South Africa’s manufacturing landscape has long been a cornerstone of its economy, contributing significantly to employment and economic activity. However, recent trends indicate a shift in this landscape, with various challenges impacting profitability and job security within the industry. Despite these hurdles, the sector remains vital, especially in key regions such as Gauteng, Johannesburg, Ekurhuleni, Cape Town, and eThekwini. In this article InterGest South Africa takes a look navigating South Africa’s manufacturing landscape by examining both the challenges and opportunities for businesses looking to invest and grow in this dynamic market.
The Manufacturing Hub of South Africa
Gauteng stands as the manufacturing hub of the country, housing 43% of the manufacturing workforce and accounting for 42% of sales of goods and services. (Stats SA,2023). The manufacturing activities are primarily concentrated in Johannesburg, Ekurhuleni, Cape Town, and eThekwini. These four cities collectively host 60% of the national manufacturing workforce and generate just over half of the sales of goods and services (Stats SA, 2023).
In 2021, the top 10 manufactured products that generated the most income were products associated with the below industries:
- Automotive,
- Beverage,
- Steel and metal production
For companies looking to do business in South Africa, understanding these dynamics is crucial. With the right strategies and partnerships, there are significant opportunities to tap into the manufacturing sector’s potential and contribute to its competitive revival.
Current Trends and Challenges
Manufacturing’s contribution to South Africa’s total economic activity has diminished over the years, despite a rise in total manufacturing income. This paradox highlights the sector’s struggle with declining overall profit margins. However, in 2023 growth was seen to improve particularly in the production of steel and alloys. As interest and investment go hand in hand in the South African Manufacturing sector, trade commissioners and local promoters must work to entice metal production entrepreneurs and investors to consider this growing African hub.
Improving Lives Through Data Ecosystems
Investing in advanced data ecosystems can be a game-changer for the manufacturing sector, driving efficiency, innovation, and growth. By leveraging accurately collected data, manufacturers can optimize operations, reduce costs, and enhance product quality. This, in turn, can help mitigate some of the challenges faced by the industry, such as declining profitability and job losses particularly in the textiles and clothing, wood, paper and publishing and transport production sectors.
Manufacturing Infographic
Navigating South Africa’s manufacturing sector, challenges and all, remains a vital component of the economy. With strategic investments and a focus on innovation, businesses can not only thrive in this sector but also contribute to its resurgence. Understanding the regional dynamics and key players in the market is essential for any company looking to establish a foothold in South Africa’s manufacturing industry.
InterGest South Africa has operated successfully in South Africa for 20 years and has experience with clients of all industries. Our local team works hard to not only fully understand the market, but find promising opportunities for our clients to seize and grow their operations. With our dedicated accountants, payroll specialists, tax specialists and market researchers, we are confident in growing your company locally, along with the employment, interest and investment into South Africa at large.
Contact us today to find out more about our service offerings and to chat with one of our experts.
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