Economics: Manufacturing Trends

The DMA is South Africa's second-largest industrial hub (after Gauteng) and has the largest concentration of manufacturing employment in the country. Manufacturing accounts for 26% of the Durban's GGP and 25% of its formal employment. The Manufacturing sector of Durban's economy is fairly well diversified, with no single sub-sector accounting for more than 20% of the total manufacturing output or for more than 20% the total employment within manufacturing. Chemicals account for about 20% of manufacturing output, while clothing accounts for 20% of manufacturing employment. The present day manufacturing activities that take place in the DMA have close ties to those industries that emerged in the early years of industrialization. These industries were sugar-processing, and the manufacturing of wood products and textiles. These industries still make up the industrial-base but exist today in slightly translated forms.

Sugar-processing has been expanded to include the broader activities of food and beverage processing, which now account for 18% of manufacturing output. It is estimated that this sector will grow significantly in the years to come as the disposable incomes of the South Africa's poor increases in the post-apartheid era and as the influx of people moving to urban areas causes more food to be purchased in higher volumes, rather than grown.

The manufacture of wood products remains a part of modern day manufacturing activities but has for the most part been translated into paper production. Durban is the site of a number of paper and board mills that export a significant amount of their production. These firms have located in Durban because of the availability of lumber resources from KwaZulu-Natal and because of the linkages to international trade offered by the city's port. Because the paper industry is so strongly tied to international trends, the outlook for Durban's paper manufacturing firms is good so long as the port remains a central place for international trade and the firms are not significantly out-priced by Southeast Asian paper manufacturers.

The textile industry is still very much alive in today's economy as the DMA has the largest concentration of textile and clothing-related activities in the country. However, in recent years this sector has experienced significant decline in the face of competitive pressures from abroad due to decreases in trade protection called for by the GATT. Furthermore, while this sector still formally employs the largest portion of labor in the DMA, many firms have shed formal jobs in recent years and out-sourced many activities to informal operators.

This trend of out-sourcing formal operations to the informal sector within the clothing industry is part of a larger trend of increasing association between the formal and informal sectors of the economy. On the whole, the greatest linkage between the two sectors takes place in industries that are carried out by small, labor-intensive firms that have strong connections to local markets and suppliers. The informal sector of Durban's economy is quite substantial-by some estimates 46% of economically active people are employed informally. Taking into consideration that only 30% of Durban's population are formally employed, this trend of increasing association between the two sectors is understandable, especially in the context of increasing globalization and competition from abroad.