South Africa’s manufacturing sector is facing a pivotal period. With rising operating costs, infrastructure constraints, skills shortages and intensifying global competition putting pressure on manufacturers, the question is no longer simply how to keep factories running, but how to create the conditions for sustained investment and growth.
Image supplied
According to Statistics South Africa, manufacturing contracted by 1.5% in the second quarter of 2026, marking the sector’s fourth consecutive quarterly decline.
Reversing this trend will require more than individual businesses improving productivity. Manufacturers need greater confidence in the operating environment, alongside the skills, technology, infrastructure and supply networks required to compete over the long term.
For Burak Bilgisel, regional managing director for sub-Saharan Africa at Defy, creating those conditions will be critical to determining what South African manufacturing looks like over the next decade.
“Manufacturers can only make these types of decisions with confidence when they have some certainty about the conditions in which they will be operating,” he says.
An enabling environment means reliable infrastructure, access to appropriate skills and supply networks capable of supporting production. Together, these factors provide businesses with a stronger basis for deciding when and where to invest.
Productivity needs people and technology
Technology will play an increasingly important role in manufacturing, but Bilgisel argues that automation should not be viewed in isolation from the people operating the factory.
Automation can improve accuracy and consistency, particularly where repetitive processes create bottlenecks or affect quality. Its effectiveness, however, depends on how it is implemented and whether it supports the workforce rather than simply replacing processes.
As digital technology becomes embedded in more production environments, manufacturers will also need to broaden their definition of factory skills.
Technical expertise will remain essential, but digital literacy, data interpretation and problem-solving are increasingly becoming part of manufacturing roles.
This makes ongoing training important. Skills development cannot be treated as a once-off intervention when machinery, software and production processes are continually evolving.
Partnerships with technical colleges, universities and specialist training providers can help manufacturers develop skills before shortages begin to affect production.
At the same time, businesses need to retain the practical knowledge already present within their factories. Experienced employees understand the realities of production, while new technologies and skills can provide additional tools to identify and solve operational challenges.
Resilience needs to make commercial sense
Energy resilience has become a fundamental consideration for South African manufacturers. The next step, says Bilgisel, is to connect resilience more closely to the wider business case.
Backup power can keep production moving during interruptions, while energy efficiency, smart monitoring and alternative energy sources can help businesses manage costs and improve operational planning.
The same principle applies across the supply chain.
Reliable logistics, responsive local suppliers, access to components and preventative maintenance all influence whether a factory can meet customer commitments.
“Building resilience means making practical decisions across the operation to reduce disruption and maintain consistent production,” says Bilgisel.
Manufacturing competitiveness therefore extends beyond the production line itself. A factory relies on a wider network of suppliers, employees and service providers to deliver products at the right quality, price and time.
Investment requires a long-term view
Manufacturing investment is rarely a short-term decision.
New machinery, product development, employee training and factory upgrades require capital and are generally planned over several years. Businesses need sufficient visibility over future demand and operating conditions before committing to investments of this scale.
This makes localisation an important part of the conversation, but it also requires a commercially sustainable approach.
Manufacturers need to identify areas where South Africa can develop genuine competitive advantages, supported by consumer demand, appropriate skills, reliable supply chains and opportunities in both domestic and export markets.
The opportunity is therefore not simply to produce locally, but to understand local customer requirements, design for local conditions, manage cost and quality effectively, and use South African manufacturing capabilities as a platform for regional and international growth.
Collaboration can unlock investment
Stronger relationships across the value chain can also help manufacturers make better-informed decisions.
Retailers and suppliers can share information about demand, plan volumes and address availability challenges. Technology providers can help manufacturers identify systems that solve genuine production problems rather than introducing technology for its own sake.
Employees can also play an important role in identifying opportunities to improve products and processes because of their direct understanding of factory operations.
For Bilgisel, South Africa does not need to build its manufacturing capability from scratch. The country already has factories, industrial expertise and established supply networks.
The priority is to create the confidence and capability required to modernise those assets, develop skills, improve productivity and invest for the long term.
When manufacturers, employees, training institutions, suppliers, retailers and policymakers work towards that shared objective, local manufacturing can do more than protect existing capacity.
It can create new products, access new markets and retain skills, investment and economic value within South Africa — helping establish a stronger foundation for the next decade of manufacturing.
