The Maritime Sector

A 2013 Department of Environmental Affairs study estimated that the country’s oceans could generate an estimated GDP contribution of between R129 billion and R177 billion by 2033. Incorporating a 600km coastline and two of the largest ports on the continent, as well as vast unexploited inland waterways, KwaZulu-Natal is ideally located to capitalise on this 'blue economy.

Freight and logistics are centred primarily around the province's two major transport hubs, being the seaports of Durban and Richards Bay which are, in turn, connected to national and regional road and rail networks linking to the economic hub in the hinterland.

Present estimates indicate that the local ship-building sector currently generates in excess of R1 billion per annum, of which 68% is in foreign currency. KwaZulu-Natal is the country’s second most prolific boat-building province with almost 6 000 vessels visiting the ports of Durban and Richards Bay every year, so providing a steady stream of potential vessel repair opportunities. While in 1993 only 15% of all South African boat-building companies were based in KwaZulu-Natal, this number has risen to 25%, with as many as 40% having entered the industry since 2006. South Africa’s fresh water aquaculture sector is dominated by the Western Cape followed by Mpumalanga, with KwaZulu-Natal placed third. Here most trout farms are located in the province's midlands, while ornamental fish, in the form of koi carp, catfish and tilapia, are also evident throughout the province.

The province’s large number of inland cold water tributaries is another contributing factor towards its potential status as a prominent aquaculture centre.

The Logistics Sector

Logistics refers to the international flows of goods and concomitant payment wherein costs are constantly reduced through the simplification of procedures and documentation.

It links demand with supply from different industries and generates a significant proportion of a country’s GDP. The global logistics industry comprises shipping, warehousing, courier, road, rail and air freight and the global market value of logistics at US$4 trillion equates to 10% of global GDP.

Logistics activities assist in accelerating economic growth, while efficient logistics is regarded as an important determinant of a country’s competitiveness and source of employment.

Logistics performance is central to the economic growth and competitiveness of countries and this sector is now recognised as one of the core pillars of economic development.

South Africa is no exception in this regard. It has a transport-intensive economy and transport has been identified as comprising the most significant portion of logistics costs in the country. Although South Africa’s GDP constitutes only 0,44% of global GDP, close to 0,6% of the world’s road network and 2% of the world’s rail network is found here. The country accounts for 1,7% of the world’s container trade and 5,1% of the world’s dry bulk trade and in 2013 its logistics costs were R393 billion, roughly 11,1% of its GDP.

When compared against other countries, such as North America (8,8%) and Europe (9,2%), the country fares quite poorly, although it remains marginally better than South America (12,3%) and Asia Pacific (12,8%).

Logistics constitutes a significant cost to the South African economy. The country’s transport infrastructure is amongst the most developed in Africa and recently the South African Government inaugurated the National Infrastructure Plan with budgeted expenditure of R827 billion (about US$80 billion) during the three-year period, beginning in the 2013/14 fiscal. Similarly Transnet’s Market Demand Strategy unveiled a budget of close to R300 billion for the next decade in order to expand the country’s rail, port and pipeline infrastructure. The country’s rail network accounts for 80% of the total network in Africa.

KwaZulu-Natal is home to the busiest container terminal in the southern hemisphere, as well as the second largest manufacturing sector, a rapidly developing aerotropolis, the heart of which includes Dube TradePort and King Shaka International Airport, and significant portion of the road and rail artery which links Durban harbour to the economic hinterland of the country. Logistics, therefore, forms the very backbone of the provincial economy and without a functioning logistics sector, the economy here would certainly stagnate.

Automotive Sector

The automotive manufacturing industry in KwaZulu-Natal is largely concentrated within the eThekwini Municipality, but also includes firms in Pietermaritzburg, Stanger, Ladysmith and Richards Bay. The industry employs some 20 000 people and contributes about R21 billion to the local economy per annum.

The key automotive player in KwaZulu-Natal is Toyota South Africa, a market leader for 30 years and attracting a range of component suppliers in the process. The company is now supported by a highly sophisticated components' sector with strongly developed national and international linkages.

Toyota is the best-selling vehicle brand in South Africa and is gearing up for a major vehicle export programme. The current production capacity of Toyota South Africa's plant in Durban is in excess of 100 000 vehicles annually. The South African operation now exports built units to both Australia and Europe.

