Addressing the challenges faced by manufacturers requires a systematic approach to boosting operations and optimizing technological processes. These include reaping the benefits of 5G connectivity which, alone, is predicted to add <a href="https://www3.weforum.org/docs/WEF_The_Impact_of_5G_Report.pdf">$13,2 trillion</a> to the global value produced by industries by 2035. Of this, almost 33% will come from manufacturing.



Across the world, manufacturing companies that have added 5G private networks to their operations are already benefiting from the technology, which is driving automation, the Internet of Things (IoT) and artificial intelligence (AI) on the factory floor.



The benefits of moving to 5G private networks include improved quality resulting from the use of predictive analysis to reduce the number of defects and detect damage in real-time. Virtual reality-based training is also ensuring safer work practices.



For manufacturers, the problems posed by the traditional factory challenges &#8211; which range from machine downtime and maintenance to supply chain delays and quality issues, and inefficient material handling &#8211; can be reduced significantly by using 5G private networks to drive the optimization of processes.



Manufacturers acting proactively to address these challenges will benefit through reduced production cycle times, increasing productivity, and overall efficiency on their floor.



The ‘smart factories’ that increasingly rely on automation, augmented reality and IoT will see 5G private networks powering devices and sensors around the factory, integrating AI into operations. Smart innovations could include automated guided vehicles to transport materials or produced goods, remote-controlled operations, digital quality inspection of production to detect defects, rework or enable root-cause analysis of issues.



The introduction of 5G private networks will also see industrial robotics communicating more reliably and with much less delay than was previously possible. Tethered and untethered robots could also be controlled, monitored, and reconfigured remotely over the 5G private network.



Already, some automotive manufacturers are leveraging partnerships with telecom tech companies. Their plant’s 5G private networks are helping to support automotive production on site and being used to track goods in and out of the factories. The networks also support automated guided vehicles in use throughout the plants.



Realizing the benefits, manufacturers are steadily moving to private networks to ensure that they can optimize the benefits of 5G.



Private networks empower users to utilize dedicated equipment and configurations in their networks. And, as they run separately from public networks, they can be deployed within a customer’s premises or in specified geographical areas, offering a dedicated and isolated network environment.



Amongst the other benefits of private networks is exclusive capacity, as there is no competition for space from other network users. High data speeds, up to 10 times faster than previous connectivity, translate into quicker downloads and uploads of large files and data sets, video streaming and large-scale data transfers. Notably, the problems associated with working in industrial areas far from urban centers and having spotty or weak indoor coverage are eliminated.



In a sector where supply chain stock sitting idly on shelves is expensive, 5G private network users are effectively managing supply chains by utilizing ‘just in time’ (JIT) techniques to ensure that materials and equipment are available when needed. The benefits are reduced production delays and improved efficiency. Savings, through reducing the cost of holding excess stock in storage facilities, are also achieved.



MTN believes that 5G private networks will play a pivotal role in transforming manufacturing. Its judicious implementation will be especially beneficial to African-based manufacturers who will be able to use its capabilities to leapfrog competitors who are not as connected, while producing high-quality, desirable products for local and international markets.

GM-for-ICT,-MTN-Business—Sudipto-Moitra-(1)

5G Private Networks Are Set To Transform The Manufacturing Sector

Report shows positive growth in the mining and manufacturing industry as both sectors&nbsp; show slight figures of recovery in third quarter



<hr class="wp-block-separator"/>



South Africa’s mining and manufacturing industry shows slight growth in production and sales, but could decline in the near future. 



The October 2018, StatsSA report shows both sectors have had figures of recovery from the start of the first quarter. 



The mining production overturned a three-month decline with a 0,5% year-on-year growth in the third quarter, with gold being the lowest contributor. 



Senior economist, Elize Kruger from NKC African economics, says despite&nbsp; growth in the mining sector there is nothing to be excited about.



Protest action that started on gold mines in mid-November added to the pressure that the sector has been under over the past months. 



A protected wage strike at Sibanye-Stillwater&#8217;s gold operations started when The Association of Mineworkers &amp; Construction Union (AMCU) made a demand of &nbsp;R1,000 annual increases in wages for mine workers. 



The National Union of Mineworkers, Solidarity and United Association of SouthAfrica on&nbsp; the other hand accepted R700 in the first two years and R825 in the third for most of their members. 



The Johanessburg based mine urged striking workers to return to work by December 15, 2018.&nbsp; 



“Novemember and December could be impacted by the strike action that we see in the gold mining industry. The fourth quarter data is likely to remain depressed despite the October numbers,” she says. 



