South African Manufacturing Sector Research Articles

Contextual Intelligence: An AI Approach to Manufacturing Skills’ Forecasting

The manufacturing industry is skill-intensive and plays a pivotal role in South Africa’s economy, reflecting the nation’s progress and development. The advent of technology has initiated a transformative era within the manufacturing sector. Workforce skills are at the heart of ensuring the sustained growth of the industry. This study delves into the skill-related aspects of the occupational landscape of the South African manufacturing sector, with a particular focus on two important manufacturing sectors: the food and beverage manufacturing (FoodBev) sector and the chemical manufacturing (CHIETA) sector. Leveraging the forecasting prowess of Autoregressive Integrated Moving Average (ARIMA), this paper outlines a sectorial occupational forecasting modeling exercise to reveal which job roles are poised for expansion and which are expected to decline. The approach predicted future skills’ demand 80% accuracy for 473 out of 713 (66%) occupations for FoodBev and 474 out of 522 (91%) for CHIETA. These insights are invaluable for industry stakeholders and educational institutions, providing guidance to support the sector’s growth in an era marked by technological advancement.

Does industry 4.0 and environmental quality asymmetrically affect South Africa’s manufacturing sector? A fresh insight from nonlinear autoregressive distributed lag (NARDL) model

Owing to recent developments and implications inspired by fourth industrial revolution (4IR) technologies in the global manufacturing sector through the Industry 4.0 (I4.0) concept, this study was conducted to discover the impacts of I4.0 and environmental quality on the South African manufacturing sector, considering governance quality. To the best of our knowledge, no study has analysed the long-run and short impacts of I4.0, environmental quality and governance quality on the South African manufacturing sector integrating the bound test cointegration, Fully-Modified Ordinary Least Squares (FMOLS) & Dynamic Ordinary Least Squares (DOLS) and nonlinear autoregressive distributed lag (NARDL) estimations techniques. Therefore, this study attempts to bridge this gap using different econometric approaches. The data used spans from 2000Q1 to 2020Q4. The principal component analysis was used to create Industry 4.0 (I4.0) and governance quality components. In this study, utilising the dynamic NARDL, it is seen that the LCO2, representing environmental quality, possesses positive and significant relationship with the LMVA, but when in interaction with the governance quality variables (GOV, INS, POL & ECO), there exists a positive and insignificant relationship with the LMVA showing there exists a dearth of green innovative technologies in the South Africa manufacturing sector respective of its significance. Utilising the FMOLS and DOLS, the GOV, INS, POL & ECO which represents governance quality, mostly possesses negative but significant relationships with the LMVA, even when in interaction with the I4.0 variable proving the I4.0 technologies have not yet started to be impactful to the South African manufacturing industry at large.

Sustainable Supply Chain Management Practices

This paper explores challenges and opportunities in sustainable supply chain management in the South African manufacturing sector. The research aims to analyze the current state of sustainable supply chain management in the south African manufacturing sector. Through interviews with production managers, procurement managers and senior managers. This paper analyzes existing sustainable practices, such as sustainable material sourcing by procurement managers. However, there are challenges, such as Complex regulatory sourcing, supplier collaboration and resource scarcity. Recommendations emphasize investing in efficient technology infrastructure and supplier collaboration, this study contributes to the ongoing discussion on sustainable supply chain management in the manufacturing sector in South Africa.

