Dinosaur phenomenon: Adapt or perish

IN the forgettable 2008 era when food and other goods became scarce in this country, it was common to find half of the customers in South Africa’s jumbo wholesalers on any day being shoppers coming from Zimbabwe.
Zimbabweans could easily be discerned by the huge groceries in their trolleys, beating SA shoppers hands down. In many shopping malls, every fourth or fifth person you saw was a Zimbabwean.
At the airport, hand luggage went through a lot of scrutiny as what appeared like bombs and grenades on their scanning machines were actually rolls of polony, bread, cheese and eggs that we bought for our families back home.
You would hear the airport personnel ask if we were from Zimbabwe because challenges back home were well documented.
However, in 2009 and 2010 shopping trips for groceries were reduced significantly because the advent of the multi-currency system saw most retailers refilling their shops with products from down south.
This was well and good but the side effects, a dwindling domestic market for the local manufacturer are still being felt.
Most firms seem to be failing to recover from the economic hazards of the pre-2009 era.
But over the past few months we have seen the rand strengthen significantly against the United States dollar, a development that has had a huge bearing on prices for the bulk of products coming from our southern neighbour. In 2008 the exchange rate was on average R10 to US$1 but it appreciated to R7,30 to US$1 last year, and is expected to further strengthen to R7 per dollar as estimated by Renaissance Capital.
The Zimbabwean consumer is feeling the pinch directly because the bulk of products in grocery shops, clothing outlets and some furniture shops are imported from South Africa.
However, this scenario is widely seen as an opportunity for local manufactures to raise their production levels so they can reclaim their market share from the SA producers.
The general trend over the past two years has been that imported products are fetching lower prices compared to locally manufactured, largely due to the duty-free importation and the economies of scale which are tilted in favour of SA manufacturers.
In some instances local suppliers are overpricing their products based on the Zimbabwe dollar mentality where prices were arbitrarily changed or fixed.
Presently most companies’ capacity utilisation levels remain suppressed at an average 47 percent due to myriad of reasons.
However, the local firms will need to reclaim their local market share and enhance competitiveness on the international arena.
With household consumption projected to rise this year on the back of salary and wage increases for civil servants and growing remittances from the diaspora, local manufacturers need to be strategically positioned to benefit from this.
Of course, such challenges as undercapitalisation, lack of raw materials, obsolete machinery, inadequate power supply and huge wage demands, continue to stand in the way of efforts by most firms to increase production levels.
The liquidity challenges that continue to haunt the economy, with banks still struggling to meet the demand for capital, have largely affected manufacturing activities.
Companies have also failed to replace obsolete equipment and purchase raw materials due to poor financing.
Certain equipment really needs to be replaced given the fact that most of it was not in use during the economic turbulence of 2008 and will thus not operate optimally.
However, we expect that manufacturers should by now have come up with strategies to circumvent these challenges. It’s not easy but it needs to be done.
They say a rough sea makes a great captain hence the need for more innovation and resourcefulness on the part of manufacturers.
There is need to apply cost-effective measures that will ensure the production of high quality goods to fend off competition.
The manufacturing sector is critical in terms of creating employment, generating foreign currency and stabilising the economy.
This sector, which is expected to grow by 5,7 percent from 2,7 percent last year, should really come out of its cocoon to make a bigger impact on the economy.
In instances where raw materials are available locally, firms should maximise on this and price their products more competitively.
The manufacturing sector apparently, cannot afford to continue listing its challenges because competition is intenssifyig, both locally and on the global stage.
The market will not commiserate with companies but will go for the high quality and best-priced product hence the need for a serious engagement among stakeholders to see how best industry can come alive again.
Dinosaurs are extinct because they could not adapt.
Some companies might meet the same fate.
In God I Trust!
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