Date: 14/08/2003
Source: Department of Trade and Industry
Title: Hendricks: National Quality Conference
KEYNOTE ADDRESS BY THE DEPUTY MINISTER OF TRADE AND INDUSTRY, MRS LINDIWE HENDRICKS, AT THE NATIONAL QUALITY CONFERENCE OF THE SOUTH AFRICAN SOCIETY FOR QUALITY (SASQ), 14 August 2003
"QUALITY IS THE KEY TO GLOBAL COMPETITIVENESS"
Programme Director
Ladies and Gentlemen
Thank you for giving me the opportunity to address you today on the link between Quality and Global Competitiveness. For a country, industry or business to be successful in the modern economy it is important that the decision makers in each of these areas understand where the globally economy is moving, so that they can make the right decisions in order to achieve the desired growth. In particular there is a need for governments to ensure that the strategies, policies and support measures that they adopt take cognisance of the global economy and how best to support its industries to be successful in the international market.
If you look at the South African economy prior to 1994 where we had a very closed and inward looking economy, and when you compare it to the situation today, you will see how far we have come especially in terms of our levels of engagement with the global economy. In 1994 we recognised these problems and saw the need to structurally transform our economy and open it up to international competition; since then we have taken a number of policy measures to promote this change. For example, this led us to reduce tariffs, become part of multilateral trade organisations and ensure that our incentives were World Trade Organisation (WTO) compliant. It also resulted in us negotiating and signing many new trade agreements and establishing trade relations with new trading partners. The impact of this has seen our levels of international trade grow from approximately R167 billion in 1994 to R467 billion in 2001.
Engaging with the global economy has put a new set of requirements on businesses not only because breaking into a competitive international market is tough, but also because our own markets have started to open up and our businesses are now competing internationally in their own domestic market. As a result of the greater number of players in the market we see that firms are competing more on quality and value addition - especially as consumers, business and government are becoming more quality aware and in most cases good quality is the expected standard rather than the exception.
Our increased openness has meant that South Africa is affected more by what happens in the global economy and it is therefore necessary for us to ensure that we maximise the benefits of globalisation. For this and other reasons, the Department of Trade and Industry (the dti) found it necessary to develop a vision of where we want to lead the South African economy and also provide the necessary support to industries and businesses for the changes that need to take place in the economy. This vision is contained in our Integrated Manufacturing Strategy (IMS) that was released last year. The IMS is linked to quality and I will explain this shortly. Before doing so I would like to outline the key aspects of the Integrated Manufacturing Strategy, and our vision, which are:
Firstly, to improve market access for South African products in key markets. Such markets include other countries in Southern Africa, Europe and America. Already we have been successful in improving our customs arrangements with Botswana, Namibia, Lesotho and Swaziland. Through the New Partnership for Africa's Development (NEPAD) and participation in the Southern African Development Community (SADC) we are improving trade relations with other countries in Africa. South Africa has also signed a trade agreement with the European Union, which has brought many benefits to South African exporters. The Africa Growth and Opportunities Act (AGOA) that was implemented by America has also played an important role in improving amongst other things South African textiles and clothing exports into that market.
Secondly, promote beneficiation and value addition of our resources. South Africa has in the past failed to beneficiate many of the natural resources that are present in this country and these primary products are often exported as raw or semi-processed goods. There are many opportunities to increase the value of these products before they are exported and by doing this create wealth, new enterprises and employment. In addition, South Africa has excellent human resources and the knowledge that these experts have acquired in areas such as mining and mining technology, the construction sector or converting gas to liquid fuel has huge market potential.
Thirdly, encourage big corporations and large companies to make greater use of small businesses. This is not only for equity purposes but also because internationally it has been shown that outsourcing and using small businesses as suppliers are a more efficient and flexible way of running an organisation.
Fourthly, find ways of capturing knowledge and using this information to our advantage. Increasingly knowledge has become a commodity and people with information on how things can be done or how they can be done better are at an advantage in a very competitive global economy. This 'knowledge-intensity' amongst other things would require greater use of technology.
Fifthly, greater integration between the different sectors in our economy so that they add value to each other. This involves greater communication and interaction between firms in related sectors and industries so that collectively they can become more efficient and competitive. This includes the means through with businesses interact with each other such as transport systems, telephones, e-mails, integrated computer networks, etc. A good example of this is how South Africa is using a combination of natural resources, cheap energy, a pleasant living environment, port infrastructure and government services to attract major international investors to Port Elizabeth.