Precarious Work and the Gendered Individualisation of Risk in the South African Manufacturing Sector, 2002–2017

Against the backdrop of workplace restructuring globally, post-apartheid South Africa is experiencing consistently high levels of unemployment, the deterioration of employment security and limited improvements in earnings. This article investigates the changing nature of labour-intensive production in the South African labour market and the gendered individualisation of risk associated with precarious or non-standard forms of employment. The article expands on the critical theoretical narrative about the challenges of labour under neo-liberalism by applying a gendered political economy analysis to the experiences of precariousness among workers in the South African manufacturing sector. By focusing on the interconnections between gender and political economy, this article delinks questions about the crisis of labour from a narrow focus on skills and refocuses our understanding in terms of the structural determinants of vulnerabilities in the labour market. The article argues that the gender composition of informal and precarious work in the post-apartheid labour market has significant implications for addressing the persistent racialised and gendered inequalities in the South African economy. KEYWORDS: labour market restructuring; informal employment; precarious work; gender JEL CLASSIFICATION: J21; J30; J71; J80

Internal Drivers of Innovation and Sustainability in South African Manufacturing Small and Medium Enterprises

The study aimed at determining the relationship that exists among internal management systems, innovativeness, and the sustainability of Small and Medium Enterprises (SMEs) within the South African manufacturing sector. As a result of the changes that are taking place daily in technology and business operational policies, organisations are to revisit their internal management systems, level of innovativeness and sustainable measures with main reference to SMEs. A quantitative research approach was used in the study, as it was meant to establish the relationship that exists amongst the set variables, internal management systems, innovativeness, and sustainability of SMEs in the manufacturing sector. In the study, the target population consisted of all the SMEs in the manufacturing industry of South Africa. The scale accuracy was performed using Smart PLS 3.0. The findings from the study show that there is a positive and significant relationship between all the variables. The study recommends that there is a need for the government through the small and medium enterprises development department to review their approach to SMEs so that they can have adequate resources to enhance their business operations.

Precarious Workers and the Labour Process: Problematising the Core/Non-core

This article recentres labour process theory in the analysis of the South African manufacturing sector to challenge the perception that precarious workers in the formal economy are largely “flexible extras” unrelated to the “core” of production. Through case study analysis of two manufacturing workplaces in Gauteng, South Africa, we demonstrate how precarious workers are both core to production and to the production of surplus value. Our analysis demonstrates how employers have increasingly restructured work through reclassifying large parts of the labour process as “non-core”. This trend has accelerated in recent years as employers seek to evade new legal responsibilities following amendments to the Labour Relations Act in 2014. Despite employers’ attempts to redefine the labour of precarious workers as non-core, we demonstrate that these workers nevertheless play an increasingly central role in the valorisation regimes of manufacturing companies – rendering them core to the production of surplus value for manufacturing capital. Our analysis problematises Von Holdt and Webster’s (2005) core/non-core schema for analysing the South African labour force, which locates precarious workers in the formal sector in the non-core. We argue that while this schema has some utility in describing the make-up of the labour force, its abstraction from an analysis of the labour process obscures the fact that precarious work has become central to manufacturing capital’s valorisation strategy. Finally, the article reflects on how precarious workers are attempting to organise within and in parallel to trade unions. This analysis highlights the importance of going beyond analysing trade unions if we are to contribute to rebuilding the labour movement under conditions of precarity. KEYWORDS: labour-process theory; precarious work; surplus value; labour movement; manufacturing; South Africa

An analysis of the impact of technological innovation on productivity in South African manufacturing firms using direct measures of innovation

AbstractWhile manufacturing is regarded as important for economic growth, there is evidence that productivity in the South African manufacturing sector has been relatively low compared to international standards. As the international literature shows a positive correlation between innovation and productivity, it is pertinent to investigate the role that innovation plays in this sector. South Africa is lagging behind other emerging market countries in terms of technological progress, and innovation efforts are deemed insufficient particularly in private firms. While there have been studies that measure the impact of R&D (as an innovation input) on productivity, the direct impact of innovation success on productivity has not been estimated in South Africa before. The business innovation survey (BIS) provides data that allow us to estimate these direct effects, thereby enabling this study to make an important contribution to the South African literature in this area of research. We estimate the effect of technological innovations on firm productivity using a sample of manufacturing firms from the BIS 2014–2016 data. Using a variation of the CDM model, we find that the introduction of product or process innovations has significant positive effects on productivity in South African manufacturing firms.