Gold is the largest negative contributor at -15,1% thus contributing -2,3%percentage points to the overall figures. 



Furthermore, increases in electricity prices that will take effect early 2019, will tighten the pressure on the industry adding to headwins faced on a global scale. 



“Alluminum sector is impacted by the US import tarrifs increases and the threat of electricity price increases in the order of 15% ,” says Kruger. 



The 15% increase is a strategy put in place by the electricity public utility,&nbsp;Eskom, to settle financial constraints. 



The request made to the National Energy Regulator of South&nbsp; Africa will be effective for three years if approved. 



The manufacturing industry grew by 3,0% with eight out of 10 sectors showing positive growth rates over the last three months. 



According to Kruger, the strong levels of the rand exchange rate put in a helping hand in the manufacturing production and sales sector.

899525318

South Africa’s mining and manufacturing sectors show slight growth

Where would we be without globalization? What if media was restricted to reporting within its own national boundaries? What if we all lived in isolation? It’s a scary picture and one where humanity would have not progressed as broadly as it has.
To fellow African entrepreneurs, I want to say one thing: the more you are exposed to, the bigger you can dream.
Industrialization progressed by further developing what had been done before. Only after working with renowned inventor Thomas Edison, could Nikola Tesla go on to create his own inventions.
Andrew Carnegie worked under the leading businessman, Thomas A. Scott. This mentorship allowed Carnegie to define an era by starting a generation of industrialists, pioneering the philanthropic movement, and becoming an epitome of self-development.
The key word here is exposure.
There are countless occasions where entrepreneurs only discovered their flair by observing other entrepreneurs or studying companies that transformed industries. Some even became competitors of their former employers.
Adrian Gore, the Founder of Discovery Holdings, was exposed to the dealings of the insurance sector early in his career. He worked for Liberty Life but resigned to build his own insurance company. Today, Discovery is the leading medical insurance company in South Africa.
Isn’t it surprising that many companies were started by entrepreneurs who thought they could do it better? Deciding to improve something can shape your destiny. Decisions like these act as the force that pushes us on in our lives.
Look at the former employees of PayPal – today known as the PayPal Mafia. After leaving the famous tech company, these individuals went on to found and fund other mammoth companies like LinkedIn, YouTube, Facebook, Tesla, SpaceX and they are not finished. At the moment, they are investing in Artificial Intelligence.
These gentlemen were exposed to a revolutionary business and they now all share a drive to change the world as we know it to a better world, one that they see in their minds.
Exposure can give you something other than experience, it can also get you through certain doors that were previously shut. Let’s look at two entrepreneurs; both are looking to seal separate deals. Entrepreneur X closes a $1.8 billion deal, while entrepreneur Y gets a $274,000 deal.
Both worked tirelessly to get these deals but the rewards are not the same. It is likely that entrepreneur X has been exposed to certain levels, while entrepreneur Y was operating independently. They might have both known about the $1.8 billion deal, but knowing about it does not mean you have access to it. You need to run in certain circles to get exposed to deals that involve other entrepreneurs in those circles.
What led Aliko Dangote to manufacturing? While trading commodities, he took note of the huge market in Nigeria and decided it was better to manufacture what he was importing.
Before founding Apple, a 12-year-old Steve Jobs landed a summer job at HP and the rest is history. It is this type of exposure that allows entrepreneurs to gravitate towards their destinies.
If you look at the rain, you will never plant. Get out there; attend conferences, travel to various countries, network with successful business leaders and read as much as you can. Whatever you are exposed to can only broaden your current view on the world around you.
By exposing yourself, you also expose your company to other markets and greater opportunities.
You can’t afford to stand idly by and wait for everything to fall in place. Business, and life, is a fight for territory – the moment you stop fighting for what you want, is the moment you will have lost.

