Forward and Backward Linkages in the Manufacturing Sector

Forward and Backward Linkages in the Manufacturing Sector

The 2009 supply-use table from Statistics SA is shown in the Appendix, with the focus being on the manufacturing sector. The primary and tertiary sectors have been condensed. A more detailed analysis can also be performed, for example, by looking at the share (percentage) of each sub-sector to the total sector, or by looking at the multiplier impact. But this is outside the scope of this research and future research can focus on this.

The table provides very detail information and although the detail will not be discussed, the principles will be provided on how to interpret the table with one example. Such a table can be very useful to support policy making by looking at potential ‘gaps’ in the value chain that can for example be filled up with SMMEs. This can also be interpreted with employment information and import and export information per sector.

The table is read from the top down (vertical) to look at the usages for a specific sub-sector/industry from other sub-sectors/industries, and from left to right (horizontal) to look at the supply from one sector/industry to another.

Looking, for example, at the furniture industry: it uses R3.7 billion in wood products, R1.76 billion of other fabricated metal (this will include for example all the cutting blades), R531 million of plastic products, R486 million in leather products, R465 million of textile fabrics and R344 million of basic chemicals. It will also use R384 million of agricultural products, and R4.39 billion of tertiary activities.

The domestic furniture sector supply mainly the retail sector (tertiary) with R2.4 billion of products. From Table 6, it can be seen that furniture on average used 2.36 employers to create R1 million of turnover (down from 4.38 in 2001). The furniture sector import almost the same as what it export (R3.5 billion vs R3.6 billion) and the imports and exports are roughly about 14% each of total supply at purchases prices.

Provincial Manufacturing Activity

Figure 12 shows the provincial contribution to the manufacturing industry between 1995 and 2010. The shares between the provinces remained more or less the same of this period. Gauteng remain the major manufacturing contributor as a province, contributing 40.5% (or R134.8 billion in 2010) of SA’s manufacturing (this remained stable from 40.8% in 1995). This is followed by KwaZulu-Natal at 21.3% and Western Cape at 15%. Northern Cape only contributed 0.5% and Limpopo only 2.7%.

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

Source: StatsSA

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