Sectoral Master Plans playing a vital role in reviving SA manufacturing
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By Eustace Mashimbye
LAST MONTH the latest in the Department of Trade, Industry and Competition (dtic) series of Sectoral Master Plans was signed, this time for the Steel and Fabricated Metal Industry.
To date, the dtic and its key stakeholders, including the private sector and organised labour, in the poultry, clothing, textile, footwear and leather, automotive, sugar and furniture sectors, have signed agreements designed to assist these job intensive industries to overcome a variety of challenges that they have faced as part of the Economic Recovery and Reconstruction Plan.
The master plans have targeted specific action points relating to the respective industries, but there are also generic objectives including a change in ownership and production patterns within each sector. This means, for example, transforming and assisting small-scale farmers in the poultry and sugar sectors, bringing more blackowned cut, make and trim plants in the textiles sector online and assisting new entrants into original equipment manufacturing in the automotive sector.
The master plans aim to increase localisation which will lead to re-industrialisation and growth, as well as to reclaim domestic markets lost to imports. The poultry sector is under threat from immorally dumped chicken principally from Brazil and the EU, but their master plan as well as adjustments to import tariffs are beginning to yield results and the sector is making a slow but sure recovery.
The value chain in this sector includes the grain industry and, as a result of the increase in local production of poultry, there has been a huge increase in the consumption of local maize and soya, with the target of a 300 000 ton increase for the year already met.
The textile sector has long been under threat from cheap imports from the East, which has led over the years to the closure of many manufacturing plants and the loss of many thousands of jobs. This sector is dominated by female workers, and the loss of livelihoods to many sole breadwinners has had devastating effects on many families and communities that relied on their incomes.
Not only are the items made in the east, subject to massive government subsidies in, for example, China, meaning their manufacturing input costs are so low as to allow them to sell at rock-bottom prices in our market, but consignments of clothing and textile items are frequently fraudulently under- or misreported on entry through our customs points and this illegal and counterfeit trade has done enormous damage to our domestic business.
The automotive sector has massive potential for job creation, from vehicle manufacturing, parts, components, and after-sales service through the entire value chain, that the sectoral master plan is in place to ensure that we encourage and nurture those international manufacturers that have invested billions of rand into our country to establish manufacturing plants, principally in Gauteng and the Eastern Cape. The Automotive Master Plan aims to increase the percentage of local content in locally assembled vehicles to 60 percent from a 2015 base of just 39 percent, thereby creating thousands of new jobs.
The sugar sector also has an extensive value chain from cane growers to soft drinks manufacturers and the food and beverage industry that buys tons of sugar for its food and beverage processing. The sector supports 65 000 direct jobs with a multiplier effect of up to 270 000 indirect jobs. In the first half of 2020, the sector was able to reduce its imports of sugar by an overall 11 percent, which therefore went to local producers.
Furniture also has a massive value chain from wood, fabric, glue, steel and many more component parts of any single item and contributes 1 percent to the country’s gross domestic product. Specifically in this sector.
Proudly South African has been very active soliciting commitments from various companies and institutions to source locally manufactured furniture for schools, office developments, housing complex projects, restaurants and more, including the procurement of white goods.
The newly signed Steel and Metal Fabrication Master Plan 1.0 acknowledges the complexities of this sector, but has the support of all stakeholders as diverse in their needs and interests as the privately-owned manufacturing plants and the labour unions.
Without a concerted effort to pull together for the greater good of the sector and not for any single role-player, the local steel sector faced a massive danger of extinction. The site of the signing ceremony is a case in point. A huge manufacturing plant was set to be sold and dismantled and sent to Nigeria in 2014, but with the timely intervention of the dtic it was rescued and bought by Barnes Group and is now supporting many jobs once again.
The steel sector master plan is the largest and most ambitious industry intervention in a sector that is critical for the country. Earmarked for future attention through introduction of sectoral master plans are forestry, agriculture and agro-processing, aerospace and defence, renewable energy, health, tourism, the oceans economy and digital sectors.
With the now tried and tested formula of existing plans, we are confident that these collaborative programmes and processes will assist in increasing the levels of localisation in the target sectors, leading to greater levels of industrialisation, productivity and job creation, proving that as South Africans we can make our mark globally and achieve great things, in the same way that Master KG took the world by storm with his Jerusalema hit.
Eustace Mashimbye is the chief executive of Proudly South African
*The views expressed here are not necessarily those of IOL or of title sites