Nothing was Achieved  by Being Idle

For over 15 years, I’ve raised money for, invested in, and advised the management of African companies. I’ve worked in sectors as diverse as transportation, agriculture and manufacturing. I’m an advocate for Africa, but I’ve learned some painful lessons along the way.
When I first started operating in Africa it reminded me of a Salvador Dali painting where everything warped and melted into each other. The turmoil wasn’t entirely unexpected though. I had read the negative press over the years: government corruption, widespread poverty, hunger and the aggressive tumors that would metastasize into Al Shabaab and Boko Haram. Even as someone who grew up in New York, doing business in Africa scared me. On Wall Street, Africa was categorized as an “exotic” market; erratic and unpredictable with a disproportionate risk/reward ratio.
You could win really big if you were smart and lose even more if you were unprepared. That was the opportunity. In those days, most emerging markets bankers in the United States (US) would only look at deals in some of the more popular countries, like Brazil or China. But Africa? An investment in Africa would have had many of the so-called experts rolling their eyes at you. The reality was that most folks on Wall Street could barely name five countries there. Asking them to find Djibouti on a map was like asking them to find the hair they had on their head 20 years earlier. That’s when I realized that operating there would differentiate me from everyone else. I was either going to be very right or very wrong. Surely, I thought, if I could operate in New York I could easily do business in Kenya or South Africa. Right?
Wrong.
In the early days, we just couldn’t get it right. As naïve Americans, we were culturally blind toward Africa. It slowly started to occur to us that Africans were unique, depending on the country they were from. Because of our naivety, we were ill-equipped to do business there. Almost every one of our early deals collapsed. Every conversation was misread. Everything we thought would happen, didn’t. And getting paid was as easy as trying to tie your shoes with your teeth.
As time passed, we gradually began to make progress. We congratulated ourselves on finally figuring out the “science” of doing business in Africa. We convinced ourselves that we had arrived – we hadn’t. Closing new debt and equity investments was almost impossible and we continued to struggle and question our methodologies.
Then the epiphany occurred. What dawned on us was that doing business in Africa is not a science, it’s an art.
The African market is full of abstractions and contradictions. It was nearly impossible to create an investment thesis or structure a capital raise like we did in New York. Projecting cash flows and investment returns was like shooting at a moving target. The traditional rules of investing didn’t apply in Africa. It became clear that, if you wanted to do business on the continent, it is more about the people than the transaction. Relationships and trust needs to be developed.
As they say, when in Rome, do as the Romans do. So that’s what we did, except we did it in Africa. We started to adapt our thinking so we were seeing things through an African lens, not an American one. Though it may sound counter intuitive, my African education didn’t come from doing deals there or looking at income statements and balance sheets. It came from dealing with the people – one on one. But not as corporate executives or managers or board members, just as people.
There are a few truths that I Iearned on the continent over the years. In Africa things move slowly, very slowly. What you see is never what you get, you need to adjust as you go. Be ready to negotiate, and renegotiate. Remember, you are an outsider and are in their house. The world you come from and how you do things doesn’t matter. Lastly, respect their diverse cultures.
Africa is a complex continent full of idiosyncrasies most westerners don’t understand. But should you be bold enough to bring your business there remember this essential lesson: when in Africa, do as the Africans do.

Business In Africa Is An Art Not Science

Will the announced nuclear program energize South Africa’s manufacturing and construction?
My background is power engineering. Building power plants across Africa generates as many stories as they do megawatts. It is ironic that, in Africa’s most electrified economy, there are tales of powerless people and an economy running out of juice.
Eskom, South Africa’s national power generator, is cooking with gas (turbines) – at the cost of around $78 million a month – while grinding away at the late completion of the new 9,000MW Kusile and Medupi coal power plants. Medupi’s first 800MW unit is generating power and will be on commercial load in September, with up to 1,600MW coming onto the grid each year for the next five years.
Keep your gas cylinders full and your camping lights charged – there’s more to this story!
South Africa has a 40GW-headache to cure in the next 20 years. The first 10GW is merely to match current demand. Generation capacity is 40GW with only about 30GW available due to the UCLF (unplanned capacity loss factor) being high. The national demand is over 40GW as mines and smelters have shut down to help Eskom. Medupi and Kusile will merely tick this box.
The second 10GW is needed to replace the old coal plants before 2025. They have been run hard well beyond their time. The third 10GW is needed to attract investment for growth and the fourth 10GW is for reserve capacity to allow for maintenance.
Coal may be easier and cheaper, but it’s dirty stuff and our economy has to be environmentally attractive to foreign investment. Few investors will stump up if it will worsen their carbon footprint.
So, 40GW in the next 20 years! Simply put, double Eskom. It has to be greener than ever before too – no dirty coal. That means nuclear topped up with clean coal IPPs. Wind and solar may be very sexy but they don’t deliver the big base load power that we need.
Like it or not, nuclear is the leading renewable energy source and South Africa is in play on the global nuclear stage to procure 9,600MW of nuclear power.
Contrary to the naysayers, nuclear energy’s lifetime cost is lower than most technologies, it’s expensive at the start, but cheaper to run.
South Africa’s nuclear regulatory body has defined that only the safest technology will meet the environmental and safety specifications for any new build program.
Russia, France and China are likely frontrunners, but who has the better and safest kit and who can offer a compelling financial deal? That’s where technology, money, politics and common sense meet in a witches brew.
The International Atomic Energy Authority (IAEA) Integrated Nuclear Infrastructure Review (INIR) sets the readiness criteria for building nuclear plants. A nuclear power plant is split into three main sections: The Nuclear Island, The Conventional Island (Turbine) and the Balance of Plant. South Africa is ready to manufacture and construct on the last two sections, which are similar to the local content of Medupi and Kusile, with some nuclear safety alignment.
The nuclear codes and quality standards take a quantum leap in the Nuclear Island and that is where the nuclear certified contractors like Group Five, Lesedi Nuclear Services and the South African Nuclear Energy Corporation (NECSA) are qualified. The country’s industry will have to partner with the successful vendors to hone those skills, train a workforce and learn from the build program in Europe, China and Russia.
There’s a buzz again. Nuclear vendors expected a request for proposals in August with a preferred Nuclear Vendor Country announced by March. Next year will see tendering for the local manufacturing and construction sector, with contracts signed in 2017 and construction starting in 2018.
The capital expenditure for 9,600MW will be approximately $40 to $50 billion, plus government costs and interest on capital. All this leads to trillions being spent over 15 years. That’s a big number that will reignite local industry and a knowledge economy after the last seven years of power cut misery.
Could we “boom” again?
&nbsp;
Additional reporting from Des Muller, head of Group Five Nuclear Construction Services.

