Denise van Huyssteen is the chief executive officer of the Nelson Mandela Bay Business Chamber.
Nelson Mandela Bay is the hub of vehicle and auto-component manufacturing, SA’s largest manufacturing sector, but over-reliance on this sector has put the local economy at risk.
We have long known of the need to diversify our local economy – retain automotive, but build on strengths in other manufacturing sectors, agro-processing and technology, to create new opportunities for investment and sustainable job creation. The need has become more pressing as requirements for climate change mitigation drive the move away from internal combustion engines (ICE) to new energy and mobility solutions, while rapid global advances in technology and automation across manufacturing and services sectors call for new types of skills.
Driven by the local business community, the Local Economy Reinvention Think Tank was established more than two years ago by the Nelson Mandela Bay Business Chamber to identify opportunities in a future low-carbon, high-tech economy, and it has advanced to the point of releasing proposed solutions and business cases into the public domain for further exploration.
Gathering some of the Bay’s leading engineers, technology innovators and out-of-the-box thinkers across diverse sectors, the Chamber challenged them to generate ideas – setting no limits – of what the economy of the future could look like and to map the path to building on our existing manufacturing strengths, applying those to future market demands and evolving new materials and technologies.
We encouraged lateral thinking and linking what we have now to what is needed in the future economy, considering how we can adapt, re-purpose and reinvent, with work streams formed to dig deeper and come up with feasible practical solutions achievable over the short- to medium-term.
This is supported by an industry-led skills development initiative, focused specifically on developing the skills required in these new industries, up-skilling, re-skilling and creating youth employment and training opportunities.
Digital skills development
The skills development aspect kicked off last year with the training of 50 unemployed youth as digital process technicians, a new job created to support the increasing digitalisation of manufacturing. The participants recently completed this training and are now embarking upon the workplace experiential phase through placements at several local manufacturing businesses.
The think tank, meanwhile, has moved a number of ideas from brainstorming stage into technical scoping and feasibility assessments, captured in “white papers” that outline the strategic, operational and financial model of a specific project and its forecast economic and social impacts.
Green hydrogen potential
The planned R100-billion Hive Hydrogen green ammonia plant for the Bay is the focus of one of the think tank work streams, as a potential anchor of a myriad downstream opportunities such as manufacturing of electrolysers, small-scale hydrogen combustion engines, fuel cells and green energy generation.
These are areas in which we have existing technology, manufacturing capabilities and skills that can be adapted and geared up to new technology needs.
We have taken a value chain approach that aims not only to diversify local manufacturing, but also to stimulate up- and downstream linkages that support local participation by both small and large businesses at various points in the supply chain.
Industrial hemp value chain
For example, the think tank’s industrial hemp value chain proposal – based on existing viability of growing it in the Eastern Cape but hampered by quality and consistency of supply – starts with integrating small-scale farming and commercial agriculture enterprises into a value chain of agro-processing, manufacturing and end-user supply.
Training and ongoing mentoring will help small-scale farmers to meet the quality and volume requirements of the agro-processors they will supply.
This value chain is intended to empower rural communities around the Bay and create jobs in those areas. It also links into local opportunities for small, medium and micro enterprises (SMMEs)to manufacture products and supply services to support the agricultural element.
A further link is into the logistics, storage and transport of the raw product, then into a local agri-processing plant, and onward into supplying national and global hemp value chains to meet the demand for renewable and low-carbon materials in diverse sectors.
The automotive manufacturing sector is a key target, for sound-deadening and insulation components from renewable sources, and we have already secured in-principle off-take agreements with key end users.
Further hemp value chains include manufacturing of biofuels, bio-degradable plastics and textiles, hemp seed oils, biomass for energy generation and carbon credit trading.
Each of these holds potential for a local business or incoming investor to capitalise on the opportunity and enter the value chain at a point aligned to their existing business or to diversify their operations.
Pre-feasibility assessments are also under way on local manufacturing and installation of solar geysers and small-scale hydrogen generation and storage for cleaner, greener residential energy, as well as a project for carbon dioxide capture and electro-chemical conversion, to “green” the industrial energy supply.
The Bay also has a key strength in the pharmaceutical sector, presenting an opportunity to take advantage of global gaps in medical devices and pharmaceuticals. A further opportunity is moving to making components for older ICE vehicles and end-of-life engines still in use in countries not moving as swiftly yet to NEVs.
Blue-sky thinking
The think tank approach has enabled the Business Chamber to have a team focused squarely on the future, while its other initiatives focus on tackling current problems. The think tank encourages blue-sky thinking, out-of-the box ideas that are then refined through research and wide stakeholder consultation.
The idea is that we do not own the ideas and projects generated – they are there to offer feasible, researched concepts for consideration by entrepreneurs, investors, venture capitalists and the government; with the benefit of groundwork already done.
We want to stimulate thinking, provide a spark for bigger ideas and collaborations to evolve; for interested parties to take up the concepts, expand on them and turn them into profitable enterprises.
The think tank set out with the aim of contributing to Nelson Mandela Bay’s resilience on two global fronts – the impacts of climate change and rapid technology advances – and unlocking the economic opportunities which lie in both. Now, it must to add a third front – resilience to an up-ended world trade order, rising protectionism and isolationism and shifting geo-political alliances.
On this, South Africa is in a disadvantaged position and highly vulnerable to the current global volatility in trade relationships and economic policy. South Africa is a relatively small economy in global terms, lacking in economies of scale (for example, automotive is our largest manufacturing sector yet accounts for only 0.6% of global vehicle production), it is at a distance disadvantage from key markets and its previous position as the “economic powerhouse of Africa” is rapidly fading. Last year Morocco surpassed SA as the continent’s largest vehicle manufacturer.
This makes the need to innovate based on local strengths and advantages to meet global needs even more critical and urgent.
The Business Chamber believes that the think tank approach is a vital, future-focused initiative to enable the Bay to leapfrog current technologies and hurdles into a future-fit local economy and workforce – and replicable models which can potentially be rolled out elsewhere in the country. DM