BUSINESS LIVE / 20 JUNE 2018 - 05:02 / DAVID MCCORMICK
Stuart Theobald’s On the Money column highlights how the increase in the cost of electricity appears to have reduced the number of operating foundries from 265 in 2007 to 165 in 2016 (While Eskom’s headcount gets ever more bloated, jobs are lost in the industrial sector, June 18).
The cost of electricity is just one of the factors in the reduction of foundry numbers.
Historically, foundries supplied machine parts to the manufacturers of mining equipment. The mining industry has been in decline for years, therefore for the foundries to survive, new manufacturers of industrial machines need to be found and new markets that utilise industrial machinery need to be developed.
SA does not appreciate the rarity of the skills required to start a manufacturing enterprise. The education system is not geared to producing technically competent entrepreneurs who are prepared to get their hands dirty. Uncertainty over mining (and other) policy, militant trade unions, load shedding, crime and poor municipal management make it clear that importing industrial machinery and finished goods is far easier, less risky and cheaper than producing them in SA. For white entrepreneurs, add black economic empowerment legislation.
Until governance is improved and legislation promulgated that encourages manufacturers to start production lines in SA, expect increased imports of manufactured goods and greater numbers of unemployed people.
David McCormick Cape Town
Disclaimer - The views expressed here are not necessarily those of the BEE CHAMBER