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Plastics

The South African plastics market is well developed throughout the plastics value chain and caters to both local demand and export markets. It is a growing market. Generally, the leading markets for plastics are in packaging, building, construction and the automotive industries. However, a number of other industries which use some form of plastic are textile, electrical, electronic, mechanical engineering, and agricultural industries. They had experienced a profound downturn in demand, as they struggle to adjust to changes in the market for their products and against a rising tide of imports. Competition from advanced developing countries is said to be having an impact on domestic demand, as cheap imports of relatively low added-value products are causing some parts of the world's plastics industry to restructure. As a result, a number of companies had relocated their manufacturing facilities to those low-cost production countries and had themselves become importers. The rising cost of the polymers used by the plastics conversion industry had made many of its customers resist the inevitable price increases that follow and led them to seek alternative sources of supply, wherever possible

Plastics manufacturing in South Africa had contributedapproximately 0.5% to GDP and 3.2% to the manufacturing sector. The largest contribution of plastic production is the plastic packaging market. The export value of plastic products in 2012 was R13.1bn compared to the import value of R20.2bn leading to a trade deficit of R7.1bn.

Plastic consumption for 2012 in South Africa was 1,628 million tons, which indicates a per capita consumption of 28kg. Included in the consumption figure is recycled plastic which contributed 264,758 tons of recycled input material in 2012, which is a 7.8% increase compared to 2011.

The compound annual growth rate (CAGR) for the plastic industry over the next 5 years is 4.8% and 2012 growth rate is 5.4%. This 4.8% (CAGR) can be attributed to an expected increase in demand for packaged food and an expected rise in the use of plastics in the automotive industry.

There are approximately 2000 companies in the plastic converting industry employing around 60,959 workers. Annually on average 25 tonnes is converted by one worker.

Key barriers to growth in the plastics sector are skills shortage and slow technological upgrading as well as high competition from imports. Plastics engineers (beyond first degree) are reportedly not produced in a quantity that is sufficient for the growth of the industry. Similarly, at an operations level, mould-setters and plant operators are also in short supply, due to new competency demands arising from innovation and technological development. The availability of trained and experienced artisans remains of critical importance to the industry. Competitiveness of the local industry has been negatively impacted upon by factors such as the cost of polymers, proximity to markets, relatively small local and regional market, electricity pricing as well as inland location of production facilities in the case of exports. These challenges need to be mitigated in order to grow the domestic plastics market.

Variable Contribution in 2012
Manufacturing value-add R50bn(2012)
Manufacturing employm 60 959
Trade balance -R7.1bn

Constraints

Plastics conversion plants are generally small to medium-sized, with an average size of 130 employees. Many plants have fewer than 50 employees, and those with 400 and more employees are generally considered to be large. Constraints faced by the plastics sector include import parity pricing of polymers and other key inputs, as well as:

  • Pricing of raw materials;
  • Relative small local and regional market;
  • Lack of advanced manufacturing practices;
  • Lack of downstream focus on R&D effort; and
  • South Africa's geographic position and resultant logistics costs.

Key Opportunities

Key areas of opportunity for growing sector include:

  • Automotive interior and exterior products
  • Food packaging
  • Medical products
  • Buildings- pipes, flooring and building sheet.
  • Electrical and electronics cables ,appliances and casing components
Facts about Plastics