double or quit?

Will the announced nuclear program energize South Africa’s manufacturing and construction?
My background is power engineering. Building power plants across Africa generates as many stories as they do electricity. It is ironic that, in Africa’s most electrified economy, there are tales of powerless people and an economy running out of juice.
Eskom, South Africa’s national power generator, is cooking with gas (turbines) – at the cost of around $78 million a month – while grinding away at the late completion of the new 9,000MW Kusile and Medupi coal power plants. Medupi’s first 800MW unit is generating power and will be on commercial load in September, with up to 1,600MW coming onto the grid each year for the next five years.
Keep your gas cylinders full and your camping lights charged – there’s more to this story!
South Africa has a 40GW-headache to cure in the next 20 years. The first 10GW is merely to match current demand. Generation capacity is 40GW with only about 30GW available due to the UCLF (unplanned capacity loss factor) being high. The national demand is over 40GW as mines and smelters have shut down to help Eskom. Medupi and Kusile will merely tick this box.
The second 10GW is needed to replace the old coal plants before 2025. They have been run hard well beyond their time. The third 10GW is needed to attract investment for growth and the fourth 10GW is for reserve capacity to allow for maintenance.
Coal may be easier and cheaper, but it’s dirty stuff and our economy has to be environmentally attractive to foreign investment. Few investors will stump up if it will worsen their carbon footprint.
So, 40GW in the next 20 years! Simply put, double Eskom. It has to be greener than ever before too – no dirty coal. That means nuclear topped up with clean coal IPPs. Wind and solar may be very sexy but they don’t deliver the big base load power that we need.
Like it or not, nuclear is the leading renewable energy source and South Africa is in play on the global nuclear stage to procure 9,600MW of nuclear power.
Contrary to the naysayers, nuclear energy’s lifetime cost is lower than most technologies, it’s expensive at the start, but cheaper to run.
South Africa’s nuclear regulatory body has defined that only the safest technology will meet the environmental and safety specifications for any new build program.
Russia, France and China are likely frontrunners, but who has the better and safest kit and who can offer a compelling financial deal? That’s where technology, money, politics and common sense meet in a witches brew.
The International Atomic Energy Authority (IAEA) Integrated Nuclear Infrastructure Review (INIR) sets the readiness criteria for building nuclear plants. A nuclear power plant is split into three main sections: The Nuclear Island, The Conventional Island (Turbine) and the Balance of Plant. South Africa is ready to manufacture and construct on the last two sections, which are similar to the local content on Medupi and Kusile, with some nuclear safety alignment.
The nuclear codes and quality standards take a quantum leap in the Nuclear Island and that is where the nuclear certified contractors like Group Five, Lesedi Nuclear Services and the South African Nuclear Energy Corporation (NECSA) are qualified. The country’s industry will have to partner with the successful vendors to hone those skills, train a workforce and learn from the build program in Europe, China and Russia.
There’s a buzz again. Nuclear vendors expected a request for proposals in August with a preferred Nuclear Vendor Country announced by March. Next year will see tendering for the local manufacturing and construction sector, with contracts signed in 2017 and construction starting in 2018.
The capital expenditure for 9,600MW will be approximately $40 to $50 billion, plus government costs and interest on capital. All this leads to trillions being spent over 15 years. That’s a big number that will reignite local industry and a knowledge economy after the last seven years of misery.
Perhaps it will be “boom” again?
&nbsp;
Additional reporting from Des Muller, head of Group Five Nuclear Construction Services.

