ENGAGING the industry innovation in South Africa's motor manufacturing sector
Automotive manufacturing is South Africa's largest manufacturing sector and contributes substantially to our GDP and exports. Since 1995 the sector has been integrated into global value chains, and has had to become more productive, more competitive, and more technologically intensive. MICHAEL GASTROW studies the factors that determine competitiveness in this sector.
At the global level, key determinants of competitiveness in the automotive sector are capabilities for technological upgrading and innovation. The study of these factors is therefore of particular interest to stakeholders, including firms, government and researchers.
Researching innovation and technological change
The HSRC is engaged in two projects that examine innovation and technological change in the automotive manufacturing sector. The first, INGINEUS, is a global research project funded by the European Commission that aims to understand the dynamics of emerging Global Innovation Networks. INGINEUS encompasses 11 countries and 14 institutions from Europe, China, India, Brazil and South Africa; one of the key outcomes of the project has been a deepening of research relationships with our fellow BRIC countries.
INGINEUS looks at three key economic sectors, one of which is the automotive sector. Our research into innovation in the South African automotive sector looks at how this innovation is positioned relative to other parts of global networks. Although the results are not available yet, the mid-term review conference of the project, hosted by the HSRC in Cape Town, successfully brought together researchers from all over the world to discuss work in progress and preliminary findings. These include investigations into the dynamics of Global Innovation Networks in relation to regional factors, human resources, firm strategies, university-industry linkages, and policy.
The second project is supported by the department of science and technology under the South Africa–Argentina Science and Technology Bilateral Agreement. This project’s collaborative research team, consisting of researchers from both South Africa and Argentina, is undertaking comparative reviews of science policy and innovation in the two countries. In addition to gaining valuable insights from these comparisons, the project aims to foster south–south cooperation in the field, in which southern countries learn from similar southern countries, rather than from their northern counterparts.
While South African policy oriented the sector towards global markets, Argentine policy supported regional integration, primarily with Brazil.
Comparing South African and Argentina
Preliminary findings of this project compare innovation in the South African and Argentine automotive manufacturing sectors. It consists of a paper written in collaboration with Centro Redes, an innovation research institute in Buenos Aires.
This comparative review explores the means by which technological upgrading and innovation in the South African and Argentine automotive manufacturing sectors evolved over time, and highlights how policy interventions shaped this evolution.
It found that differing policies affecting export orientation in turn affected technological trajectories in each case. While South African policy oriented the sector towards global markets, Argentine policy supported regional integration, primarily with Brazil. This resulted in technological trajectories that aimed towards meeting the specifications of developed countries and developing countries respectively. While economic integration between Argentina and Brazil created competition for knowledge-intensive activities in which Brazil had an advantage due to its larger scale, South Africa does not face such regional competition.
Although innovation expenditure has been higher in South Africa, both countries perform relatively little R&D in the global context. These findings have suggested areas for further research, with a focus on understanding the position of medium-sized developing countries with respect to knowledge-intensive activities in the global value chains of the automotive sector.
Engagement with industry
In both the INGINEUS and the South Africa-Argentina bilateral projects, engagement with industry is crucial. Fieldwork interviews with executives from automotive manufacturing firms are critical for research. At the same time, research benefits firms by providing additional insights into the nature of innovation in the sector. In recognition of the importance of this interaction, the Wits Business School’s Strategic Management of Innovation Research Group arranged a meeting between researchers and industry, followed by a seminar presenting research findings to a broader group of representatives from government, academia and industry.
Researchers from the HSRC and Wits Business School met with representatives from the National Association of Automotive Component and Allied Manufacturers (NAACAM), including Roger Pitot, the organisation’s executive director.
Previous research findings in the area of automotive innovation were presented, as well as preliminary findings of current projects. The NAACAM members commented that the continued survival of the South African automotive manufacturing sector depended not only on controlling costs (such as wages and raw materials) but in remaining technologically competitive through continued skills development, knowledge creation, and knowledge transfer from abroad.
The engagement ended with a commitment on the part of NAACAM to assist HSRC researchers where possible, for example in identifying suitable firms for research and assisting in gaining access to these firms. This has already paid off, as highly innovative firms were identified for inclusion as case studies for the INGINEUS project, and access to these firms was facilitated. These case studies have already made a valuable contribution to the project’s fieldwork.
A key outcome of this seminar was the establishment of important networking links between researchers, firms, government departments, and science councils to lay foundations for further research and cooperation.
Following this meeting, a seminar was held for a wider audience from government, universities, science councils and the private sector, as well as MBA students, including representatives from the University of Pretoria, the department of science and technology, Sasol, ARMSCOR, Angloplatinum, the Technology Innovation Agency, Mintek, Standard Bank, and the Council for Scientific and Industrial Research. among others. The presentation of research findings sparked a lively discussion about the future of the industry and the role that technology could play in its development. A key outcome of this seminar was the establishment of important networking links between researchers, firms, government departments, and science councils to lay foundations for further research and cooperation.
Author: Michael Gastrow, chief researher, Education and Skills Development research programme, HSRC.