Factors affecting the cost of poor quality management in the South African manufacturing sector: structural equation modelling

Factors affecting the cost of poor quality management in the South African manufacturing sector: structural equation modelling

PRODUCTION AND SALES RISKS IN THE MANUFACTURING SECTOR: THE ROLE OF ELECTRICITY SUPPLY, INFLATION AND FUEL PRICE VOLATILITY

The manufacturing sector occupies a critical position in the South African economy. However, in recent decades this sector experienced significant instability due to challenges within macroeconomic indicators. The sector's challenges include the issue of electricity distribution, growing inflation rate and commodities price instability. This study aims to assess the effects of electricity supply, inflation and fuel prices on food and beverage production and sales in the manufacturing sector. To this end, the study applied different econometric approaches such as Johansen test for cointegration, vector error correction model (VECM) and Granger causality test on a monthly time series data ranging between January 2002 and December 2019. The study findings suggested the existence of a joint long-run relationship between electricity distribution, inflation rate, fuel price and production and sales of both food and beverage within the manufacturing sector. The result also indicated that both electricity supply and inflation highly impact the production of food and beverage sales compared to the effect of petrol price. Granger causality results have shown that inflation rate can serve in predicting short term production and sales of food and beverage in the South African manufacturing sector. Given the aforementioned findings, the study suggested that to increase production and sales of food and beverage in the manufacturing sector, policymakers should reduce tax on imported fuel. This would assist in lowering petrol prices that may have a repercussion on the inflation rate. Additionally, besides the government support towards electricity production in the Eskom, more effort and resources (financial) would also be allocated to generate and improve other sources of energy such as solar, wind, gas and biogas. Keywords: inflation, Eskom, electricity, fuel price, manufacturing, South AfricaJEL Classifications: L60, E31, L11DOI: https://doi.org/10.32479/ijefi.12509

Developing a digital transformation model to enhance the strategy development process for leadership in the South African manufacturing sector

Purpose: This study’s aim was to gain insight into the transformative skills of business leaders in the South African manufacturing sector to drive their business’ digital transformation process. Technology recources lead digital transformation requires skills not understood by leadership. Cloud computing has facilitated machine learning and artificial intelligence where human comprehension is limited, using algorithms for analytics requiring size and scale to provide data for decision-making and enabled disruptive technologies that have changed the face of industry sectors.Design/methodology/approach: A pragmatic postmodern paradigm supports the theoretical framing of this study, conducted using descriptive research by e-questionnaire using quantitative analysis for deductive statistical evaluation.Findings/results: The findings formed the basis of a model developed to assist chief executive officers (CEOs) to implement digital transformation successfully.Practical implications: The CEO is responsible for the digital transformation of the business and must understand that data management is the most important asset in the digital era. The collection, storage, analysis, reporting and usage of data are key to competing in the digital economy, which requires the appointment of the chief information officer (CIO) to manage data and who should report directly to the CEO.Originality/value: Reporting to the CIO would be data scientists and analysts who work with data; their roles focus on building algorithms from machine learning and developing predictive models from data and simulation models to test if technologies used to drive digital migration are optimal.

Factors affecting the cost of poor quality management in the South African manufacturing sector: structural equation modelling

Factors affecting the cost of poor quality management in the South African manufacturing sector: structural equation modelling

PRODUCTION SCHEDULING HEURISTICS FOR FREQUENT LOAD-SHEDDING SCENARIOS: A KNOWLEDGE ENGINEERING APPROACH

Most industrial machinery and equipment used by the South African manufacturing sector is powered by either a direct current or an alternating current electricity supply. With the recent frequent power cuts caused by load shedding, operations managers have a difficult time trying to satisfy demand. Power cuts are a supplier-related operational disturbance that leads to production halts, increased downtime, and a significant compromise in delivery due date conformance. The paper presents heuristic rules of thumb that can be applied during the process planning and scheduling of orders during cases of frequent load shedding to maintain high levels of system reliability and productivity. Different load shedding scenarios are characterised, and an appropriate strategy for production planning and scheduling is outlined for each scenario. A knowledge engineering approach is employed in the study, with expert opinions derived from surveys and the literature employed to generate the strategies. These strategies are validated through a simulation study conducted in a small manufacturing firm.