Double or quit?

Positive news is flowing out of Africa these days. The global consultancy Ernst &amp; Young, now EY, ranks Africa as the world&#8217;s second-most attractive market after North America.
If anyone had asked me, I would have pointed at China as the world&#8217;s second-most attractive market after the United States (US).
Okay, forgive me. China is the world’s biggest factory yard. Can Africa be a base for a global factory and one day rival China’s manufacturing might? Yes it can.
Let’s start with the obvious. African governments certainly need to invest more in healthcare, education and innovation. They need to promote more public and private capital into infrastructure – roads, modern railways, power plants etc. These steps should – all things being equal &#8211; further facilitate intra-Africa trade which also needs to grow. Presently, African nations conduct only about 10% of their trade with each other, according to the World Bank, which also reports that the continent’s share of global trade in value terms currently stands at less than 5%.
A substantial share of the world’s timber, diamonds, gold, cobalt, copper and platinum come out of Africa. Transforming Africa’s raw materials into finished goods before exporting them to the rest of the world would also help.
South Africa already exports German technology (BMW sedans) to the US. Ethiopia has excellent leather and coffee. Kenya produces world-class tea and horticulture. Beyond its crude oil and liquefied natural gas (LNG) exports to international markets, Nigeria’s movie and music industry has practically displaced European and American pop culture across the continent, helping to rekindle African pride, local talent industries and worldwide appetite for indigenous African content.
Foreign firms are all over Africa, scrambling for opportunities. In China’s case, its direct investment in sub-Saharan Africa has jumped from virtually nothing in 2002 to $18.2 billion in 2012. The EYs and McKinseys of this world are only stating the obvious: Africa is a very safe bet for Western and Asian companies, European private equity firms and fund managers from Silicon Valley looking for superior return of investment (ROI). The counterpoint to this fact is to ask how well Africa will harvest its ROI delivery capabilities.
Will Africa take advantage of its unique spot in global trade to improve its society and environment?
Africa’s business and political leaders attending the US-Africa Summit in Washington last August came away with more than $14 billion in investment pledges by American firms.
According to the Brookings Institution, cumulative foreign investment in sub-Saharan Africa grew from $33.5 billion in 2000 to $246.4 billion in 2012. Former New York City mayor, Mike Bloomberg, says it is now factually incorrect to refer to Africa as an emerging region.
“Africa has finally emerged,” he says.
We all, however, need to look beyond the continent’s sweet and sour stories to see this emerging reality. The harsh reality of life in Africa for so long has been one of stagnated growth and arrested development fueled by endemic graft, penury and scarcity in the midst of affluence, painful and unprogressive politics, career militants, religious and ethnic strife, wars, cross-border epidemics, currency constipations, illicit trade, human trafficking and the sheer reluctance of Africa’s elite class to confront the bogey of nepotism.
Thankfully, these harsh realities are being attenuated – at national and sub-national levels – by positive exemplars of economic and social progression and by a new wave of afro-centric thinking which seeks to locate and redefine Africa’s role and position in the evolving global polity.
Practically every corner of the African continent today is adding value to Africa’s new growth story. A McKinsey report released in August 2014 states that the continent is home to eight of the world&#8217;s top 15 fastest-growing economies between 2000 and last year, with growth topped only by East Asia, which includes China.
Several sectors – the entertainment, financial services, telecommunications, information technology and agriculture sectors – have helped to galvanize this growth spurt.
Responsible for most of the foreign investment streaming into Africa, their cumulative contributions to social and economic transformation will continue to spur growth and new jobs. They have been the most receptive to the disruptive influence of innovation. They have helped to define the new picture of Africa rising out of the development woods.

