There are few moments at which business executives may safely weep and earn nothing but respect and admiration. One of these is at the opening of a new manufacturing plant.
At a cost of R 1.2 billion, and taking two years to build, the new PG Glass float line plant in Springs is their second line, and only the third in the whole continent of Africa. Chairman Ronnie Lubner, speaking at the official launch, was – momentarily – overcome by the magnitude of what his family-owned business has achieved.
CEO Stewart Jennings, equally passionate, demanded of Deputy President Phumzile Mlambo-Ngcuka – a guest at the proceedings - that she look to government policy regarding economic policy support to encourage further such large-scale investments. Manufacturing, at 16.3% of GDP, has a significantly larger impact on employment and economic growth than mining, at 6.5%. "So," asked Jennings, "why is it that the financial press only concentrates on mining?"
The production of primary products – such as mined resources – is an easy one to cover. We dig stuff out of the ground and other people pay for it. The products require relatively little skill to produce and can leave the country scarcely without touching the ground from whence it just came.
Manufacturing is harder and more vulnerable. The motor industry requires an entire network of components manufacturers, distributors, marketers and agents. One factory may employ less people than a single mine, but the network necessary to produce those manufactures is larger than that required to send minerals to the harbour for export.
Value-added manufactures are also more valuable in terms of exports, something that Deputy Director of Trade and Industry, Iqbal Sharma, is keen to promote. He has a funny way of doing so.
Selling products to people who can come and see your shop, hold your product, and decide whether to buy it is a lot more straightforward than exporting it to a country where you have no local representation. Finding customers to buy your products in a foreign land takes a lot of time and energy. Salespeople have to fly to trade-shows, introduce themselves to potential customers, fly back-and-forth as they work to convince local distributors to order sufficient products to cover the incredible expense of transporting the goods in the first place.
Exporting from a country that still has exchange control makes matters even worse as manufacturers go cap in hand to "beg" government to allow them to send money abroad to pay for all these marketing and sales junkets.
Sharma says that South Africa has a "mere" 2 000 exporters when we should have 6 – 8 000 exporters. Sharma, spoon-fed on the lard of government largess, declares that exporters are displaying a "significant amount of laziness".
Certain expletives come to mind.
Just like not every person is cut out to run a business, not every business is cut out to be an exporter. It takes a considerable amount of patience. Not only do you have to deal with the idiots in charge of your own government's economic policy, you have to deal with the idiots in charge of another country's as well.
This swells the amount of paperwork required to export the average widget to around the amount of paper felled from a large forest. When confronted with the number of forms that have to be filled in with the correct pen-colour, on the correct day, in triplicate, most business owners will find their eyes automatically glazing over.
Mr Sharma, there are not enough manufacturing businesses, and so there are not enough exporters. Align policy with business promotion and export will happen on its own. Reduce the amount of bureaucratic twaddle that exporting manufacturers have to deal with and you'll attract even more.
And, next time you want to see real laziness, I suggest you visit parliament.
To learn more about this author, visit Gavin Chait's Website.
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