Toyota South Africa has entered into a Public-Private Partnership with the KwaZulu-Natal Provincial Government and eThekwini Municipality to establish an automotive supplier park in Durban. The R450 million park will be South Africa's third such supplier park, but the first in KwaZulu-Natal. The other two are located in Uitenhage, in the Eastern Cape and in Rosslyn, near Pretoria. Already, at least 13 automotive component suppliers have shown an interest in establishing operations in the park in an environment that would be to the benefit of suppliers and producers alike, enabling savings on transport and just-in-time management.

Another important manufacturer, Volvo South Africa, is presently relocating its truck plant from Gaborone, Botswana, to Durban. Denso, Japan's largest and the world's third largest automotive component manufacturer has recently purchased an equity stake of 25% in Prospecton-based Smiths Manufacturing, leading to the establishment of their Toyota Boshoku and Toyota Gosei factories. The province is also home to Man Truck and Bus in Pinetown and Bell Equipment in Richards Bay.

Stainless Steel

There exists in KwaZulu-Natal a well-established stainless steel manufacturing environment catering for the construction of pressure vessels, general tankage, pipe and tube, heat exchangers hollowware, automotive exhausts and the like.

Ship Building

KwaZulu-Natal has a competent ship-building and repair sector with an excellent skills base. During past years a variety of ocean-going vessels, inclusive of luxury motorised yachts, have been built here. The present the ship-building industry enjoys excellent basic infrastructure, whilst there exist tremendous possibilities along the Durban shoreline for, especially, the construction of ships, boats and parts.

Jewellery

The country's mineral wealth and the Government's stated commitment to beneficiation is set to make the country a successful jewellery manufacturing destination.

There is a well-established jewellery manufacturing sector producing a wide variety of precious metal jewellery items, ranging from mass production items to individual pieces. The South African industry comprises some 350 manufacturing concerns, ranging from large manufacturers employing several hundred employees, to smaller studios specialising in high-value added 'designer' pieces.

Jewellery manufacturing nodes are to be found in both the Durban and Pietermaritzburg areas.

Chemicals

The chemical industry is well-developed with a number of large plants and a diverse grouping of specialist medium-sized firms. Downstream there are many SMME chemical formulators, all of which play an important role in the distribution chain. Central to the industry are two large oil refineries which feed the petro-chemical sector.

In terms of the KwaZulu-Natal chemical and petro-chemical sub-sector, industrial chemicals comprise a third, at R1,1 billion, of the gross output, petroleum and coal products 30%, at R1 billion, chemicals 21%, at R0,7 billion, whilst rubber and plastic products comprise the balance. Other sectors which enjoy substantial investments include paint, agricultural chemicals, plastics and synthetic resins.

Pharmaceuticals

The South African pharmaceutical industry is well-established and contributes some 1,5% to national GDP, with overall revenue at about R40 billion and employing some 9 500 full-time employees.

The sector is represented by the following companies, amongst others:
• Abbott Laboratories
• AbbVie
• Alcon
• Allergan
• Amgen
• AstraZeneca
• Bayer
• Boehringer Ingelheim
• Bristol-Myers Squibb
• Covidien
• Eli Lilly
• Galderma
• GE Healthcare
• Janssen Pharmaceutica
• Merck
• MSD
• Norgine
• Novartis
• Novo Nordisk
• Pfizer
• Roche
• Sanofi
• Servier Laboratories
• Takeda

Textiles and Clothing

The textiles, clothing and footwear industry is well-established in South Africa and comprises some 300 manufacturers, based mainly in KwaZulu-Natal, the Western Cape, the Eastern Cape and Gauteng.

Food and Beverage

Together, these industry-types contribute more than 3% of total GDP in the province. A key focus area in the food and beverage sector is new product development.

Major players in the KwaZulu-Natal food production industry include: Unilever, the Tongaat-Hulett Group, Illovo Sugar Ltd, Clover and Rainbow Chickens.

Pulp and Paper

Pulp production (from raw material other than re-cycled waste) in South Africa is undertaken by two companies, Mondi and Sappi, which have KwaZulu-Natal-based operations.

However recent developments are likely to result in the entrance of NCT Forestry Co-operative and the Swedish market pulp producer, Sodra Cell into this market. Plans are afoot to develop their plant in KwaZulu-Natal

Plastics

KwaZulu-Natal provides nearly a third of South Africa's plastics requirements.

This industry, which utilises 150 000 tons of polymer per annum, consists of predominantly small and medium-sized companies.