The Department of Trade and Industry’s (DTI’s) initiative to designate industries for domestic production – where procurement is conducted by public entities, including State-owned enterprises – has motivated the inception of the pump cluster in South Africa.

“The aim of the cluster is to revitalise industries within the industrial and mining pumps sector through strategic capital investments. Based on this, we aim to produce more pump products locally by accessing the State-owned companies’ (SOC’s) projected spend and, thereby, create a competitive industry for export with increased volumes,” says South Africa Pump Cluster chairperson Ernie Muller.

He explains that the cluster comprises companies that operate in the same markets – of seals, couplings and motors – as these form an integral part of the end product of a pump set. “It is called the pump cluster for simplicity and because the demand the end product created for these sectors comprises components which are all required in a pump set. The cluster will create a platform whereby all the sectors involved in forming a pump cluster have one mandate,” he says.

Meanwhile, during his speech at the Old Assembly Chamber on May 15, 2013, DTI Minister Rob Davies mentioned that providing incentives to promote competitiveness and localisation in the automotive important sector of the South African economy has resulted in production volumes increasing to 539 424 units and exports reaching 277 893 units in 2012. Further, this change of focus in incentive to support and encourage deepened local component manufacturing has resulted in 128 projects supporting or sustaining 57 197 jobs.

“As a sign of confidence in the steps we have taken, private investments of nearly R16-billion have been secured. These have included both new investors and new lines of operation by existing investors. Among the new investors in the sector, we have welcomed First Automobile Works, of China, which is constructing a truck plant in Coega, in the Eastern Cape, and Beijing Automotive Works, which is building a taxi assembly line and distribution centre – [these] are examples of existing investors expanding their operations.

“We also saw important new investments by long-established original-equipment manufacturers, including Mercedes-Benz’s new C-class production in East London, BMW’s increased production capacity in Rosslyn, Ford, in Silverton, and GM, in Port Elizabeth,” he adds.

Davies notes that the clothing, textiles, leather and footwear industry experienced a remarkable turnaround, directly attri- butable to a radical change in the DTI’s introduction of the Clothing & Textile Competitiveness Programme (CTCP): 12 205 new permanent jobs have been created in companies benefiting from this programme. A pleasing new development has been key local retailers committing to local procurement in support of manu- facturing companies. Over 469 companies were assisted under the CTCP with R1.5-billion in applications approved. About 49 888 existing jobs are being retained through the support of the CTCP.

“Under the Preferential Procurement Policy Framework Act, the rail rolling stock, power pylons, bus bodies, textile, clothing, leather and footwear, canned vegetables, furniture and certain pharmaceuticals are sectors which have been designated for local procurement since 2009. Also, localisation is now fully entrentched in a number of key procurement programmes, such as the renewable-energy generation programme and the fleet procurement processes of SOCs,” highlights Davies.

Muller adds that, through the creation of a single point of contact for all SOCs, the DTI, or any other role-players, the cluster will be able to engage other industries, such as the foundry industry, through the National Foundry Technology Network. This industry produces castings, which are a vital input cost to the pumps cluster.

Meanwhile, Muller notes that companies that comply with government’s local content stipulation are encouraged to join the cluster. “To have as strong an influence as possible, it is important to have all local manufacturers as members. A copy of the constitution and code of ethics is available to all interested companies,” he adds.

Government, through the DTI, stipulates that a company wishing to be considered for inclusion in the DTI’s procurement strategy should have at least 50% of its cost of production incurred in South Africa and that there must be a substantial transformation of any imported materials. Also, the manufactured product must prove to be of high quality in the market.

Moreover, the DTI mentions that the Manufacturing Competitiveness Enhancement Programme has awarded grants to 214 enterprises across industry at an approved value of R1.35-billion, with 41 626 jobs being expected to be retained as a result and a total investment outcome of R5.37-billion.

“The membership will be reviewed yearly and every company that forms part of the cluster will be audited to ensure that its local manufacturing claim is valid. If a company is found to be noncompliant with the cluster’s stipulations, and by extension, the DTI’s, the company will be asked to leave the cluster,” highlights Muller.

He points out that the cluster can contribute to SOCs in the form of new technology, as local firms are often subsidiaries of inter- national companies that have advanced research and development facilities.

“What local manufacturers aim to achieve through the cluster is to increase their volumes of production and the cluster’s local manufacturing portion through designation by the DTI; this could be a platform from which international companies could expand their product offering so that their South African subsidiaries could become centres of excellence for their international companies, much like the automotive industry in South Africa,” Muller adds.

Meanwhile, he notes that the shortage of skills in the pumps industry is a cause for concern, which the cluster aims to address through offering apprenticeships and internships to graduate students to provide them with practical experience. “This will also aid companies in fulfilling another of the DTI’s criteria, which is that companies comply with labour legislation and adhere to fair labour practices.

“More than being an opportunity to create jobs, this is also an opportunity to create interest for engineers to enter the pumps sector, as we lose a lot of qualified engineers to other industries because of those industries’ proven success. If we are successful in realising the objectives of the cluster, we will be a sector that is as popular as the automotive industry, but that will depend on how well we drive the cluster and promote it,” he concludes.