The manufacturing sector in KwaZulu-Natal is robust
and resilient, and is facing the global economic downturn head-on, confident of
emerging from the crisis stronger.
This was the essence of a recent workshop,
hosted by professional services firm Deloitte in Durban, at which some of the province's
biggest manufacturing companies gathered to discuss their response to the
economic meltdown.
Forty representatives from KZN's top
manufacturers, including Toyota, Bell, UEC, GUD, Feltex
and Grafton Everest, attended the workshop.
They were hosted by Deloitte's Andy Dillon,
an analyst of lead technology innovation, and Paul Botha, the director of
consulting.
The meeting took place after Stats SA
announced that manufacturing output in South Africa had contracted by 20
percent in the last quarter.
In KZN, according to the provincial
government, manufacturing was the biggest contributor to the province's gross
geographic product (GGP). Manufacturing contributes 24 percent to GGP. The next
biggest contributors are finance, real estate and business services.
"Manufacturing in KZN is going through
a tough time. There are rising input costs and markets are softening,"
said Dillon.
Botha said manufacturing companies were
well aware of the challenges. They knew that "now is the time for
action" and this was not just a phase that would "go away".
Botha and Dillon emphasised the value of
leadership in the current climate.
Dillon said in these uncertain times, when
people were worried about their futures, it was important for business leaders
to remain calm and to display inspirational leadership.
Botha said: "There are a slew of
things that you can do. Our advice is to pick the right initiatives and stick
with them.
"Focus should be around cost saving
and innovation. Cost-saving should not automatically be associated with
lay-offs. Don't automatically think that you have to cut heads. Your people
have bright ideas and, when things pick up, you don't want to be without
them."
Botha said manufacturing firms had to be
ruthless about dealing with waste, duplication and inefficiency.
Streamlining
"Now is the time to cut fat and be
lean. Look at the top three aspects of your business. Look at procurement.
Streamline how you handle your materials. There are always ways to
improve."
Dillon said all manufacturing companies
struggled to handle materials efficiently.
"Apart from the cost of material,
there is how you receive and store materials, how you choose and deliver them
to be manufactured, and how you get your product to market," he said. "The common thread is efficient logistics: conveying these goods to the
right place at the right time."
Botha said in many ways, KZN manufacturing
firms were going back to basics.
"Sometimes it takes a crisis to
improve co-ordination. Many of our clients haven't hit rock-bottom, but they
are fully aware that harder times are on the way. Some have long-term contracts
that will help them weather the crisis, but these contracts also have finite
lifespans."
Botha said manufacturers were keen to get
their houses in order to improve productivity and position themselves for
growth when the economy turned.
He said there were minority views from
manufacturers that the government should help more with import tariffs to
protect local producers. Appeals for this were likely to come from the auto
sector.
Beyond that, Botha said, KZN manufacturers
would benefit from more trade agreements that opened up developing markets like
Brazil and India.
"Local producers are looking to the
government to increase bilateral trade agreements with developing
countries," he said. "They are looking to get their products to new
markets which can be volatile, but are potentially lucrative."
Dillon said the province had serious,
globally competitive manufacturers with original designs and great components.
"They have visionary leadership and
they are prepared to transform to become more competitive," he said.
"They are looking to new products and
new markets. Now is the perfect time to consider this."
Botha said although it was difficult not to
be affected by general market confidence, most manufacturers in the province
were "spirited and imaginative" and were prepared to ride out the
storm.
April 01, 2009 Edition 1
Network Reporter
The Mercury