Inclusive growth and wage inequality: The case of South African manufacturing exporters

Background: Exporting poses a challenge to the achievement of inclusive growth because there is a discernible wage inequality between exporting and non-exporting firms. The literature shows that exporting firms pay a wage premium relative to non-exporting firms, with the resultant wage gaps having widened over the years in line with expanding global trade. Aim: Limited research has been done on the distribution of wages within manufacturing exporting firms relative to non-exporting firms in South Africa and how wage differentials might contribute to wage inequality. This article disentangles these wage differentials using administrative firm-level panel data. Setting: Exporting and non-exporting firms in the South African manufacturing sector. Methods: By determining the wage differential in a firm at various percentiles, it is found that all employees (across the wage distribution) in an exporting firm earned a wage premium. This premium seemed to increase in magnitude towards the upper tail of the distribution, indicating that the wage differential did contribute to wage inequality. Results: Much of the wage inequality could be explained by the size and labour productivity of a firm. This implies that larger, more productive firms are more likely to be exporters, whereas there was little evidence that wage inequality is driven by either the type of destination country or the quality of export products. Conclusion: The findings suggest that the resultant wage inequality is related to the process of exporting or simply a firm being in the export market. Alternatively, wage inequality could be attributable to a specific type of firm (employing a specific type of person with sought-after skills) that had this (unequal) wage distribution before it started to export.

The impact of Training and Assessment Register (TAR) on productivity in the automotive parts manufacturing organisation in South Africa

Orientation: Organisations are confronted with the challenge of competency among its employees for productivity improvement. They implement strategies that improve employee skills proficiencies for higher productivity. These can also be achieved by implementing a training model that develops employee’s skills and knowledge so that they become the specialists in their work areas. This sentiment underpins the concept of employee Training and Assessment Register (TAR).Purpose: This study evaluates the influence of TAR on productivity in automotive parts manufacturing organisation in South Africa.Motivation for the study: The South African manufacturing sector has a low level of productivity compared to its counterpart industries in the Asian and Western countries. The sector experiences the lack in short to medium term growth in productivity.Research design, approach and methods: The automotive parts manufacturing company that has used a TAR strategy for productivity improvement participated in the study. The study objectives were achieved by examining the production and related experiences in the company. The collection of data was carried out in two phases. This includes the collection of pre- and post-quarterly data for spoilage, overtime and customer complaints. The pre-TAR results were quarterly data reflecting the company’s performance over the three-year period prior to the implementation of TAR. This company operates in the eThekwini District Municipality in KwaZulu-Natal.Main findings: The results established that spoilage rate has a relationship with company productivity. Any decrease in spoilage rate would result to an increase in company productivity. However, the overtime and customer complaints do not statistically have a relationship with company productivity.Contribution: This article uncovers the strengths and weaknesses of TAR on productivity in the automotive parts manufacturing organisation in South Africa.

Analysis of the Keynesian Theory of Employment and Sectoral Job Creation: The Case of the South African Manufacturing Sector

Abstract The manufacturing sector is one of the backbones of the South African economy, and yet is one of the economic sectors facing challenges in job creation. This study analysed the long-run and short-run effects of aggregate expenditure components on job creation in the South African manufacturing sector. A Vector Autoregressive (VAR) with Johansen co-integration approach was used to analyse quarterly data from 1994 to 2015. The findings are that there is a long-run relationship between aggregate expenditure and job creation in the South African manufacturing sector, with government and investment spending being the major components of aggregate expenditure that create jobs in the South African manufacturing sector. Conversely, consumption spending destroys jobs in the manufacturing sector, while net exports have no significant effect on job creation. The short-run relationship between variables was not significant. Recommendations are that more effort should be put into investment spending, and government should spend more on investment than on consumption spending - in order to increase job creation in the manufacturing sector.

