Despite government’s efforts to industrialise the country’s economy, data released by Statistics South Africa shows that the manufacturing industry’s contribution to economic activity has eroded since 2005.
Profits for the manufacturing industry declined from 7% in 2005 to 2% in 2021.
Stats SA further notes that over 300 000 jobs were lost in the sector during the sixteen-year period.
Stats SA’s 2021 manufacturing report indicates that despite a rise in the total income for manufacturing, the overall profit of the industry has declined.
Manufacturing sector showing signs of slowing down
The data shows that the contribution of manufacturing to the gross domestic product (GDP) also declined from 19% in 2005 to 13% in 2021.
Deputy Director General for Economic Statistics at Stats SA, Joe De Beer says, “It was a tough time for manufacturers during that growth period, 2005/08, the profit margins were very strong and that started flattening out, a very low 2% that we estimated in this survey. But within the profit margin it’s not a case where everyone has the same 2%. You can see the telecom, medical equipment, still had a decent profit margin, 4.7% and then it slows down at the bottom of the pile and other manufacturing only recorded a one percent profit margin. We did say this period overlapped with the COVID restrictions.”
Gauteng, the Western Cape and KwaZulu-Natal contributed a combined income of R1.8-trillion in 2021.
Manufacturing is mainly concentrated in the City of Johannesburg, Ekurhuleni, City of Cape Town and eThekwini – accounting for 60% of the national workforce.
De Beer says the biggest job losses were recorded in textiles and clothing.
“The period from 2005, there was actually 308 000 jobs lost and you can see the gradual decline. Still a bit of a change in direction between 2007/14 but then it drops again further in 2021. Where did we loose these 308 000 jobs? Everyone dropped a little bit. The one exception is petroleum products, that’s only a plus of 5000. But if you remember the drop was 308 000 and most of that was in textile and clothing, so 120 000 jobs were in textiles and clothing.”
Stats SA says 11 400 VAT approved South African enterprises participated in the manufacturing survey.