Sixthly, promote specific sectors that have been identified as both being competitive for South Africa and having international potential. These are clothing and textiles, agro-processing, metals and minerals, tourism, automotive and transport, crafts, chemical and biotechnology, and knowledge-intensive services.
The underlying premise behind all of these aspects of the IMS is that we are increasingly being integrated into the global economy, and as I have already mentioned, our businesses need to become more export orientated and be able to effectively compete with imports in the domestic market. Therefore, companies must be more competitive in order to survive in the modern business environment. There are three factors that are necessary for this competitiveness and they are; one, ensuring that the quality of our products and services are up to international standards, if not better; two, that the prices for these goods and services are right; and three, that we get the goods to market on time with the quantities that are required.
Quality is an expectation that people have when they buy their products and services from any company no matter the size or ownership status of that company. Furthermore, the environment has changed and firms and consumers are not only looking at the quality of the product or service that they are receiving but also at the overall approach to quality that the entire company has. This places the responsibility of having quality standards in a company not only on the quality manager but firmly on desk of chief executives.
South Africa has come a very long way over the past few years in its approach to quality and more and more chief executives are taking this issue very seriously. We have achieved some notable successes on the quality front; one example of this is the success that Daimler Chrysler in East London had by being the second best in terms of quality in the production of vehicles across the Daimler Chrysler group worldwide.
Given the importance of quality and the relevance of quality to the dti's strategy it should come as no surprise that the dti puts substantial resources into institutions that support and promote quality in South Africa. The dti also has several incentives that are linked to improvements in the competitiveness and quality of a company.
Some of the support that the dti gives in this area is:
* Support to the South African Quality Institute (SAQI). An institution that you should all be familiar with as they are playing a leading role in the promotion of quality in South Africa, and are closely connected to the organisers of this conference, SASQ
* Funding to the CSIR, which has played an important role in the development of new technologies including those related to improving quality standards
* Funding to the South African Bureau of Standards (SABS). The SABS which in addition to setting minimum quality standards for most of our manufactured goods is also a key institution in the certification of firms according to international standards i.e. ISO 9000 or ISO 14000. I would also like to mention that the SABS has also played an important role in assisting over 800 small businesses across the country to improve their capabilities and quality standards by subsidising the costs of their ISO certification, product testing, skills training in standardisation, and product certification
* Support to the Manufacturing Advisory Centre (MAC) programme, which assists businesses with advice and support on how to become more competitive. This programme has consistently been successful in the support provided to SMMEs and the programme is now being established in all provinces of South Africa
* Support to Ntsika Enterprise Promotion Agency, which is one of the dti agencies that offer business development and support services to SMMEs and has over the years worked in the area of encouraging smaller enterprises to improve their quality. This has involved running training courses on quality, introducing aspects of quality into their other training programmes, and working with the dti and other organisations to establish a set of standards for quality in small businesses
* There are several incentives that the dti offers to businesses for amongst other things quality improvements. These include the Competitiveness Fund, the Black Business Supplier Development Programme (BBSDP), the Technology and Human Resources for Industry Programme (THRIP), and the Support Programme for Industry Innovation (SPII). These incentives amongst others assist businesses with resources to enable them to improve their operations and modernise their businesses. My colleagues from the dti who are giving presentations later today will provide you with more information on how these incentives work.
To conclude, it is clear that the future of any economy, industry and business is tied into the global economy. If a business wants to be successful in today's business environment then they need to be quality aware and quality driven. The dti has recognised the importance of quality and it is key component of our strategy because without focusing on quality we will not be able to successfully engage with the international market or even the domestic market. To this end you have heard today how we are putting significant resources into supporting quality and that this support comes in a number of different forms. Our seriousness about quality issues not only extends to the support that we give to industry but also into the offices of the Minister and Deputy Minister of Trade and Industry. We have hanging in the entrance of our ministerial offices in Pretoria a certificate from SAQI, which pledges us to quality, as well as our officials adopting a number of mechanisms to improve the quality of our operations through the use of the South African Business Excellence Model.
I thank you and hope that your deliberations today are successful.
