South Africa’s manufacturing industry may be in jeopardy as the Rand continues to strengthen, warned Bill Cooper, Dorbyl chief executive.

South Africa’s manufacturing industry may be in jeopardy as the Rand continues to strengthen, warned Bill Cooper, Dorbyl chief executive.

Cooper, who is also chairman of automotive components manufacturing organisation Naacam, said this was because the strong rand had made many hard-won export orders unviable.

"At R13,86 to the dollar, the rand was clearly undervalued, but at R7 to the dollar it is massively overvalued. We have allowed our currency first to go berserk in one way, and then in the other," he said.

Based on the rand’s recent strengths, Dorbyl was being forced to get rid of 700 jobs, about 20 per cent of the company's automotive components business workforce. This was a trend being seen across the components industry, Cooper said.

He contrasted SA's volatile currency with that of China and other Asian competitors, which pegged their currencies to the US dollar to retain a globally competitive edge.

"Virtually nothing is made in the US anymore; it is almost all made in southeast Asia. The Chinese keep their currency undervalued so they can export to the rest of the world, as Japan did for 20 years, and other Asian currencies are pegged to the dollar as well," said Cooper.

"But we in SA have allowed our currency to appreciate 60 per cent to 70 per cent in the past nine months.

"Some people are shutting their doors, with losses of 100 per cent of the workforce, and more companies face bankruptcy. Unemployment surely should be the biggest political imperative in SA, but they (government) never seem to be worried at all."

Cooper said that with the mining sector predicting job losses of 70 000 to 80 000 he expected manufacturing to face job losses in the order of 20 000 to 30 000.

Because South African exporters were competitive to the dollar at R7 three years ago, it was unrealistic for government to suggest that this still holds true, Cooper said.

Original article from Car