SA manufacturing ahead of the game in the
security industry.
Whether it is shoes, clothing or electronic equipment, the world seems to be moving its manufacturing facilities to the East.
China, Vietnam, India and an assortment of countries in the Asia-Pacific region are attracting investment and creating jobs by the hundreds of thousands in the manufacturing arena. Should we expect to see local companies currently manufacturing security products following this trend and moving their factories to offshore?
In short, the answer is no. It seems South Africa's security manufacturers are hard at work finding new markets overseas, but have no intention of moving their manufacturing offshore.
First, there is the question of loyalty to South Africa. Impro's Barry East says the option to move the company's manufacturing offshore has been discussed by the company's decision makers. Fortunately, the directors of the proximity access control systems manufacturer are Proudly South African and, according to East, believe in the concept of South Africa.
Impro is positive about the future opportunities in South Africa, with East noting that the (DTI) is doing a great job of supporting initiatives to expand the local and overseas markets for South African companies. Although he notes finding people with the appropriate mix of skills and experience is difficult.
Another company embracing South Africa's opportunities is QD Group. Having gained its black economic empowerment (BEE) credentials, the company producing solutions for the electronic security and cash management markets is very positive about the future and is already gaining a foothold in Africa.
QD director, Richard Phillips, adds that the concept of manufacturing outside of South Africa has never even been raised in the organisation. With over 200 people employed, the majority PDIs (previously disadvantaged individuals) and a lot of in-house training, the company is committed to the country's future.
And while Turnstar Systems may look at joint ventures in other countries, including China, which Mark Eardley says would open a new, potentially lucrative market, moving everything there is not an option for the company. Turnstar is the largest manufacturer of turnstiles in the southern hemisphere (according to the company's website) with a 3500 m² factory in Johannesburg.
Eardley notes that South Africa does not need to take a back seat to anyone else in the world in terms of product quality as our goods can compete head to head with goods in the European Union and win - without competing on price alone. In any case, Turnstar quotes its price in rand to ensure it is not caught out by exchange rate fluctuations and its export markets accept this without question.
Cannot ignore China
Starting out as a UPS manufacturer in 1986, Centurion Systems has grown into an innovative company successfully producing goods such as gate motors according to its own South Africa-specific design. The company sports an 8000 m² factory and employs over 250 people who today supply a variety of products to customers globally.
Richard Rohman, marketing director of Centurion says the company will not be leaving the shores of South Africa, although the threat of cheaply manufactured goods from China cannot be ignored. The company may end up importing components from China for use in its products, but will retain its manufacturing facilities in South Africa. Rohman says centralised control is critical to delivering quality.
He also highlights the issue of skills, noting that getting and retaining good quality skills is difficult. This is a problem he expects will continue for some time.
Another company keeping its manufacturing on-shore for the sake of quality is RDC. Radio Data Communications (RDC) has been in the game of manufacturing transmitting and receiving equipment in South Africa since 1978. In its long history, the company has gained a number of industry firsts, such as launching the first transmitter capable of sending a signal in under one second. Its leadership has seen it playing a leading role in the security market in South Africa as well as the rest of Africa, South America and Australia.
The company has always manufactured its products in its South African plants because, as RDC's Brent Andreka notes, of the control it offers. The company needs to be sure its products provide reliable service at all times and having control over all its manufacturing processes from start to finish provides exactly this. He says outsourcing would not provide this control and quality assurance, and a lower cost does not make up for non-functional security products.
Onshore offshoring
Of course, the abovementioned businesses are companies that are committed to their own manufacturing in South Africa. There are also companies that do not handle their own manufacturing, but outsource it to third parties. And in the case of companies like Wavetrend, an active RFID designer, it outsources its manufacturing to three South African manufacturers while selling far beyond the country's borders. So maybe China does not hold all the cards.
The one negative aspect of the local market that many of the companies above have commented on, however, is the difficulty of finding and retaining skills, especially when it comes to research and development (R&D). South African universities seem to be good at producing engineers, but large companies or even overseas organisations always snap up these graduates, leaving smaller companies continually on the lookout for new talent.
Even with the skills problem, which most see remaining a thorny issue in the medium term, there is still a wealth of optimism and positive sentiment to keeping manufacturing concerns in South Africa and shipping to the rest of the world from here. South Africa may not be able to compete face to face with the Asian giants in manufacturing, but that does not mean companies in the security industry are on the way out. In fact, most, if not all seem determined that South Africa will be their R&D, design and manufacturing centre of activity for the foreseeable future.
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