South Africa’s manufacturing output has reached its highest level since October 2016. This is a good sign that the country is slowly recovering from early-2018’s recession. Other industries showing positive growth are agriculture and retail.
Statistics show that manufacturing output increased by 1.6% at the end of last year, compared to the year before. The growth was driven by the vehicle production and metal processing sectors. The vehicle manufacturing, parts and accessories sectors account for 6.2% of the total manufacturing output.
Manufacturing accounts for 14% of South Africa’s annual gross domestic product (GDP). Industry performance directly impacts the South African economy and can have far-reaching effects for ordinary citizens. The recent growth is good news as it helped to strengthen the Rand towards the end of 2018.
Upcoming elections will affect manufacturing industry
Seven of the ten manufacturing sectors reported growth at the end of 2018. Although output in the industry has improved, business conditions at the start of 2019 remain challenging. There is a degree of uncertainty about the future of the country’s political framework that will directly influence the decision made within the industry.
The May 2019 general elections will affect the industry, either positively or negatively. Until the elections have been decided, investors remain cautious. Similarly, South Africans are being reserved and strict with their spending; local demand for new vehicles is constrained as citizens are implementing tighter budgets since the 2018 recession.
However, Nedbank’s Group Economic Unit believes that the manufacturing industry will grow more in 2019 than it did in 2018. Export volumes will improve this year as the world economy grows slowly.
Formex Industries is a metal forming and assembly company that supplies a variety of complex products to the local automotive industry and export market. The company is based in the Nelson Mandela Bay metropole, South Africa’s foremost region for automotive manufacturing and export.
Formex specialises in producing components for the catalytic converter industry, as well as metal components and assemblies for the various vehicles. Formex aims to become one of the foremost suppliers for the South African automotive industry by 2035, aligning itself with the South African Automotive Masterplan (SAAM) which takes effect in 2020.
Formex is a Level 2 B-BBEE supplier with over 80% black ownership, of which more than 40% are black women. The company is owned by Deneb Investments Limited – a subsidiary of Hosken Consolidated Investments Limited (HCI) – one of South Africa’s biggest true B-BBEE companies listed on the Johannesburg Stock Exchange (JSE).