Africa Is A Safe Bet

A cold front is sweeping over Addis Ababa from the Eucalyptus-dotted Entoto mountain range. In the gloom of dawn, I shiver and look out from my hotel window at the derelict shell of a half-finished tower block. As usual I am awake as the early traffic noise begins. Despite the gray pallor of the horizon, I set out and take a morning run across the rutted steps of Meskel Square—my feet splashing in rust-colored potholes.
As the shadows lift on the downtown plaza, a more forgiving light gradually reveals hundreds of young athletes limbering up in the drizzle. I know my limits. I am a mere mortal compared to even the least talented of these local runners—most of whom will finish 30 kilometers in a round trip—a day. Rising at 4AM and running between 5AM and 7AM, with their eye on the Olympic dream, this is their solemn and stark ritual seven days a week. It will take the most dedicated years to let it go.
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I may be a stranger in their midst but I know something of their story. I investigated the plight of Ethiopia’s female athletes in 2008. For them, running represented not only a long shot at riches but an opportunity to escape the blight of child marriage which is still common in far-flung rural areas. The stipends paid to the most talented athletes by local associations also ensured the track was a small source of income in a landscape where jobs for young women were, like gold medals, too often beyond reach.
Today, I notice the warring crowds of female athletes, jostling for position along the concrete terraces that line the square, have thinned out.
“More and more are going to college. They all want to work for Western firms setting up shop here,” my driver scornfully tells me.
I have arrived back in Addis to investigate Ethiopia’s thriving leather export industry just as the Swedish retail giant, H&amp;M, reportedly enters the local market with their first small manufacturing hubs in Africa on the outskirts of the city. Other Western firms, notably the British supermarket giant, Tesco, and the ubiquitous Walmart, are also now, according to local newspapers, manufacturing goods here for the first time. This is welcome news in many ways. I know from experience that jobs in the retail sector fill a vital role employing women—although, as recent history in Asia shows us, it is a sector that does not necessarily empower them.
The garment industry and I have had a combative relationship. While a foreign correspondent based in India, I uncovered children in the supply chain of Gap Inc, prompting relentless international headlines and hurtling me into a campaign to expose abundant retail wrongdoing among other Western manufacturers in unimaginable sweatshops from Karachi to Dhaka and Colombo.
It was an issue I couldn’t even stay away from when I first moved to Africa after I exposed suppliers to both Levi’s and Gap, in the tiny kingdom of Lesotho, who were dumping dangerous garment waste and leaking toxic dyes into the heart of an impoverished HIV-ravaged community. An exposé made all the more startling by the fact that the Gap supplier in question was producing clothing for Product Red—an enterprise entirely designed to help the world’s poorest people.
As a consequence, I find myself sitting in an Addis café reading local headlines heralding the creation of garment manufacturing hubs in Africa with both hope and trepidation.
H&amp;M’s decision to look towards Ethiopia as a new low-cost country to produce clothing does not come as a surprise. After all, it is not a newcomer to the textile and garment industry. The first garment factories in the country were built in 1939, during the fascist Italian occupation.
Africa also has a history of production in the sector. Few Western shoppers realize that Madagascan textile factories continue to make clothes for Inditex, the parent company of Zara, and once did so for Gap Inc as well as other major Western retailers. Tunisia and Morocco has been furnishing high street shelves for decades.
But H&amp;M’s decision to move into Ethiopia has captured the attention of many in the garment trade. It comes at a time when many retailers are relying too heavily on nations like Bangladesh for clothing production—a place where many supply chains are at breaking point. Like other foreign firms, H&amp;M, widely seen as an industry leader, inevitably sees Ethiopia as an opportunity to expand its sourcing footprint in Africa, which could come to represent a major consumer market in itself, and not part of a bigger plan to replace its commitment to production in Asia.
But Asia is causing many retailers serious problems. In Bangladesh, sustainability and a series of deadly factory fires has led to international condemnation of the garment industry. The shelf life of China, at least as a source of cheaply manufactured clothing, also appears to be diminishing. According to the research firm, Sanford C. Bernstein, individual garments manufactured in Ethiopia were half the cost of those in China as of 2011.
