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We take a look at South Africa's under utilisation of manufacturing capacity and break it down by various manufacturing sub industries. And its not looking good for textiles.
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So South Africa's manufacturing not running at full steam?
South Africa's manufacturing industry's has been in trouble for a very long time, as we have reported on on numerous occasions on our website. We even have a page dedicated to South Africa's manufacturing industry. Even though it is struggling in South Africa, it is still one of the biggest industries in South Africa's economy.
But the industry is under continued pressure due to cheaper imports, high and rising labour costs in South Africa, increased cost of electricity in South Africa, lack of skilled labour etc. And then for the employees in the manufacturing industry there is the continued threat of automation, in which machines and robots take over the work of humans. As the machines can operate 24/7, it doesnt require leave, or sick leave, or maternity leave, it doesn't get into arguments with co-workers etc. Hard of companies not to see the benefits in greater automation in their businesses.
Another factor affecting the manufacturing industry is local demand. Is the there continued demand locally for locally produced goods? Or is manufacturing output slowing down in South Africa due to lower demand for goods produced?
But the industry is under continued pressure due to cheaper imports, high and rising labour costs in South Africa, increased cost of electricity in South Africa, lack of skilled labour etc. And then for the employees in the manufacturing industry there is the continued threat of automation, in which machines and robots take over the work of humans. As the machines can operate 24/7, it doesnt require leave, or sick leave, or maternity leave, it doesn't get into arguments with co-workers etc. Hard of companies not to see the benefits in greater automation in their businesses.
Another factor affecting the manufacturing industry is local demand. Is the there continued demand locally for locally produced goods? Or is manufacturing output slowing down in South Africa due to lower demand for goods produced?
So which sub sectors of manufacturing is the most under utilised in South Africa?
So based on data published by Statistics South Africa the following shows the amount of under-utilisation of manufacturing capacity in South Africa for the 3rd quarter of 2018 (July 2018- September 2018):
What the above is saying is that for South Africa's total manufacturing capacity and capabilities, we are not using 19% of it, or basically factories and manufacturing plants are only running at 81% of full capacity. So almost a fifth of South Africa's production and manufacturing capacity is not being used currently.
So why are manufacturers in South Africa not running at full steam? Well the main reasons provided that makes up the 19% under utilisation is shown below:
- Textiles: 33.70%
- Leather:30.30%
- Other transport equipment:28.00%
- Textiles, clothing, leather and footwear division:27.70%
- Metal products:26.00%
- Wearing apparel:25.00%
- Basic iron and steel products:24.70%
- Printing and publishing:23.10%
- Basic iron and steel, non-ferrous metal products, metal products and machinery division:22.90%
- Electrical machinery division:21.60%
- Machinery:20.90%
- Professional equipment:20.50%
- Other manufacturing groups (incl Tobacco):19.70%
- Radio, television and communication apparatus and professional equipment division:19.50%
- Food and food products:19.40%
- Food and beverages division:19.20%
- Total manufacturing:19.00%
- Non-metallic mineral products:19.00%
- Basic precious and non-ferrous metal products:18.70%
- Beverages:18.60%
- Radio, television and communication apparatus:18.60%
- Glass and non-metallic mineral products division:17.80%
- Wood and wood products, paper; publishing and printing division:17.60%
- Furniture and other manufacturing division including tobacco:17.50%
- Wood and products of wood:17.30%
- Basic chemicals:17.00%
- Motor vehicles, parts and accessories and other transport equipment division:16.80%
- Coke, petroleum products and nuclear fuel:16.60%
- Petroleum, chemical products, rubber and plastic products division:16.20%
- Plastic products:15.70%
- Other chemicals:15.30%
- Motor vehicles, parts and accessories:14.60%
- Rubber products:14.50%
- Paper and paper products:13.80%
- Glass and glass products:12.80%
- Furniture:12.70%
- Footwear:11.70%
What the above is saying is that for South Africa's total manufacturing capacity and capabilities, we are not using 19% of it, or basically factories and manufacturing plants are only running at 81% of full capacity. So almost a fifth of South Africa's production and manufacturing capacity is not being used currently.
So why are manufacturers in South Africa not running at full steam? Well the main reasons provided that makes up the 19% under utilisation is shown below:
- Lack of raw materials: 2%
- Lack of skilled labour: 1
- Lack of semi-and unskilled labour: 0.2%
- Insufficient demand: 11.7%
- Other reasons: 4.1%
- Total under-utilisation: 19%