'Decline in manufacturing must be reversed'

He was addressing members of Proudly SA, the Manufacturing Circle and the National Union of Metalworkers of SA (Numsa) who had gathered in Johannesburg to sign a pledge to promote the demand of South African products.

Abedian was currently preparing a research report for the Manufacturing Circle which had shown so far that the manufacturing sector remained a critical source of decent and sustainable job creation with considerable positive multiplier effects for economic diversification, fiscal benefits and the favourable balance of payments.

"The research is still a work in progress but I already have enough to go on. This is the first draft. The research will be completed by month end," Abedian added.

"It's important to note that trends in the manufacturing sector have been rising but declining as a contribution to GDP - many become confused about this.

"Manufacturing has been growing since 1994 but its relative ratio has been going down."

From 1970 until 1991, manufacturing declined as the apartheid economy was under siege and could not grow.

However, under the new dispensation the economy expanded and so did manufacturing.

"Yet in the 2000s - in my view - there were a lot of contradictory and poor macroeconomic policies adopted and manufacturing softened.

"The anomaly was that it was a time that the global economy was in a super cycle of growth and SA could possibly have tripled its manufacturing."

Abedian said that contrary to many arguments, SA had the basis to be a globally competitive manufacturing base for a number of reasons.

"SA has a one hundred year history of manufacturing with a lot of state intervention and a history of adhering to quality.

"Secondly, manufacturing needs raw material and even more than gold - SA has a disproportionate supply of manganese, coal and chrome - all necessary for manufacturing.

"However, we had our macroeconomic policies mixed up and there has been an inappropriate timing and sequencing of issues such as electricity and water."

From 2002 onwards, Abedian said that there had been a decline in industrialisation.

"This was the beginning of a sustained currency appreciation after the rand crashed in December 2001 and this did not favour manufacturing.

"Our situation is self-imposed. We can blame China, but we shouldn't. We can blame India, but again we shouldn't. We've got to compete on good and fair grounds but we have to remove certain constraints.

"We have everything going for us and if we cannot sort things out, we can't blame the Chinese. If we cannot get labour and business sitting around the table, we also cannot blame the Chinese," Abedian added.

He said manufacturing remained critical.

"If we let our manufacturing go, our economy will go only one way. The US and the UK provide good evidence - you can destroy it but you can't regain it - and when manufacturing goes, so do associated services."

Considering the multiplier effect, a R1 investment in manufacturing resulted in a R1.13 increase in GDP, Abedian explained.

A R1 million investment in manufacturing translated into three decent and sustainable additional jobs while a R1 investment in manufacturing resulted in a R0.13 increase in exports receipts.

Furthermore, he said that a R1 investment in manufacturing resulted in a R0.35 increase in fiscal revenue.

It could be assumed that an extended boost in manufacturing would significantly impact on sustainable employment and other macroeconomic variables.

Abedian said that SA manufacturing had taken 50 years to build.

"We should not destroy it in five years."