Funding gap slowing manufacturers’ modernisation push

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JIMMY MOYAHA: South Africa’s Manufacturing Indaba kicked off today. We’re going to be examining that and trying to see what’s in focus at this year’s [Indaba].

I’m joined on the line by the product manager at Lula, Koreshini Pillay, to look at this and see if we can make sense of it.

Koreshini, lovely having you on the show. Thanks so much for taking the time. What is on the agenda at this year’s Manufacturing Indaba?

KORESHINI PILLAY: Hi Jimmy, and thanks so much for having us on the show.

It has actually been an incredible day today, lots of conversations happened around automation and AI, and just how much that is needed in the manufacturing space in itself.

There have been a lot of conversations, a lot of knowledge-sharing from all industries across the likes of your government departments due to Lula competitors in the field, and there has just been an immense amount of knowledge coming through.

JIMMY MOYAHA: Koreshini, I see decarbonisation has also been top of mind when we look at the industrialisation and decarbonisation of our industrial sector.

This obviously lines up, of course, with the industrial decarbonisation that the United Nations has set out for the world to hopefully achieve, and manufacturing as a sector forms such a critical part of our own growth and our own economy in terms of how much it contributes towards our economy.

I want to get your thoughts from an economic perspective on how we are looking to strike that balance around things like automation, decarbonisation, and all of these other objectives that are being set forward for the manufacturing sector – and where the manufacturing sector sits right now.

KORESHINI PILLAY: I’m really glad you asked that, Jeremy, because it’s an all-encompassing thing that we’re all responsible for.

Modernisation isn’t just about modernising to drive revenue and drive outcome for the business, and to meet the next order. It’s exactly what you’re talking about – the impact on everything that is our world and our environment.

The main thing we’ve come to realise is it’s not actually about waiting till the cash flow is there.

It’s about striking when the time is hot; and it has now become a necessity.

Modernisation is no longer a luxury that you need to have deep pockets for in order to stay relevant and to get that next big deal. It’s an element that is going to either push a contract over the line or stop it.

So if businesses aren’t able to do that change in manufacturing ways to reduce their carbon emission, they are unfortunately potentially going to have to walk away from a potential contract and a big deal for themselves.

That’s why for us at Lula the main thing we’re looking to do is to say, as a business that needs to modernise but doesn’t have the capital, how do you bridge that gap between being able to supply what’s needed in the market, at the way in which it’s needed to actually secure the next big deal? That gap can sometimes be up to six months.

So when it comes down to timing, Jimmy, that’s what I’m trying to figure out and talk about.

The timing for every industry is unique in itself, but you need to have that funding available when you need it; when your business can afford to undertake that level of infrastructure change and that level of manufacturing change.

It’s something that could put you out of business for one week or two weeks at a time. You need to recover that cost later on.

But to get that funding is the trick, and that’s where the smart funding comes in from businesses that understand the actual rhythm of the manufacturing world. That’s the reality.

You need to partner up with the business that isn’t looking at what you’ve done in the past, but forecasting what you need right now for the real-life situation that the businesses are faced with that distances them from economic conditions and environmental conditions that they need to meet.

JIMMY MOYAHA: Koreshini, can we take a look at the scaling of businesses? The manufacturing sector often requires a lot of scale for it to be effective; for companies to achieve cost efficiencies and cost reductions.

And if we’re looking at this particular Indaba, every year we have conversations around how we move the sector forward. Is scale a focus here?

KORESHINI PILLAY: For us definitely it’s something that we did discuss – not necessarily in our knowledge there that I’ve experienced, but through this conversation with the IDC [Industrial Development Corporation] that came up at the Lula stand.

The main thing, weirdly enough – and it was actually a study that our team members studied into – in 2026 the data is actually showing that skills development is leading to the opportunity, not to say modernisation, of technology and manufacturing in itself, but investing in the people, because investing in the people is as much a high need and a high-tech change that businesses’ workforces need.

That in itself will almost reduce your level of waste and boost efficiency.

So it’s almost that fine balance, Jimmy, that we’re trying to find [in terms of] what level of automation we need that’s going to fast-track you and your business itself.

So it’s not necessarily a loss of jobs and a loss of team members. It’s more about how you to strategically move forward with the right technology, the right funding partner and the right people in your team.

It’s investing in both the growth of machinery and the people within your team to reduce cost ineffectiveness and drive higher outputs.

