Mechanical Technology — August 2013
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I
n spite of record highs on the JSE, not much of South Africa’s economic
news is good. The June figures on the country’s metals and minerals out-
put from Statistics SA show that gold production is down 14% from June
2012, and that it is now the country’s fourth most important mined metal
by value, having been overtaken into third position by iron ore. Coal is now the
most valuable mined mineral in South Africa with platinum second. From being
the world’s top gold producer less than a decade ago, we are now down to 6
th
,
behind China, Australia, USA, Russia and Peru, which has just overtaken us.
In this issue, we feature two manufacturing articles that both raise concerns. Brandon Mor-
genrood, who deals with small enterprises at Standard Bank says that since about 2005, manu-
facturing’s contribution to the South African GDP has “slumped from 21% to 12,56% and if we
track back, manufacturing has been dropping since the 1980s and has shed 300 000 jobs since
2008.” It now accounts for only 4% of the broader SME portfolio at Standard Bank.
Also worrying, according to Morgenrood, is that while our fellow BRIC countries are managing
to reduce their input costs, ours – mostly due to spiralling electricity, fuel and labour costs – are
rising sharply.
Dimitri Markoulides of the management and operations consulting firm BMGI also compares
us to our BRIC partners. He reveals that manufacturing in other BRIC economies has, in the last
decade, declined on average by only 10%, compared to a drop in the manufacturing sector’s
contribution to GDP in South Africa by over 33% in same period. “South Africa’s figures are wor-
rying because manufacturing growth is the predictor for developing economies. Manufacturing
attracts high business value activities, is the driver for service-related growth, and vitally, is the
key driver for job creation.”
Markoulides attributes this largely to a lack of adaptive innovation, especially in the country’s
manufacturing sector. He argues that, in the catalytic converter industry, for example, we have
focused mainly on manufacturing simple components. “This strategy can work, provided you are
able to reduce costs to remain competitive as supply increases with time. If reducing costs isn’t
a core strength, however, then one needs to manufacture more complex value-added components
to maintain margins.”
According to Markoulides, the industry has failed to increase its competitive advantage, despite
its local supply of high-value raw materials, namely stainless steel, platinum and rhodium. “This
was a critical lapse, because a lack of competitiveness – resulting from a lack of integration of
new technologies – can undermine an industry’s survival,” he warns.
But can we innovate? Manufacture more complex value-added components and emerge com-
petitive from our current predicament?
At the Southern African Institute of Welding (SAIW) Dinner and Award Ceremony held on
August 16, Steinmüller Africa – a Medupi and Kusile contractor not implicated in causing de-
lays – was honoured with the Institute’s highest award, the SAIW Gold Medal. Reasons given
include the company’s commitment to skills development and its implementation of ISO 3834,
the international welding standard – and the SAIW’s opinion is reinforced by Steinmüller’s global
parent, Bilfinger Berger, who recognise the Pretoria West fabrication workshop as the group’s
global centre of excellence for steam pressure components.
How is this company keeping its head, ‘when all around them are losing theirs’? Like others,
they have invested in modern equipment and implemented the quality standards required by
Eskom, perhaps more honestly and effectively.
In my opinion, the key difference is the company’s attitude towards its people.
To mitigate against skills shortages, Steinmüller Africa has established three technical train-
ing academies, and these exist to produce Red Seal artisans. The coding process for welders,
which is mandatory for any welder of critical components, is done as a three-month extension
programme to the two-year apprenticeship. Many South African companies rely solely on short
coding processes to ‘qualify’ their welders.
Now Red Seal artisans are in very short supply, and therefore in demand. Yet Steinmüller Africa
manages to keep theirs, through, according to Sonet Jordaan, the group training administration
manager, ongoing “talent management and training”.
South Africa has spent decades trying to develop a manufacturing sector to add value to our
mineral resources and improve the resilience of the economy. Yet here we are, with our strongest
resource sectors being overtaken by both established and emerging economies, and our manu-
facturing sector in reverse.
Joking at the SAIW dinner, Mark Lottering, the compère, picked up on a comment by Johan
Pieterse of Afrox: “Remember good people,” he said, “that after training, welders are actually
able to weld!” Not so funny for insiders.
We have to raise our training standards significantly, across the resources and manufactur-
ing sectors, to have any hope of becoming a destination for “the manufacture of more complex
value-added components”.
Peter Middleton
Training standards and manufacturing innovation