The Ethiopian government wants to transform its textile and garment industry and has set an ambitious target of $1 billion in textile exports by 2016. In order to achieve this, it is bringing in foreign investors to modernize machines and factories. Other countries like Kenya, Ghana and Uganda are following suit. Led by commitments by firms such as H&amp;M, the garment industry could partly help such nations achieve the goal of moving from primarily agricultural economies to industrial.
Few in the West realize that Ethiopia is the second-most populous country in sub-Saharan Africa, with an estimated population approaching 92 million. According to the United States Census Bureau, in less than 40 years, Ethiopia’s population will more than triple to 278 million. In perspective, in 1967, the population was just 23.5 million.
But it is also a youthful demographic. Half of all Ethiopians today are between the ages of 15 and 24. Yet according to a 2012 US Agency For International Development study, Ethiopia has one of the highest urban youth unemployment rates in the world at 50%. In a nutshell, Ethiopia, like all African nations, needs manufacturing hubs to deliver jobs to young people and in particular, young women.
In my opinion, for major players like H&amp;M and Walmart, the country also offers the opportunity to learn from the mistakes made by the garment industry as a whole in Asia. Shaping sub-Saharan nations like Ethiopia into retail manufacturing hubs offers Western retailers the chance to wipe the slate clean and to work harder to help local suppliers avoid supply chain exploitation and sustainability issues. Above all it could represent a chance for retailers to offer consumers and stakeholders more transparent insight into their supply chains.
But there is already a flaw in this ideal. Today, the sub-Saharan Africa clothing industry is challenged by the fact that it is only partly African-owned. The clothing industries in Lesotho and Swaziland are in fact owned by Taiwanese consortiums. Similarly, in Kenya and Ethiopia, much of the industry is controlled by Indian and even Mauritian investment. Before it even grows to a recognizable sector, sub-contracting already shapes much of the industry in Africa—as does the inevitable out-sourcing of profits from local operations.
Shane Godfrey, a senior researcher in the Labor and Enterprise Project at the University of Cape Town, recently claimed that many of the garment factories in Africa are part of a triangular manufacturing strategy. So, despite often being very large operations, they do little more than assemble garments made in other nations. In the industry, he claims, they are known as caravan factories that can be easily packed up and moved elsewhere.
Godfrey’s argument is simple. He claims that that while foreign investment should be retained and encouraged, there also needs to be more stringent requirements for skills transfer so that locally-owned manufacturing capacity can develop. Controversial perhaps but the argument that Indian factories in the heart of Ethiopia will, inevitably, be less engaged in emancipating the local population and more engaged in taking out profit is hard to ignore.
Major Western retailers should not think about building schools or investing in clinics but framing corporate social responsibility investments around the training of young women to work in the garment sector and ultimately assisting Ethiopians themselves to create businesses that contribute and profit from the promising retail economy. Simplistically speaking, these firms should also keep a tighter hold on sustainability issues in far flung production hubs, such as the disposal of garment waste, the use of water during dry spells and the application of dyes.
In recent years, my own thought processes, as the outsider trying to encourage change in the garment industry, has evolved with reason and deeper understanding.
I strongly believe that Africa needs to become a manufacturing hub in sectors like retail to capitalize on the youth dividend of nations like Ethiopia. But there also needs to be more social responsibility from major manufacturers, who have been part of problematic supply chains in Asia and are now eyeing Africa as the next source of cheap clothing.
H&amp;M, now the second biggest retailer in the world, was the first company to sign a Europe-led safety pact for Bangladesh garment factories after the collapse of the factory in Rana Plaza. This despite the fact the firm had no suppliers in the building. Helena Helmersson, the firm’s global head of sustainability, has also urged Bangladesh and Cambodia to raise the minimum wage and revise it annually. Such commitments at the outset of any involvement in Africa should be expected.
Underlying this entire issue, the dialogue between the stakeholders involved in these supply chains also needs to be more open, honest and robust. The NGOs, the CEOs, the grassroots communities and the regional and national governments all need to be involved from the outset as Africa begins to process and build goods for the West and we all need to discard the distrust we have of each other and learn from the terrible mistakes made in the sweatshops of Dhaka and Delhi.