JIMMY MOYAHA: Koreshini, the manufacturing sector, as we mentioned, has its role to play here. How is that sector looking to perhaps engage with other sectors? We’ve seen quite a bit of an increase in areas like the automotive sector, and automotive manufacturing would then form part of both sectors.

How do we start to see the integration of the manufacturing sector with other sectors in the economy, and the role that this sector particularly looks to play going forward?

KORESHINI PILLAY: I think the challenge that we’re actually seeing right now – from all the conversations, Jimmy, that I’ve been engaging in with across all the different stakeholders that come through the stands – is that it’s not unique to manufacturing.

It is actually something that all SMEs and all businesses are currently facing at the moment.

We even had the likes of an accountant and [legal professionals] come through, facing the exact same challenges. How do they automate their business and partner themselves with the correct team members to push their business forward, because you’re all facing that sort of crunch.

Automation is such a trendy word right now, and it’s everywhere we go into. But again, it comes down specifically to the timing that each industry is focusing on to make that move for themselves within automation.

Automation, to be honest, Jimmy, is not just your machinery. It’s not just the way you’re building a car or taking steel and processing it.

It’s how you are just running your business from A to B, obtaining any job and securing any job and getting that contract agreement – and then actually being able to output what it needs to [be] six months, eight months down the line.

And it’s being able to understand that gap between the two. How are you able to bridge it in a very safe way for your business, to not just survive but to actually grow and enable [yourself] to be bigger and better with every order thereafter?

The problem in itself, Jimmy, is I don’t think unique to manufacturing. I think it has definitely been highlighted a lot within the Manufacturing Indaba space, but it is definitely a challenge that all industries that I have faced today are facing.

JIMMY MOYAHA: Can we take a look at the recovery of the manufacturing sector? We haven’t yet recovered to pre-pandemic levels. We’ve been struggling in some areas. Other areas have recovered and recovered quite strongly at that.

But I want to get your thoughts, perhaps, on where some of the challenges persist and where we should be focusing our efforts if we are, as the Deputy Minister of the Department of Trade, Industry and Competition mentioned, to reposition manufacturing at the centre of the country’s industrial strategy.

Where do we need to be shifting our focus if we are to achieve that?

KORESHINI PILLAY: That was a big question, Jimmy. To be honest, I actually stopped when I spoke to a few of the ladies today from the IDC, the Industrial Development Corporation, and we explored this slightly.

Yes, the pre-pandemic era was a big hit for everyone – and I’m going to use this word again, but literally, Jimmy, it does come down to the timing of everything.

Some businesses are choosing not to modernise because they can’t afford to, but they also can’t afford not to.

So how do we actually help our businesses become able to do so?

Obviously, AI and funding is the correct way of the world that builds their business alongside them.

I think the biggest setback is that businesses aren’t choosing to put their money up front because it’s a risk. It’s a definite risk for them because they’re not going to get that ROI [return on investment] right now on the money they’re putting in.

They need someone to walk the journey with them, and they are stuck in the sort of old ways of manufacturing because they can’t afford to move forward, Jimmy.

And that’s because more traditional ways of funding and getting funding for a business are stuck in the old, traditional last-month’s revenue, whereas how Lula is looking to do it is we are looking to achieve a sort of real-time concept by saying:

‘We need you. We need to help you enable yourself to grow to a point, to be a front-and-centre focus for the economy. But we can only do that by helping you modernise.’

So we are there as a community in itself to help businesses enable their untapped skills, and to actually push them forward in a space that they are scared to enter – or can’t afford to enter – because we can bridge that gap now with them.

So come November or come December, when they are faced with a contract that they can now fulfil, it’s no longer having to upgrade the infrastructure. The infrastructure is already upgraded, and that’s the biggest challenge.

You can’t wait for the orders to come to upgrade, because those are sometimes some of the deciding factors for them to actually win on the contract.

So the long and short journey, Jimmy, for me is about working with the industries on a timing basis to help them modernise before they are no longer considered relevant in the market.

JIMMY MOYAHA: The manufacturing sector continues to evolve, and the Manufacturing Indaba kicked off today.

We explored this with the team at Lula. They shared some insights around what seems to be driving the agenda for this year’s Indaba, and what it is that could be in focus for the remainder of the conference.

We’ll leave the conversation on that note. Koreshini Pillay, product manager at Lula, joined us to take a look at this year’s Manufacturing Indaba.