Issued by Department of Trade and Industry
14 August 2003
Source: Department of Trade and Industry
Title: Hendricks: National Quality Conference
KEYNOTE ADDRESS BY THE DEPUTY MINISTER OF TRADE AND INDUSTRY, MRS LINDIWE HENDRICKS, AT THE NATIONAL QUALITY CONFERENCE OF THE SOUTH AFRICAN SOCIETY FOR QUALITY (SASQ), 14 August 2003
"QUALITY IS THE KEY TO GLOBAL COMPETITIVENESS"
Programme Director
Ladies and Gentlemen
Thank you for giving me the opportunity to address you today on the link between Quality and Global Competitiveness. For a country, industry or business to be successful in the modern economy it is important that the decision makers in each of these areas understand where the globally economy is moving, so that they can make the right decisions in order to achieve the desired growth. In particular there is a need for governments to ensure that the strategies, policies and support measures that they adopt take cognisance of the global economy and how best to support its industries to be successful in the international market.
If you look at the South African economy prior to 1994 where we had a very closed and inward looking economy, and when you compare it to the situation today, you will see how far we have come especially in terms of our levels of engagement with the global economy. In 1994 we recognised these problems and saw the need to structurally transform our economy and open it up to international competition; since then we have taken a number of policy measures to promote this change. For example, this led us to reduce tariffs, become part of multilateral trade organisations and ensure that our incentives were World Trade Organisation (WTO) compliant. It also resulted in us negotiating and signing many new trade agreements and establishing trade relations with new trading partners. The impact of this has seen our levels of international trade grow from approximately R167 billion in 1994 to R467 billion in 2001.
Engaging with the global economy has put a new set of requirements on businesses not only because breaking into a competitive international market is tough, but also because our own markets have started to open up and our businesses are now competing internationally in their own domestic market. As a result of the greater number of players in the market we see that firms are competing more on quality and value addition - especially as consumers, business and government are becoming more quality aware and in most cases good quality is the expected standard rather than the exception.
Our increased openness has meant that South Africa is affected more by what happens in the global economy and it is therefore necessary for us to ensure that we maximise the benefits of globalisation. For this and other reasons, the Department of Trade and Industry (the dti) found it necessary to develop a vision of where we want to lead the South African economy and also provide the necessary support to industries and businesses for the changes that need to take place in the economy. This vision is contained in our Integrated Manufacturing Strategy (IMS) that was released last year. The IMS is linked to quality and I will explain this shortly. Before doing so I would like to outline the key aspects of the Integrated Manufacturing Strategy, and our vision, which are:
Firstly, to improve market access for South African products in key markets. Such markets include other countries in Southern Africa, Europe and America. Already we have been successful in improving our customs arrangements with Botswana, Namibia, Lesotho and Swaziland. Through the New Partnership for Africa's Development (NEPAD) and participation in the Southern African Development Community (SADC) we are improving trade relations with other countries in Africa. South Africa has also signed a trade agreement with the European Union, which has brought many benefits to South African exporters. The Africa Growth and Opportunities Act (AGOA) that was implemented by America has also played an important role in improving amongst other things South African textiles and clothing exports into that market.
Secondly, promote beneficiation and value addition of our resources. South Africa has in the past failed to beneficiate many of the natural resources that are present in this country and these primary products are often exported as raw or semi-processed goods. There are many opportunities to increase the value of these products before they are exported and by doing this create wealth, new enterprises and employment. In addition, South Africa has excellent human resources and the knowledge that these experts have acquired in areas such as mining and mining technology, the construction sector or converting gas to liquid fuel has huge market potential.
Thirdly, encourage big corporations and large companies to make greater use of small businesses. This is not only for equity purposes but also because internationally it has been shown that outsourcing and using small businesses as suppliers are a more efficient and flexible way of running an organisation.
Fourthly, find ways of capturing knowledge and using this information to our advantage. Increasingly knowledge has become a commodity and people with information on how things can be done or how they can be done better are at an advantage in a very competitive global economy. This 'knowledge-intensity' amongst other things would require greater use of technology.
Fifthly, greater integration between the different sectors in our economy so that they add value to each other. This involves greater communication and interaction between firms in related sectors and industries so that collectively they can become more efficient and competitive. This includes the means through with businesses interact with each other such as transport systems, telephones, e-mails, integrated computer networks, etc. A good example of this is how South Africa is using a combination of natural resources, cheap energy, a pleasant living environment, port infrastructure and government services to attract major international investors to Port Elizabeth.