Investment Or Exploitation?

Three years ago, as the construction industry cratered, Bill Haney and Maura McCarthy made the curious—maybe crazy— decision to launch a prefabricated home business. Their vision: architect designed, factory-built, single-family dwellings with green accents (including energy-efficient appliances and airtight construction) that appeal to higher-income, eco-conscious buyers. “Yes, the housing market has been decimated,” says Haney, 49. “But if you have the moxie to get going during a recession, you can build something sustainable and significant.” So-called modern prefab had become a staple of home-design magazines during the housing boom. But the economics of mass-producing green homes like Priuses didn’t work.
<div id="attachment_73" style="width: 484px" class="wp-caption alignleft"><img loading="lazy" decoding="async" aria-describedby="caption-attachment-73" class="size-large wp-image-73" src="/wp-content/uploads/2017/04/FO091211_008-1024x683.jpg" alt="" width="474" height="316" />Blu Homes Construction &#8211; Founders Bill Haney &amp; Maura McCarthy at their East Longmeadow, MA manufactory.</div>
For one thing, building houses narrow enough to fit on a truck while still wide enough to live in is no mean engineering feat. Then there was all that custom work. “The options package just grew and grew, and economies of scale were never reached,” says Allison Arieff, former editor-in-chief of Dwell, who wrote the book on prefab in 2002 (Prefab, Gibbs Smith). “The homes ended up being all one-offs.” When overall housing demand tanked, some prefab firms shut their doors. With Blu Homes, headquartered in Waltham, Mass., Haney and Mc- Carthy are building a different model. Their solution: steel and software. Using recycled-steel frames with large hinges, Blu homes fold up to fit on a standard tractor-trailer that handle cargo up to 8.5 feet wide. Fancy software automates design, manufacturing and purchasing. The extra efficiency allows Blu to offer more options and still make a living; doing it all in-house also eliminates confusion among a slew of subcontractors. “You have to control the manufacturing, design, shipping and the finishing,” says McCarthy, 31. “The guys who pack up the thing in the factory have to be the same guys who set it up on-site.” That recipe sounded plausible enough to attract $25 million in funding from investors like Abby Disney, Walt’s grandniece. (Haney keeps a 40% stake.) Blu used some of the proceeds to buy mkDesigns, a high-profile prefab firm founded by San Francisco architect Michelle Kaufmann, giving the company green cachet and some award-winning designs.
Since 2008 Blu has built 28 homes, which sell for between $125,000 and $500,000 (land not included), and has orders for 42 more. McCarthy estimates that Blu’s East Coast operation will be in the black at an annual production of 50 homes, a goal she expects to hit in 2013. Blu is set to open a factory just north of San Francisco this year. And if the housing market nose-dives again? “The general notion that we want to be greener, we want to conserve, we want to be healthier— that’s a cultural trend that has not been thwarted by the economic downturn,” says Haney. Clad often in jeans, sports jacket and a baseball hat, Haney dabbles in documentary films when he’s not cranking out houses. (His latest flick, The Last Mountain, chronicles mountaintop coal mining and stars Robert F. Kennedy Jr.)
<div id="attachment_74" style="width: 484px" class="wp-caption alignleft"><img loading="lazy" decoding="async" aria-describedby="caption-attachment-74" class="size-large wp-image-74" src="/wp-content/uploads/2017/04/FO091211_009-1024x682.jpg" alt="" width="474" height="316" />Blu Homes Construction &#8211; Founders Bill Haney &amp; Maura McCarthy at their East Longmeadow, MA manufactory. Tom Skala, Carpenter, installs kitchen cabinet units on a house nearing completion.</div>
Haney met McCarthy, a venture capitalist who invested in prefab builders, in 2005 at World Connect, a non-profit organization focused on solving health care issues in developing countries. At Blu’s 120,000-square-foot factory outside Springfield, Mass. A 1,650-square-foot model called the Glidehouse (ordered by a retired Boeing engineering executive in Seattle) is under construction. Build time is about six weeks. When finished, the floors and walls will fold up like a corrugated box, and the entire house—from the low-flow toilets to the kitchen sink— will fit on an 8.5-foot-wide trailer. (Unfolded, each of the structure’s two wings measures 18 feet wide by 48 feet long.) Joining the sections and bolting them to a foundation takes a day; spot-painting and other finishing work about a week. (For a diagram of the setup process, see page 52.) Blu architects draw the folding domiciles on a system called CATIA made by Dassault Systèmes. Boeing uses the same program to design and stress-test airliners. When changes are made the algorithms make engineering adjustments, calculate the cost and send a bill of materials to the factory floor.
Blu is rolling out a new interface that allows customers to view models in three dimensions and to preview thousands of options, from the location of the kitchen to the flanges in the Anderson windows. Replacing wood framing with recycled steel allows Blu to build foldable houses that can withstand high winds and heavy snow. Steel also adds flexibility: The absence of load-bearing walls means windows and doors can be placed just about anywhere. Says McCarthy: “It feels much more like building a car than building a stick-built house.”
Indeed the Blu factory resembles a gargantuan assembly line rather than a construction site. The structural steel rolls in from a loading bay, and machines fabricate it into parts that are welded together to form the frame. After the exterior walls are hung the house slides on rollers to another station where workers add interior walls, insulation and the roof. Next comes the drywall, cabinets and bathrooms. The entire house is constructed in the factory; the only work done at the owner’s address is minor painting and woodwork near the folding joints. For two-story models a crane drops the upper floor in place.
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Blu’s customers are clustered on the coasts. To expand, Haney and McCarthy will need to reach more people like Sandra Beer, a fundraiser for a PBS station in Albany, N.Y. and a single mother. Beer bought a 1,008-square-foot Blu Element model last year. A big draw for Beer: never having to deal with an army of contractors. “They gave me a price, and that is something I can control,” she says. Haney and McCarthy have the luxury of patient investors. “The timing is horrible right now,” says Abby Disney, who has put in $3 million. “If you buy Bill’s thesis you might have to wait a while, but things will turn around.
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Tag: Manufacturing

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