Manufacturers Commit to Local Procurement as a means to Job Creation (October 2018)

The Manufacturing Circle - the voice for the South African manufacturing industry - is participating in the Jobs Summit this week. The Manufacturing Circle’s purpose is to promote the interests of manufacturers to enable job-rich growth in the South African economy.

Says Philippa Rodseth, executive director, “The Jobs Summit is particularly relevant as the manufacturing sector is among the top three multiplier sectors in terms of value addition, job creation, export earnings and revenue generation”.  She emphasises that manufacturing has lost around 400,000 jobs since the 2008 financial crisis and that it is vital for South Africa that job creation takes top priority.  “We have to limit further de-industrialisation, arrest job losses and stabilise our industrial base,” she notes. 

The localisation of procurement spend is one of the strategies required to achieve this. To this end, the Manufacturing Circle is committed to advancing the reputation of South African manufactured products and is working closely with the Proudly South African campaign. This includes promoting preferential procurement of locally manufactured and beneficiated products that are of competitive quality and price; partnering with Proudly South African and other relevant institutions in multi-faceted “buy local” campaigns; and encouraging companies to increase expenditure from local producers. 

Says Eustace Mashimbye, CEO of Proudly South African, “The South African buy local movement was born out of the first Presidential Jobs Summit in 1998. In the intervening years, the country, and the world have gone through periods of growth and contraction, but sustained economic growth is what we now need. With economic growth comes job creation, and one proven strategy to increase employment levels is the uptake by business and consumers of local goods and services.  Proudly South African’s partnerships with organisations such as The Manufacturing Circle are important platforms for the promotion of our message of localisation.”

The Manufacturing Circle is collaborating with various manufacturing associations and Government to assess opportunities in value chains, represented by manufacturers across the sector, to identify opportunities for import replacement and export led growth, as well as addressing current blockages to driving local procurement.  The Paper Manufacturers Association of South Africa (PAMSA) is one such example.  “Where possible, we need to encourage investment in new production capacity and small businesses, particularly in the industrial waste sector where beneficiation has additional environmental benefits and creates new job opportunities.” says PAMSA executive director, Jane Molony.

Members of the Manufacturing Circle have announced their commitment to local procurement and job creation.

Sappi, a leading global woodfibre company with its roots in SA, has invested close to R5 billion in its SA operations since 2012 to boost local production.  Earlier this year, the company announced a new five-year investment of R7.7 billion to increase capacity in KZN.  According to SA CEO Alex Thiel, “Sappi’s direct value-add to KZN is R11.7 billion per annum and R5.8 billion to Mpumalanga. In addition to the direct employment of 5,000 people, Sappi’s use of contractors provides employment to more than 10,000 people, mostly in rural areas.  We are committed to driving local procurement in terms of sourcing more raw materials domestically and we believe that it is important to achieve a holistic, aligned and coordinated approach to local procurement and job creation.” 

Mpact, one of SA’s leading paper and plastics packaging businesses, has invested over R3.4 billion in various strategic projects over the past four years. In addition to employing close to 5,000 people, the company supports more than 50 small businesses through its enterprise development programme. Mpact CEO, Bruce Strong, believes education is the key to employment and the company has made this a priority. “Our commitment to job creation is evident in our apprentice and learnership programmes which improve the industry-relevant skills pool.  We also provide 22 fully funded bursaries for tertiary studies to dependents of previously disadvantaged employees.”

Amka Products purchases local inputs where possible for production of personal and haircare products.   Amka CEO, Ismail Kalla, says, “We commit to advance the reputation of domestically manufactured products.  To develop consumer trust in and preference for our local products, we believe in constant research, development and product innovation, market research, use of modern high-tech ingredients and international benchmarking.”  Amka maintains an active, well informed consumer base, as well as offering training initiatives in hair care, creating over 5 000 entrepreneurs over the past 10 years. 

Multotec, which provides consumable and capital mineral processing products to the global mining market, believes that local procurement will assist in reversing de-industrialisation and will positively impact on job creation.  CEO, Thomas Holtz stresses, “The proviso is that these goods must be world class and cost competitive in the international mining markets.”  Holtz welcomes the focus on inclusive procurement, supplier and enterprise development in the draft Mining Charter and is in favour of a multi-stakeholder initiative to incentivise the execution of a South African mineral processing plant for the African continent. “This would have a real multiplier effect,” he says.

Aspen Pharmacare, a South African multinational world leader in its field of pharmaceuticals, is committed to ongoing investment in SA.  Aspen supports local procurement of goods and services in its operations, including in building and construction of plants, purchasing packaging material and components from SMEs, supply chain services and distribution, local training, skills, scholarship and bursary services, enterprise development and areas that have a direct multiplier effect on the local economy.

Alan Dickson, Reunert Group CEO, says “Our manufacturing businesses employ more than 4000 people and we export products throughout South East Asia, Africa, Australia and America. Reunert embraces local procurement and, wherever possible, procures from South Africa.  Positive engagement between the DTI and industry has led to several successes, e.g. the designation process, which has created local jobs, improved BEE and generated investment.  This good work should be further developed to maintain our industrial base. Reunert is also continuing to expand its local procurement.”

Mehul Mehta, the joint CEO of Corruseal Group, a black owned paper and corrugated packaging business which employs around 1400 people, says, “We have invested R840 million to remain competitive in our markets.  This includes the acquisition of the Enstra paper mill and a greenfield corrugator site in the Western Cape. We support the contributions of PAMSA and the Manufacturing Circle.”

André de Ruyter, Nampak CEO and Chairman of the Manufacturing Circle, agrees that procuring locally manufactured goods that are competitive on cost and quality will drive increased local demand, job creation and ultimately investment.  “We employ some 4 000 people in South Africa, and are continuously investing in skills and training to ensure that we run world-class manufacturing facilities”.  Local procurement has strategic supply chain benefits for Nampak, and imports are only pursued as a business necessity.

Rodseth concludes, “The Manufacturing Circle welcomes the opportunity for continued engagement and collaboration to achieve its objectives of job-rich growth by driving the manufacturing sector. This includes recommendations to address current blockages, and interaction on progress made to date. This is fundamentally important to effectively implement increased aggregate local demand, an urgent demand-side intervention required to grow our economy and create the jobs that our country desperately needs.”



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