We cannot be, at least in the short term, on par with them. In order for us to compete viably, we need to adopt a sustainable model. We have to find ways of avoiding competition with the highly industrialised. By this, I am referring to going the high-mix, low-volume manufacturing route. Our manufacturing industries are operating with antiquated and virtually obsolete machinery. The effect of this is that we become inefficient in our production. We waste so many materials in production, we face numerous breakdowns, our delivery times are becoming unreliable and we incur many defects, all of which compromise the quality of our goods and reflect on the final price of our goods.
Our roads are a mess. It’s becoming expensive to move goods given the current state of roads. You pay a lot on insurance and transportation costs and you are stopped at police roadblocks. Some areas are actually becoming inaccessible.
We are also highly labour-intensive, whilst South Africa is capital intensive. The wages are ballooning production costs, and that too is reflected in the high prices. A country in the east can produce an organic chicken that is sold at a market price of $1, and still make a profit. However, $1 is the price of a day old chick here, which still needs stock feed and attracts other costs for at least eight weeks. Can we compete with that country?
Our utilities, water and electricity are too expensive, to the end that our industries are running on generators, which is much more expensive. On top of that, you pay usurious interest rates to borrow money you should return after a short period of time, which is the very opposite of South Africa
It is very important for both policy makers and industrialists to appreciate and acknowledge the reality of our circumstances. This will allow us to make informed steps and know which policies to support and advance.
Zimbabwe should adopt high-mix, low-volume manufacturing, as a strategy to counter heavy competition from highly industrialised countries. This is a niche which frustrates highly industrialised nations that are often involved in low-mix, high-volume manufacturing.
The good thing about high-mix, low-volume manufacturing is that being price competitive is not considered much, but getting the job done is what counts.
Zimbabwe has every incentive to be involved in high-mix, low-volume manufacturing, especially in food manufacturing. This way, exports are guaranteed to rise dramatically too.
Highly industrialised nations usually have machines that are customised not to produce variety, since they produce in bulk. If they are given orders with many varieties, they simply can’t do them because it would be expensive for them to shut the entire plant and customize their machinery for that small special order. This is where we should gain leverage. It is important for every manufacturing concern to start exploring the opportunities for high-mix, low-volume orders in the regional and international markets. This is also a very sustainable niche.
Our local manufacturers should be very innovative and creative in their production. Low mix products are exposed to high competition from highly industrialised nations, which accrue enormous economies of scale to the end that we are outmatched when we try and compete with them. But there is simply one thing we can do, which they can’t: high-mix, low-volume manufacturing.Post published in: Business