The SA furniture sector needs a leap of consumer faith | Eustace Mashimbye
This job creation benefit is the premium we are asking South Africans to consider paying
LAST WEEK was not a great one for the South African economy. Latest unemployment statistics once again were more than 27 percent. The SA Revenue Service announced a R2.9 billion trade deficit for September, as imports surged 8 percent from August to September, while exports decreased by 2.6 percent.
Nevertheless, Proudly South African continues to work at making a difference to pockets of the economy in the hope of sustaining and creating jobs. We have written about the positive strides being made in the textile sector, and about the pledges for increased localisation by a number of large corporations during the Jobs Summit.
We have written about examples of multi-national companies’ investment in local manufacturing and the local workforce and cited excellent supplier and enterprise development as well as import replacement programmes by retailers and other corporates.
We have pushed local content in radio, film and television as a means of massive job creation and written a column on that sector; we have encouraged South Africans to check labels of origin in everything they buy, seeking out local over imported goods and avoiding counterfeits.
We have made proper comparisons between the quality and prices of locally made items versus imported ones, calling for South Africans to believe in themselves and the value of our design and manufacturing. We have heralded great South African inventions and innovations, and lauded public private partnerships that are working for local enterprises.
But sometimes, we just have to ask South Africans to make a choice for the good, even if there is a premium to be paid.
This week, we are putting the spotlight on the furniture manufacturing sector, which is among one of the worst hit by imports, and is definitely one in which we show a massive trade deficit.
Surprisingly, it is the third largest labour-intensive manufacturing industry, with huge inputs in terms of raw materials including wood, natural and synthetic textiles and fabrics, steel and other metals, adhesives and paints.
Those raw materials require beneficiation from forestry to sawmill, from abattoir to tannery, from dying and spinning to upholsterers of finished cushions and soft furnishings.
In 2009, the sector supported 50 000 jobs, but today there are only around 26 400 workers, of which more than 90 percent are employed by SMMEs, showing where the opportunities lie.
We currently export R3.9bn of locally made furniture, but we import R6.9bn, mostly from China.
This 2017 figure was, according to Trade Map, 6.2 percent higher than the previous year’s figure.
At the same time our exports grew just 0.7 percent, but the actual value of those exports fell from R4.2bn in 2016 to R3.9bn in 2017.
The furniture value chain has been included in the government’s Industrial Policy Action Plan 2018/19 to 2020/21, which states that the sector contributes 1 percent to gross domestic product and 1.1 percent to manufacturing employment, and it further states that “the industry level of competitiveness has declined over the years (and) this has been attributed to skills shortages, declining investment in capital equipment and insufficient research and development”.
Once again, for the bold and brave, just as in the shoe sector about which we wrote last week, there are opportunities and gaps to be exploited here.
However, combined with the bravery of the few we need a leap of faith by the many.
If, where direct price and quality comparisons reveal a South African product to be more expensive than its imported equivalent, which is something highlighted in the furniture sector, we must be prepared to pay a premium to save entire industries and hundreds of thousands of jobs and skills that will disappear for the want of a small price disparity.
How can any country with more than 27 percent unemployment have a skills deficit in any sector?
It simply doesn’t add up, and only makes sense insofar as we continue to make choices to buy imported over locally produced goods and services.
As demand for locally made products increases, so the manufacturers may be required to add human capacity, creating opportunities for new job openings, in both skilled and unskilled positions.
This job creation benefit is the premium which we are asking South Africans to consider paying when faced with paying slightly more for a high quality, locally made piece of furniture.
We need to open the doors for locally made products, so that our manufacturers can sing A’vulekile masango like Ishmael did, as the markets open up for them, and their products start to move off retailers’ shelves.
Eustace Mashimbye is the chief executive of Proudly South African.