Workers in a clothing factory in Newcastle, KwaZulu-Natal. Picture: FINANCIAL MAIL
Workers in a clothing factory in Newcastle, KwaZulu-Natal. Picture: FINANCIAL MAIL

SOUTH Africa is at risk of losing global manufacturing competitiveness because systems are not being implemented effectively, consulting and advisory firm Deloitte and South Africa’s Manufacturing Circle said in a manufacturing competitiveness survey, released on Monday.

"The stresses on the South African manufacturing sector could see South Africa becoming less competitive in the years to come, with its contribution to the national gross domestic product sliding from an historical high of 22% to below 12%," Karthi Pillay of Deloitte said.

South Africa ranked 24th out of 38 countries in the survey.

The survey was conducted to highlight major issues that were affecting South Africa’s manufacturing competitiveness, with 76 respondents from local manufacturing companies with annual turnovers of between R300m and R10bn per annum, being surveyed.

The most important factors considered in the survey were the cost and availability of labour and materials, local market attractiveness, energy costs and policies, economic trade, financial and tax systems, and physical infrastructure.

Mike Vincent, a director in Deloitte’s advisory services, said the local survey highlighted the scarcity of skilled labour and rising unemployment as huge constraints on South Africa’s competitiveness.

"Adding to labour pressures is the fact that local labour laws and regulations could be improved to help the South African industry. This contrasts totally with the international survey in which co-operation in labour employer relations, flexibility in wage determination policies, hiring and firing practices and pay and productivity are regarded as key factors contributing to labour market efficiency," he said.

Stewart Jennings, the head of Manufacturing Circle, said South Africa needed to bring in skilled artisans and engineers from abroad who could then pass on skills and train South Africans as the education system was producing manufacturing professionals "very slowly".