Manufacturing sector evolving

Wednesday, August 22, 2018

KwaZulu-Natal Economic Development, Tourism and Environmental Affairs MEC Sihle Zikalala says the changes in trade, technology, organisation of production and product demand have all influenced the evolution of manufacturing activities.

“We are living through the Fourth Industrial Revolution, a wave of new technologies that are emerging and affecting our lives in many new ways, creating entirely new capabilities for people and machines. Global trends show an increase in disruptive markets that are changing traditional markets as we have known them,” Zikalala said.

Zikalala was speaking at the KZN Manufacturing Indaba, which is currently underway at Inkosi Albert Luthuli International Convention Centre.

Zikalala said the changes in the manufacturing sector has impacted heavily on the relationships between firms and the spaces they operate in.

“Probably the most significant change in this regard has been the globalisation of production networks whereby most manufacturing businesses are part of some type of globalised or globalising value chains. The growth of the manufacturing sector hinges on the availability of both skilled labour force and the ability of companies to acquire the latest technology to improve competitiveness,” he said.

Protect aggregate demand

The MEC said while they value the importance of technology in production, they also believe there is a need to protect the country’s aggregate demand, through attempting to balance the purchasing power of the labour force and productivity.

This will ensure that companies remain competitive and at the same time maintain the aggregate demand required to sustain increased production, he said.

Zikalala also stressed a need to constantly promote the growth of the middle income population in the economy, noting that in most emerging markets like India, China and Brazil, the growth in the middle income population has continued to anchor sustained economic growth.

Invest in infrastructure

In view of this, Zikalala said there is a need to invest in infrastructure that is investing for growth, rather than investing because of growth.

“There is a need to earmark substantial resources for research and development that are aimed at improving product quality. This might be achieved through tax incentives. KwaZulu-Natal remains committed to the national agenda of maximising the benefits of regional integration within SADC (Southern African Development Community) and BRICS (Brazil, Russia, India, China and South Africa) countries.

“The significance of exports in economic growth is evidenced by a large contribution of exports to GDP (Gross Domestic Product) in many successful countries. I can cite many examples here but it is critical to mention China and Germany. China’s export to GDP ratio is 39.9%, Germany’s ratio is about 50% compared to 25% of South Africa, and about 18% for KZN,” Zikalala said.

Zikalala maintained that the most successful economies of the world are those that are able to diversify their export basket. –