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Incentives aim to stimulate the manufacturing sector

An economic overview of the manufacturing sector in Gauteng Province, South Africa.

The Manufacturing Circle reported in 2018 that the manufacturing sector, in which Gauteng Province is preeminent, contributes 13% of South Africa’s GDP, significantly down from 24% in 1980. The sector employs 1.8-million people. For every direct manufacturing job, another 3.8 indirect jobs are created.

Employer organisations like the Manufacturing Circle and government at national and provincial levels are engaging in initiatives to grow the sector. Chief among these are the incentives such as the Manufacturing and Competitiveness Enhancement Programme (MCEP) of the Department of Trade and Industry (the dti). The dti is the state’s lead promoter of the sector.

Sectors that have received support include plastics, pharmaceuticals, chemicals, metal fabrication, transport equipment and agri-processing. The Support Programme for Industrial Innovation (SPII), run by the Industrial Development Corporation (IDC) on behalf of the dti, promotes technology development.

Another IDC initiative has allocated R23-billion over three years to support the Black Industrialist Programme to help existing entrepreneurs grow their businesses.

The Provincial Government of Gauteng has tabled plans to bolster manufacturing capacity in the province’s western areas. The priorities are mining and mineral beneficiation, capital equipment and machinery, agriculture and agri-processing, tourism, retail and economic development in townships.

Manufacturing contributes 14% to Gauteng’s real economy output and provides 40% of South Africa’s manufacturing overall. Manufacturing related to the mining industry, historically the lynchpin of the Gauteng economy, is still important.

Ekurhuleni Metropolitan Municipality has the greatest concentration of manufacturing enterprises, especially between Wadeville and Alrode, south-west of Alberton. Germiston is the country’s biggest rail junction and Transnet Engineering has invested hundreds of millions of rands in new equipment at its facility there.

New technology has been embraced by some innovative manufacturers. Desert Wolf’s Skunk Riot Control Chopper is an unmanned light aerial vehicles (UAV) that has proved popular in the world market. Desert Wolf operates out of Pretoria.

Packaging company Nampak, which in 2019 celebrated its 50th year as a listed company on the JSE, has metals, plastic, paper and glass operations at various locations including Industria West, Boksburg and Olifantsfontein. It is the market leader in beverage cans. The glass plant in Germiston has nearly doubled its output (to 40 000 bottles per year) to cater for increased wine exports. The country’s biggest glass producer, Consol Glass, has facilities in Clayville, Wadeville and Nigel.

Household products manufacturer Unilever represents an example of the lighter industrial capacity of the East Rand. Kellogg’s, Kimberly-Clark South Africa and Procter & Gamble all have significant manufacturing capacity in the area. Corrugated paper manufacturer Corruseal has purchased the Enstra Mill in Springs from Sappi, giving them greater control of production.

The southern portion of Gauteng around Vanderbijlpark and Vereeniging is synonymous with steel production. Flat iron is made at the large plants of ArcelorMittal. Scaw Metals’ chain-making factory in Vereeniging (McKinnon Chain) has invested R110-million in expanding and modernising its operations.

Steel has been experiencing a volatile few years, with reduced demand for from China severely reducing production volumes in South Africa. The Steel and Engineering Industries Federation of Southern Africa (Seifsa) noted small increases in output in the broader manufacturing sector in the first three months of 2019, despite what it described as “a difficult operating environment”. Steel makes up 28% of manufacturing in the country.

There are as 35 aluminium processing firms in Gauteng, involved in both secondary processing to produce foils, cans, bars, rods and sheets, with final fabrication in the form of die-casting and sheet metal work. Within Gauteng, the automotive and packaging industries are the chief consumers of these products.

AECI is a large manufacturing company with its roots in the mining industry. It comprises two principal divisions: AEL Mining Services (with a large factory site at Modderfontein south of Johannesburg) and Chemical Services, which presides over 20 separate companies (including Senmin, the group’s mining chemicals company).

More than half of the companies operating in the food and beverage sector in South Africa are in Gauteng, including Nestlé, Tiger Brands, Pioneer Foods, RCL, AVI and Astral. There are approximately 4 000 food processing companies in the province, employing more than 100 000 people. South African Breweries is spending R2.8-billion on expanding two of its three Gauteng breweries. Heineken’s brewery at Sedibeng has already been expanded since it opened in 2010.

Nestlé operates four manufacturing plants in the province and has invested heavily in increasing production volumes over the last three years. Tiger Brands runs six plants in Germiston that produce a range of meat products, and the establishment of a new tomato sauce plant and pasta plant rank among the company’s recent investments in the province. McCain Foods, located in Springs, produces frozen vegetables for the Gauteng market.

Although the South African poultry business took a knock because of the relaxation of import duties, chicken is still a popular South African choice. Earlybird Farm, one of Astral’s operations, processes 800 tons of chicken per day at its two factories in Olifantsfontein. RCL, operates 18 farms and two feed mills in Gauteng alone. Daybreak Farms, an AFGRI operation in Springs, produces about 650 000 broilers every week.

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