In the recently release Budget Review, it was revealed that, despite increasing by 10.3% in the first three quarters of last year, relative to the same period in 2020, manufacturing production remains well below pre‐pandemic levels. Furthermore, the outlook remains subdued.
The Budget Review noted that business confidence indicators point to constrained conditions. These indicators include supply chain disruptions and higher production costs. It is clear that the sector remains susceptible to ongoing supply and logistical challenges. “Compounding this is the decline of our ports and railway infrastructure over the past decade or two. It’s placed heavy strain on manufacturers, wholesalers and distributors.” This is according to Zane van Rooyen, Product Marketing Manager at field sales management CRM and mobile ordering app Skynamo.
“This would, under normal circumstances, be a great burden. However, coupled with the pandemic, lockdowns and supply links breaking both on an import and land-based level, this has resulted in a 24-month unprecedented pressure matrix. We will likely still be working our way out of for many years to come,” he adds.
Van Rooyen continues. “In his State of the Nation Address, the President rightfully said that our economy cannot grow without efficient ports and railways. My hope is that improvements to these are among the 55 new infrastructure projects that Government is prioritising. They are said to significantly boost long‐term GDP growth. This will help accelerate recovery of local manufacturing as well as import and export channels. These are needed to supply the parts and materials for manufacture as well as for the ability to once again trade on an international stage.
“Had the Covid-19 crisis not happened, the state of our ports and railways would need to compete with many other pressing issues in our economic turnaround strategy which is currently underway. However, the fact that Covid did happen added spotlight to the manufacturing and supply industries in their entirety. The experience of being ‘all in it together’ has forced every manufacturer, wholesaler and distributor to go back to the starting line. They need to develop new relationships, solve new supply chain issues, and approach everything in a new way. This problem-solving mindset has contributed to the resilience of these sectors. I believe this is what is going to get our ports and supply channels operational faster.”
Although imports are expected to grow by 5.4% this year, South African manufacturers should be looking to make things locally as global supply chains remain fragile. Especially now in light of Russia’s attack on Ukraine. “I’ve witnessed examples of South African manufacturers who used to have tight direct-to-destination export networks set up prior to the pandemic. They now have to send their international order via three continents before it can reach its intended destination. This only results in higher costs both to the distribution line and the consumer. Similarly, this is happening in reverse.
Many imports to South Africa at the moment are also experiencing this. We have seen what this is doing at consumer trolley level. Making local in some instances is a great solution to this. In other cases, businesses still need to import materials, ingredients, and parts, and no quick fix exists right now.”
He acknowledges that a number of businesses in this sector have not managed to survive the past two years. The pressure heaped upon them being too much. “Initially, they were unable to get stock due to the 17.4% decline in imports in 2020. Then, they got too much following last year’s 8.5% increase and weren’t able to sell this. It all became too much for some. Sadly, larger competitors had to take over many companies, or the companies had to close completely. Sales reps also faced cuts, and many companies slimmed down their sales teams. Others had to partner with brand management agencies and rely on them for retail execution needs.”
In light of these losses, van Rooyen welcomes the announcement of a new business bounce-back scheme for small and mid-size enterprises (SMEs) by Finance Minister Enoch Godongwana during the 2022/23 Budget Speech. “With small enterprises employing between 50% and 60% of South Africa’s workforce and contributing around 34% of GDP, this will be crucial for the country’s economic recovery. We will be assisting businesses too by giving them the ability to have live reporting data available for immediate use. You can place sales orders in real time and access the information needed to make informed decisions in an uncertain world.”
He concludes by saying, “I’m hopeful that with President Ramaphosa and Treasury shining a spotlight on the manufacturing industry, a very vital economy channel. With the collective mindset being one of finding resolution, we can discover ways to recover together.”
Zane van Rooyen is the Product Marketing Manager at Skynamo.
Established in Stellenbosch, South Africa in 2012, Skynamo is the leading field sales technology provider. It has close to 10,000 users at nearly 1,000 companies across a wide range of industries in Southern Africa, Australasia, the UK, Europe and the US. Skynamo’s field sales mobile app and cloud-based management platform. It is used by manufacturers, wholesalers and distributors with sales teams in the field, selling products to an existing base of customers. Skynamo integrates with a wide range of ERP and accounting software to improve order accuracy and fulfilment.
It was named Sage ISV Partner of the Year for 2019 (Africa & the Middle East) and an Acumatica Certified Application and Customer Verified Application. Skynamo received $30million in funding from US-based software investment firm Five Elms Capital in 2020. It forms part of the Stellenbosch-based Alphawave group of software and electronics companies. The group has more than 100 employees in South Africa, the UK and the US.
Issued on behalf of Skynamo by Zenahrea Damon from Hook, Line & Sinker Communications
Tel: +27 79 428 0389 / Email hello@hooklinesinker.co.za
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