

MERSETA Manufacturing, Engineering and Related Services Sector Education and Training Authority

MFMA Municipal Finance Management Act, 2003 (Act No. 56 of 2003)

MOA Memorandum of Agreement

MOU Memorandum of Understanding

MEDS Micro Economic Development Strategy

MTBPS Medium Term Budget Policy Statement

MTEF Medium-Term Expenditure Framework

NAAMSA National Association of Automotive Manufacturers of South Africa

NAACAM National Association of Automotive Component Manufacturers

NEPAD New Partnership for Africa’s Development

NGO Non Governmental Organisation

NPO Non-profit organization

NQF National Qualifications Framework

NRF National Research Foundation

NSDS National Skills Development Strategy

NSIF National Spatial Information Framework

NYC National Youth Commission

NCPGDS Northern Cape Provincial Growth and Development Strategy

NSDP National Spatial Development Perspective

NGDS National Growth and Development Strategy

OEM Original Equipment Manufacturer

PAIA Promotion of Access to Information Act, 2000 (Act No. 2 of 2000)

PFMA Public Finance Management Act, 1999 (Act No. 1 of 1999)

R & D Research and Development

RDF Rural Development Framework

RDP Reconstruction and Development Programme

SA South Africa

SABS South African Bureau of Standards

SACOB South African Chamber of Business

SADC South African Development Community

SADT South African Development Trust

SAQA South African Qualifications Authority

SARB South African Reserve Bank

SARS South African Revenue Service

SDF Spatial Development Framework (In terms of Municipal Systems Act, 2000)

SDI Spatial Development Initiative

SDI Act Spatial Development Initiative Act (part of the KwaZulu-Natal Land Affairs Act, 11 of 1992)

SEDA Small Enterprise Development Agency

SETA Sector Education and Training Authority

SMME Small Medium Micro Enterprise

Stp Seda Technology Programme

StatsSA Statistics South Africa

SAISI South African Iron and Steel Institute

SAAPA South African Agricultural Processors Association

SAAFoST South African Association for Food Science and Technology

SACCI South African Chamber of Commerce Industry

SASSDA T Southern Africa Stainless Steel Development Association

SEIFSA Steel and Engineering Industries Federation of South Africa

SACTMA South African Cotton Textile Manufacturers Association

TIKZN Trade and Investment KwaZulu-Natal

VAT Value Added Tax

WESGRO Western Cape Investment and Trade Promotion Agency

WSSD World Summit on Sustainable Development

WTO World Trade Organisation

WC Western Cape

WRSETA Wholesale and Retailing Sectoral Training Authority

ZAR South African Rand

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