The South African toolmaking and manufacturing industries go hand in hand. You cannot have one without the other. So why is it that manufacturing seems to be doing pretty well, even in a slow economy, while toolmaking has been having problems for the past few years?
In July, manufacturing production increased by 5.6% year-on-year, driven mostly by a 39.6% year-on-year production rise in the automotive industry and a 17.4% year-on-year rise in the metals and machinery industry.
The manufacturing sector currently employs around 1.7 million people, and continues to occupy a significant share of the South African economy, with manufacturing output accounting for 15% of GDP.
Backing up this important sector is the toolmaking industry but despite the growth of manufacturing, that success has not filtered through and toolmaking is facing difficult times.
In 2008, Simthembile Pakkies of the Tooling Centre of Excellence KZN highlighted the importance of toolmaking in a M&G article saying: “You wear a shirt with buttons and those buttons must be made by a tool. You carry a cellphone and a tool must be used to make that cellphone. You use spice on your food—that spice bottle is made by a tool. A tool makes everything around you. We have estimated that one toolmaker can create jobs for about 14 people.”
But despite the demand for tools, the industry is having trouble attracting young blood and skilled toolmakers are becoming harder and harder to come by.
The Deputy Minister for DST in 2008, Derek Hanekom said: “South Africa has lost considerable capacity in this field and is currently heavily dependent on imported tooling, currently standing at about R2 billion per annum.
“It is clear that the South African tooling industry is currently seriously in decline,” and this was all before the global economic crisis.
The difficulties has not gone unnoticed and the DoE, DST, GTI and TASA have all stepped in with initiatives and financial support but today it seems that the problems remain.
Some of the issues faced by toolmakers include weak business practices in contract management, planning, production and project management.
“The market potential in toolmaking is phenomenal. In the automotive industry alone, we are spending $1.5 billion overseas on toolmaking work that could have been done in South Africa, had the industry been up to scratch,” said Ron MacLarty of Afrimold
“If we want to put the growth of South Africa on manufacturing, tooling cannot be ignored,” said TASA’s Henk Snyman.
So how what changes are needed, and what is causing problems? We ask Founder of Durban’s Spec Tool and Die, Dave Murgatroyd.
“It’s so important that we get some sort of support from the government and the multinationals; that’s what we desperately need,” he says.
“We’ve done some fantastic work for companies like Unilever. We’ve personally been responsible for three Gold Pack Awards with the Aromat canister, the Malibu Spice canister and the Rich ‘n Creamy ice cream tub which were all designed here.
“What people don’t realise is that small businesses create the most jobs so the government needs to stimulate and support the development of small businesses. There’s no point training people if there’s no jobs for them,” he adds.
Some reports suggest that investing in manufacturing can bring about benefits in the economy. According to Business Report, for every R1 invested in manufacturing there is R1.13 of value addition to the South African economy. But for this investment to mean anything, government support must be sustainable and keep people involved in the industry.
“The understanding of what toolmakers actually do is often lost in the system somewhere,” says Murgatroyd.
“In the last two years, my company has lost seven people to New Zealand. These are highly skilled artisans that I’ve spent many years and lots of money training. There’s no incentive for them to stay. In places like Germany and India, there’s a host of things in place to support the industry.
“We had a thriving toolmaking fraternity 20-25 years ago. We had apprentices, apprentice boards, training facilities, all the corporates were investing but today I’m guessing there would be a total of around 50 being trained in toolmaking if we’re lucky.”
According to Murgatroyd, toolmaking in South Africa does not enjoy the same protection that other industries do when it comes to imports.
“In the plastics industry, convertors get protection – on finished goods they get a surcharge imposed on them, and if they import raw materials they get a surcharge imposed. It makes things competitive as opposed to just importing from China. It’s the same in automotive – if you import a vehicle you pay a charge whereas if you buy local, there’s no import duties. In toolmaking, there’s no protection. You can bring a mould in from China or wherever extremely cheaply and there’s no protection for the toolmaker so we cannot compete.
“We’ve recently had some international companies open in SA and they bring all their machinery and moulds from Europe. There’s no reason for them to source the tooling from South Africa and that’s been a big knock for us,” he says.
With today’s technology, an attractive market for young people to enter and an inseparable connection with the wider manufacturing industry, investment in the tooling sector would not only benefit the country, it is now vital if we expect job creation and growth in a slowing economy.
“We need the multinationals to support local industry and we need the government to stand behind that and encourage that support with protection and finance,” Murgatroyd concludes.