Total Factor Productivity in South African Manufacturing Firms

AbstractWe use firm‐level data for the period 2010‐2013 to estimate total factor productivity in the South African manufacturing sector. We examine differences in the level and growth of productivity across manufacturing subsectors and examine the heterogeneity in productivity levels within sectors. We find that productivity grew in most subsectors but that there is heterogeneity across subsectors in the pace of growth. We find that firm size is positively correlated with productivity and its growth rate. We also find that there is a productivity premium associated with engaging in R&D and international trade.

Identification of Green Procurement Drivers and Their Interrelationship Using Total Interpretive Structural Modelling

Green procurement is the set of procurement policies held, action taken and relationships formed in response to concerns linked with the natural environment. Green procurement has drawn major attention of supply chain practitioners and has become the theme of most of the seminars and workshops. Green procurement is gaining popularity due to its positive association with the triple bottom line, that is, sustainability. Firms implement green procurement to achieve sustainability in this dynamic business environment. There are several published papers that have adopted qualitative and quantitative methodology to build and test theories in the field of green procurement. However, existing research gaps have motivated to pursue this study. The main purpose of this article is to investigate the interrelationships of green procurement drivers. First, systematic review of literature is done to identify the leading drivers. Second, these drivers were refined through experts’ opinion with interview conducted among five procurement managers from South African manufacturing sector. Third, the comments of these experts are converted into interpretive logic of pairwise comparison, and total interpretive structural model (TISM) is developed. Finally the conclusion of research, the managerial implications and directions of future research are presented.

Comparison of green procurement framework using fuzzy TISM and fuzzy DEMATEL methods

This paper argues for the use of fuzzy TISM and fuzzy DEMATEL in building theory of green procurement. To address the gap in existing green procurement literature, this study first systematically reviews the green procurement literature, secondly, these drivers were refined through expert interview from South African manufacturing sector and thirdly, it illustrates the use of fuzzy TISM and fuzzy DEMATEL method to find the intensity of influence of green procurement drivers and make a comparative study of elements. The paper concludes with managerial implications and directions of future research.

Competition in the South African manufacturing sector: An empirical probe

This paper empirically probes competition in the South African manufacturing sector using the latest published data on the industries of this sector released by the national statistical office. It is found that enterprise behaviour in this sector is governed by competition where the negativity between industry concentration and its linkages with output, employment, labour productivity, profit margins, rates of return, investment, and producer prices, has more to do with the limiting of rivalry between enterprises, as opposed to growing concentration promoting by itself poor economic performance. The findings are consistent with earlier investigations. From a managerial perspective, they suggest that while adaptive behaviour by enterprises through imitation or experimental actions is likely to lead to positive profitability, any resultant profit margins and rates of return are ultimately dependant on how successful or decisive enterprises are at innovating if they wish to grow their output, raise labour productivity, invest and employ more, as well as secure the demand-inducing prices commensurate with their innovative record. Thus the success of an enterprise rests on its ability to innovate.

Incentives for the manufacturing sector: what South Africa can learn from Malaysia and Singapore

The expansion of the manufacturing sector is one of the South African government’s focus areas for economic growth and employment creation. The research on which this article is based identified additional incentives, applicable to the manufacturing sector, which the South African government could introduce to encourage investors to choose the South African manufacturing sector as a desired investment destination. The incentives provided to manufacturing companies by the governments of Malaysia and Singapore and those provided by the South African government are compared in order to examine the similarities and differences between these incentives. In the light of these findings, recommendations are made for additional incentives in South Africa to promote investment in South African manufacturing companies and reduce some of the barriers that prevent local and foreign investment in the country.