Trade Minister Parks Tau says South Africa needs a stronger manufacturing and engineering base to achieve economic growth and create jobs, as government support helps Brimis Engineering expand in Middelburg, Mpumalanga.
Tau was speaking at the opening of Brimis Engineering’s premises in Middelburg.
The Department of Trade, Industry and Competition (dtic) said the company is a black-owned mechanical engineering firm specialising in industrial valve and pump lifecycle management.
It also provides technical support, maintenance and products for heavy industries, including mining, power generation, petrochemicals and water treatment.
The department said it had provided approximately R46 million in incentive support to Brimis Engineering to help fund the investment and expansion of the Middelburg facility. Other government support agencies have also contributed to the company’s 13-year growth journey.
Tau said government support was essential to helping companies thrive because industrial capability was expensive and slow to build. He said the market did not always fund such development, particularly for black-owned businesses.
“State support exists to close that gap: to de-risk the first investment, to back the entrepreneur who has the engineering insight but not yet the balance sheet, and to make sure that when a company is ready to grow, that growth happens in places like Middelburg, in Mpumalanga, in South Africa, and not somewhere else,” Tau said.
Localisation target
Tau said the government’s localisation programme directed approximately R86.6 billion in public procurement towards South African-made goods and services during the last financial year.
The government is targeting R100bn in the current financial year, he said.
“Every rand of that target is only meaningful if there are companies on the ground with the technical capability to deliver on it — companies that can machine a component, refurbish a pump, fabricate a valve, or execute a plant shutdown safely and on time,” Tau said.
Manufacturing and jobs
Economist Dr Simphiwe Madikizela, a senior lecturer at the University of South Africa’s School of Graduate Business and Leadership, said Tau’s comments highlighted one of South Africa’s central structural challenges.
“The country needs a stronger productive economy, and manufacturing is one of the most important foundations of that productive capacity,” Madikizela said.
He said the latest Industrial Development Strategy estimated that manufacturing contributed approximately 13% of GDP and supported about 1.6 million direct jobs. The sector also supported employment in mining, agriculture, logistics, business services and other parts of the value chain.
Madikizela said manufacturing had a significant multiplier effect because factories purchased raw materials, machinery, electricity, transport, financial services, packaging, maintenance and professional services.
“This means investment in a manufacturing plant can stimulate activity across a much wider supply chain,” he said.
He added that manufacturing could help South Africa move from a natural-resource-based economy towards a higher-value, knowledge-based economy.
“A stronger engineering base improves the country’s ability to design, produce, maintain and innovate rather than depending excessively on imported machinery, equipment and technology.”
University of South Africa economist Dr Eliphas Ndou said sustained government investment in engineering and manufacturing was needed to support economic growth and job creation.
“This will lead to bigger multiplier effects on overall economic activity, and the positive spillovers to the business, engineering and manufacturing environment will uplift business optimism,” Ndou said.
He said sustained investment could improve business confidence and strengthen the rand against the dollar, pound and euro. He added that a stronger rand could dampen the rand price of oil and reduce inflationary pressures.
yogashen.pillay@nationalmg.co.za