Western Cape Business 2017 edition

OVERVIEW Manufacturing

OVERVIEW Manufacturing Diesel locomotive engines are powering up in Montague Gardens. A diverse manufacturing sector contributes 15% to the Western Cape’s GDP and the renewable energy sector holds huge potential for further growth. Growth in the manufacturing sector between 2003 and 2013 averaged 2.2% and the Provincial Economic Review and Outlook (Western Cape Treasury 2015) predicts the same level of growth to 2020. A recent Moody’s report on the green economy in Africa states that South Africa is growing the fastest in that sector in Africa, and at one of the fastest rates in the world. The Western Cape is driving a green economy manufacturing strategy focussed on the suburb of Atlantis. At this stage, some 70% of South Africa’s manufacturing in renewables is happening in the Western Cape. Even an established investor such as fridge manufacturer Hisense is exploring ways to make its product greener, either through its own processes or encouraging its suppliers to go down that route. SECTOR INSIGHT Seda has launched an enterprise incubator at False Bay TVET College. • Cape Town’s catamaran builders are world leaders. Investment agency Wesgro has noted the following major investments into the Western Cape since 2003: Hisense, Kimberly- Clark, Tellumat, Exar Corporation, GlaxoSmithKline and General Electric. WESTERN CAPE BUSINESS 2017 100

OVERVIEW Within the Western Cape manufacturing sector, the agri-processing subsector (including food and beverages and tobacco) is the largest employer (24%) followed by metals, metal products, machinery and equipment at 19%. The Western Cape Provincial Government has identified agriprocessing as a key growth sector, one of those most likely to deliver economic growth and jobs. For too many years, jobless growth was the norm. An initiative of the Small Enterprise Development Agency (Seda) aims to boost manufacturing in metal fabrication and furniture. False Bay TVET College will host a Rapid Incubator and Centre for Entrepreneurship (CFE) which will teach students how to start businesses and how to make their products marketable. Areas Manufacturing in the Cape Winelands District makes the single biggest GDP contribution (19%) to provincial GDP. Many small towns in the rural areas have some kind of agri-processing facility. Bonnievale has two cheese factories, Mooivallei Suiwel and Parmalat, which have recently decided to increase the size of their operation in the Breede River Valley. Iron production at Saldanha includes hot-rolled coil produced by ArcelorMittal (about two thirds of which is exported to other countries in Africa) and cold-rolled and galvanised steel by DSP, a joint venture between South Africa’s Industrial Development Corporation (IDC) and a Belgian company, Duferco. Within the City of Cape Town there are several areas where manufacturing takes place, including Epping Industria, Blackheath Industria, Bellville South, Paarden Island, Maitland and Ndabeni, Airport Industria, Parow Industria and Montague Gardens. A City of Cape Town survey has found that Montague Gardens has 308 manufacturing concerns, more than any other area. It is also well suited to logistics and distribution, being near to the N1 highway and to the road north along the West Coast. MTU Friedrichshafen has spent R50-million on upgrading its engine business at Montague Gardens. MTU is the core business of Rolls-Royce Power Systems, a division of Rolls-Royce plc. The overhaul was done as preparation to make 232 diesel engines for Transnet Freight Rail. Additional training for staff has been provided on site and in Germany, and an extra 20 staff have been added to deal with the order. MTU’s other facility in the Cape is a maintenance and support centre at the South African Navy base at Simon’s Town. MTU also has a strong presence in the mining sector. According to the City, the industries in which Cape Town has a competitive advantage include fishing, clothing and textiles, electronics, furniture and wood product manufacturing – in addition to the more service-driven hospitality, finance and business services industries. Food and beverages The combination of excellent and plentiful agricultural produce, good manufacturing capacity and a skilled workforce give the Western 101 WESTERN CAPE BUSINESS 2017