Professor Van Zijl, Vice Rector
Professor Dr Gossner, Senior Vice President of the Fraunhofer-Gesellschaft
Professor Byrne, President of the International Academy of Production Engineering
Chairman of the conference, Professor Dimitrov and members of the organising committee
Ladies and gentlemen
It is a pleasure for me to be here to deliver this short address at this wonderful venue in the heart of the Cape Winelands.
It goes without saying that manufacturing is a key driver of economic growth and development. In the midst of the global economic recession most countries have experienced a significant decline in their manufacturing base and have introduced various measures to reverse the decline. Amongst other things this has included leveraging advances in knowledge and through the identification of competitive advantages.
South Africa has an extensive manufacturing base albeit skewed and not competitive enough. It needs to be further diversified, modernised and made more competitive, in order for it to contribute more to job creation and economic growth in our country.
Skills development is a critical component, alongside the adoption of innovation and improved technology in achieving a dynamic and competitive manufacturing sector. The Department of Science and Technology has established a number of initiatives to develop competencies in key technologies to strengthen the technological base of the South African manufacturing sector. Notable among these is the Advanced Manufacturing Technology Strategy.
The strategy emphasises developing technologies with strategic value to the country and in areas in which South Africa can develop a competitive advantage.
While South Africa has been spared the worst of the financial crisis, our manufacturing sector has been in decline for some time. Industrial output fell from 17.3 percent of the Gross Domestic Products (GDP) in 2000 to about 15 percent in 2008. By comparison, the financial sector now accounts for almost 20 percent of the GDP. In November 2009 South Africa’s manufacturing output was still experiencing a decline of 4,7 percent year on year.
We are fortunate that we are seeing the end of the downturn in manufacturing. However, a cause for concern is that since 2007 the manufacturing sector has shed up to 10 percent of its workforce. What is positive, though, was that the three-month output to November last year showed a growth of 2,9 percent and that by the third quarter of 2009 we had returned to a positive GDP growth of 0,9 percent.
There is good news on the horizon: Many countries are moving out of the recession a lot sooner and in a more robust manner than was predicted some months ago. South Africa itself is no longer in a recession as narrowly defined. Old Mutual recently forecast a three percent growth rate for our economy in 2010. With economic growth increasing across the world, we are confident our manufacturing sector will continue to improve.
Of course, the more we integrate our manufacturing with global supply chains which we are committed to do the more susceptible we are to global events. In a globalised world, we need to be adaptable and prepared to handle sudden changes in the global economic environment.
I believe that is important for us to focus on the opportunities offered by the global situation. Let us, for instance, talk about energy efficiency a theme of this conference. While climate change certainly poses a major threat to the future of humanity, it is also driving the emphasis on the efficient use of resources that we are seeing more and more in all sectors of our economy.
To quote Richard Branson in today’s Business Day, “The past 40 years have brought great progress in information technology, software and computing and many fortunes made. I believe the next 40 years will see great progress in the clean, green sector, new fortunes made and the creation of a more equitable, cleaner and safer world.”
And with energy use key to all manufacturing processes, we have the opportunity to develop innovations that will lead to sustainable and competitive industries.
In an article published in last September’s Harvard Business Review, Nidumolu, Prahalad and Rangaswami developed the argument that sustainability is now the key driver of innovation. They suggested that new regulations should be seen as opportunities for sustainable value chains, products and business models.
In the latest version of the Department of Trade and Industry’s Industrial Policy Action Plan, we have identified the so-called Green Economy as one of our priority areas, partly because we have no choice, but largely because it is the right thing to do, and has significant employment creation prospects.
When I look at the conference programme (which, in addition to the focused technical sessions, has sessions on energy efficient production, processes and equipment, innovative knowledge networks and infrastructure and intelligent manufacturing), it appears that the organisers of this conference are in full agreement.
It is pleasing to see the many contributions from our local universities and universities of technology, as well as a strong international presence, which includes representatives from a number of German universities and Fraunhofer institutes and papers from Belgium, Finland, France, Greece, Ireland, Norway, Portugal, Singapore, Sweden, Switzerland, the Netherlands and the United State America (USA).
The contributions from industry are important. Being the interface with the market is at the centre of innovation. The Department of Science and Technology (DST) is committed to assisting in the building of a strong partnership between government, universities and industry. We will be focusing greater attention on building the soon to be established technology innovation agency and working with other players within the National System of Innovation to establish a portfolio of centres of competence and research chairs that support the long-term growth of the manufacturing sector.
A significant event that coincides with this conference is the launch of South African-German collaboration in advanced manufacturing. This is appropriate, as I believe that the concept for this initiative was incubated at the last conference on international manufacturing, in February 2007.
This initiative builds on the long-established links between the two countries in manufacturing and academia. Partnerships are opportunities to maximise the complementary capabilities of researchers from different countries to the benefit of all. And this is the way to go in the context of a global economy, research and development should be global too.
In the case of the Advanced Manufacturing Initiative, the preliminary areas of interest will focus on the titanium beneficiation value chain and green materials specifically natural fibre and resin-based composite materials. Both these areas are considered to have strategic importance for development in South Africa. Joint projects on the high performance machining of titanium and bio-composite interior panels for aerospace applications have been going for a number of years as part of the AMTS, and have had promising results.
There will certainly be more opportunities as the Technology Localisation Framework. With specific reference to the capital expansion projects of Transnet and Eskom, the department is promoting technology assistance packages for qualifying companies. These packages are intended to enable companies to upgrade their manufacturing capabilities so that they are in a position to bid as competitive suppliers to the larger original equipment manufacturers. The foundry industry has been identified as one sector for such assistance.
The next few years will be both exciting and challenging for us. There will be excitement about the opportunities for South Africa to develop a world-class manufacturing industry by advancing strategic partnerships and assimilating world-class technologies. The challenge will be to make the interventions succeed, through collaboration, careful planning, the mobilisation of resources, and efficient and effective delivery.
To conclude, we cannot overemphasise the importance of work in which you are involved and we are confident that it will contribute to the creation of decent employment for South Africans through diversified and inclusive growth. We encourage you to work innovatively, with a bias towards sustainability.
I wish you every success with your deliberations at this conference and hope that you initiate many rewarding collaborations.
Thank you.
Issued by: Department of Science and Technology
4 February 2010
Source: Department of Science and Technology (http://www.dst.gov.za)