Sixthly, promote specific sectors that have been identified as both being competitive for South Africa and having international potential. These are clothing and textiles, agro-processing, metals and minerals, tourism, automotive and transport, crafts, chemical and biotechnology, and knowledge-intensive services.
The underlying premise behind all of these aspects of the IMS is that we are increasingly being integrated into the global economy, and as I have already mentioned, our businesses need to become more export orientated and be able to effectively compete with imports in the domestic market. Therefore, companies must be more competitive in order to survive in the modern business environment. There are three factors that are necessary for this competitiveness and they are; one, ensuring that the quality of our products and services are up to international standards, if not better; two, that the prices for these goods and services are right; and three, that we get the goods to market on time with the quantities that are required.
Quality is an expectation that people have when they buy their products and services from any company no matter the size or ownership status of that company. Furthermore, the environment has changed and firms and consumers are not only looking at the quality of the product or service that they are receiving but also at the overall approach to quality that the entire company has. This places the responsibility of having quality standards in a company not only on the quality manager but firmly on desk of chief executives.
South Africa has come a very long way over the past few years in its approach to quality and more and more chief executives are taking this issue very seriously. We have achieved some notable successes on the quality front; one example of this is the success that Daimler Chrysler in East London had by being the second best in terms of quality in the production of vehicles across the Daimler Chrysler group worldwide.
Given the importance of quality and the relevance of quality to the dti's strategy it should come as no surprise that the dti puts substantial resources into institutions that support and promote quality in South Africa. The dti also has several incentives that are linked to improvements in the competitiveness and quality of a company.
Some of the support that the dti gives in this area is:
* Support to the South African Quality Institute (SAQI). An institution that you should all be familiar with as they are playing a leading role in the promotion of quality in South Africa, and are closely connected to the organisers of this conference, SASQ
* Funding to the CSIR, which has played an important role in the development of new technologies including those related to improving quality standards
* Funding to the South African Bureau of Standards (SABS). The SABS which in addition to setting minimum quality standards for most of our manufactured goods is also a key institution in the certification of firms according to international standards i.e. ISO 9000 or ISO 14000. I would also like to mention that the SABS has also played an important role in assisting over 800 small businesses across the country to improve their capabilities and quality standards by subsidising the costs of their ISO certification, product testing, skills training in standardisation, and product certification
* Support to the Manufacturing Advisory Centre (MAC) programme, which assists businesses with advice and support on how to become more competitive. This programme has consistently been successful in the support provided to SMMEs and the programme is now being established in all provinces of South Africa
* Support to Ntsika Enterprise Promotion Agency, which is one of the dti agencies that offer business development and support services to SMMEs and has over the years worked in the area of encouraging smaller enterprises to improve their quality. This has involved running training courses on quality, introducing aspects of quality into their other training programmes, and working with the dti and other organisations to establish a set of standards for quality in small businesses
* There are several incentives that the dti offers to businesses for amongst other things quality improvements. These include the Competitiveness Fund, the Black Business Supplier Development Programme (BBSDP), the Technology and Human Resources for Industry Programme (THRIP), and the Support Programme for Industry Innovation (SPII). These incentives amongst others assist businesses with resources to enable them to improve their operations and modernise their businesses. My colleagues from the dti who are giving presentations later today will provide you with more information on how these incentives work.
To conclude, it is clear that the future of any economy, industry and business is tied into the global economy. If a business wants to be successful in today's business environment then they need to be quality aware and quality driven. The dti has recognised the importance of quality and it is key component of our strategy because without focusing on quality we will not be able to successfully engage with the international market or even the domestic market. To this end you have heard today how we are putting significant resources into supporting quality and that this support comes in a number of different forms. Our seriousness about quality issues not only extends to the support that we give to industry but also into the offices of the Minister and Deputy Minister of Trade and Industry. We have hanging in the entrance of our ministerial offices in Pretoria a certificate from SAQI, which pledges us to quality, as well as our officials adopting a number of mechanisms to improve the quality of our operations through the use of the South African Business Excellence Model.
I thank you and hope that your deliberations today are successful.
Issued by Department of Trade and Industry
14 August 2003
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