By: Anna Majavu
SMMEs hoping to break into the manufacturing sector need to position themselves as “high value” companies by first working in the manufacturing sector and developing the specialised skills that will compel bigger businesses to include them in their supply chains. This was the view of industry experts who were brought together by Proudly South African at a webinar on 11 July.
Tapiwa Samanga, CEO of the Production Technologies Association of South Africa (PtSA), which trains people for the Tool, Die, Mould (TDM), and Special Machining industry, said tooling was at the core of manufacturing in any country. “Without tooling, we are not going anywhere,” he said, adding that many companies in the tooling sector were SMMEs usually owned by tiny groups of people who had worked in the industry for several years before starting their own businesses.
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“Skills are at the core. You need to develop the competence that will lead you to a global value chain. Stranded SMMEs that are not connected to any global value chain are just destined to fail. When people are funding a project, they fund the owner,” said Samanga. He said people could set up SMMEs making plastic cups and buckets for domestic use where the level of precision needed was low, but within four years, their businesses would be gone if they had not found a way to make themselves indispensable to a global value chain.
Manufacturing production in South Africa increased by 4.0% in March 2023 compared with February 2023. The largest increases were in the food and beverages sector, petroleum, chemical products, and rubber and plastic products, which offered many opportunities for SMMEs, the experts said. Chester Foster, General Manager at the SBS Group, an industrial energy and water tank manufacturer, said his company “purchases everything locally that we could possibly purchase”, including thousands of nuts and bolts that were made specifically for their products by a local company.
Small businesses manufacturing equipment as small as nuts or bolts should be able to break into the manufacturing supply chain, he said. However, he also found that there was a skills shortage in his sector. National Association of Automotive Component and Allied Manufacturers Executive Director Renai Moothilal said that while the automotive sector’s global supply chains were typically dominated by multinational companies, the new focus on “deep localisation” meant that SMMEs could enter the lower levels of supply. “I do believe the opportunity comes in for micro-enterprises [when] we get more volumes of vehicles being assembled in South Africa,” said Moothilal.
Programmes in automotive component manufacturing that already had guaranteed procurement opportunities for smaller-sized black-owned businesses could be expanded to open up opportunities for smaller enterprises, he said. Department of Trade, Industry, and Competition (DTIC) head of incentives Susan Mangole said her department would provide small businesses and start-ups with machinery, equipment and quality training “to get them into the value chain of the bigger businesses”.
The DTIC would also help SMMEs market their products overseas, and small businesses could approach the department to say which countries they needed assistance to market their products in. Meanwhile, Proudly SA CEO Eustace Mashimbye announced at the webinar that it would launch a new electronic platform on 1 November where its local member companies could sell their products for free.
