New global consumption class could stimulate new manufacturing opportunities, says Ekurhuleni MMC

The global manufacturing sector is entering a dynamic phase that will bring about a range of new market opportunities in emerging economies by 2025 and result in the emergence of a new global consumption class.

Driven by steady growth in the middle class, the development of a new consumption class will drive demand for value-added manufacturing and will require a greater need for product variation in the manufacturing sector, especially innovation in materials and processes in high-technology industries.

“Although the manufacturing sector is still battling in the current economic climate, there is room for strategic advances in the sector, if we, as policymakers and investors, exploit the opportunities that exist in our sectors,” City of Ekurhuleni finance and economic development MMC Nkosindiphile Xhakaza said on Tuesday.

Speaking at the yearly Manufacturing Indaba, in Kempton Park, he said the focus and strategy of Ekurhuleni, Gauteng’s manufacturing hub, was, in part, informed by an appreciation of global trends, along with the performance of the local manufacturing sector.

With global opportunities still to be exploited, the city remains focused on strengthening its manufacturing sector and making strategic investments in economic infrastructure, despite the stalled state the local industry finds itself in.

South Africa entered its first technical recession since 2009 in the second quarter of this year, with the manufacturing sector maintaining an alarming downward trend.

The contraction in manufacturing had significant knock-on effects, with many industries needing to import equipment and failing to exploit local potential, Xhakaza said.

The export market has been experiencing a sharp decline since 2008 – when exports had reached a value of some R40-billion after increasing from R10-billion in 2003 – as global uncertainty led to a fall in demand that had been difficult to recover from.

The “troubling” decline in export orders had limited or pushed back production, leading to a contraction in jobs.

Xhakaza pointed out that although overall growth had started to pick up, employment creation remained low, as business confidence, and subsequent investment levels, remained low.

“Because we are failing to manufacture locally, we are failing to exploit potential,” he said, adding, however, that by working together, the tide could be turned, placing the overall economy on a better trajectory in the third quarter.

“This sector remains an important area around which we focus our regional growth prospects. Our investment in capital projects is geared towards this end, but we strongly need private sector investment,” he concluded, calling on business leaders to join the efforts made to grow the South African economy.