South Africa’s manufacturing output fell by 4.3% in the second quarter of 2026. That is the headline. But the real story lies beneath the numbers.

It would be comforting to blame the decline on weak global demand, a slow economy or another temporary downturn. Unfortunately, that would ignore what has been happening to manufacturing for many years. The latest figures are not an isolated setback. They are another sign of an industry that has been steadily losing its ability to compete.

The uncomfortable truth is that South Africa has been drifting towards deindustrialisation for a long time.

Manufacturing has always mattered because it creates value. It transforms raw materials into finished products, supports skilled employment, drives innovation and stimulates dozens of other sectors, from transport and engineering to business services. Countries that have built lasting prosperity have almost always developed strong manufacturing bases.

South Africa once had one of the most diversified manufacturing sectors on the African continent. Today that advantage is steadily eroding.

The reasons are hardly a mystery.

Electricity remains one of the biggest burdens. Manufacturers depend on reliable, affordable power. Instead they have faced years of escalating tariffs, supply interruptions and uncertainty. Even though load shedding has eased, electricity costs continue to rise well above inflation. For energy-intensive industries such as steel, metals and chemicals, that is enough to wipe out already thin profit margins.

Then comes the challenge of moving goods.

Factories cannot survive if raw materials arrive late or finished products sit for days waiting to leave congested ports. South Africa’s deteriorating rail network, inefficient ports and ageing road infrastructure have steadily pushed logistics costs higher. Every additional delay makes locally produced goods less competitive against imports arriving from countries with far more efficient supply chains.

These rising costs are squeezing manufacturers from every direction.

But there is another problem that receives less attention.

South Africa appears to have lost much of its competitive edge. Research by Harvard’s Growth Lab has pointed to a long-term decline in the country’s manufacturing exports, suggesting that this is not simply another business cycle but a structural weakening of the sector itself.

Employment figures tell a similar story. Manufacturing employed around 1.4 million people in 2005. By 2021 that number had fallen to roughly 1.09 million. That represents more than 300,000 jobs disappearing from one of the sectors traditionally capable of creating skilled and semi-skilled employment.

Many of those jobs have not been replaced by new industries. Instead, South Africa has become increasingly dependent on imported manufactured goods that local factories once produced themselves.

Some argue that globalisation made this inevitable. There is certainly some truth in that. Manufacturers everywhere have had to compete with lower-cost producers, particularly in Asia.

However, many countries have adapted by improving productivity, investing in infrastructure, modernising factories and creating policy certainty. South Africa has struggled on all four fronts.

Government has not been entirely absent. The automotive industry demonstrates that targeted support can produce internationally competitive manufacturing. Yet success in one sector has not translated into a broader industrial revival. Too much of manufacturing has been left to cope with rising costs, unreliable infrastructure, regulatory uncertainty and weak domestic demand.

Picking a handful of winners is not the same as building a resilient manufacturing economy.

Yet it would be unfair to paint the entire manufacturing landscape with the same brush. There are still pockets of excellence proving that South African manufacturers can compete with the best in the world. Alberton-based Van Tuyl Kilns is one such example. The company has built a successful export business supplying specialised industrial kilns to Australia and other international markets. It has done so by focusing on engineering excellence, product quality and customer service while continuing to manufacture locally despite the familiar challenges of rising electricity costs and logistics bottlenecks. Companies like this demonstrate that South Africa is not short of engineering talent or entrepreneurial spirit. What it lacks is an environment in which many more manufacturers can achieve similar success.

The concern is not simply that factories are producing less this year. It is that South Africa risks losing capabilities that are extremely difficult to rebuild once they disappear. When factories close, skills are lost, supplier networks break apart, investment dries up and younger workers look elsewhere for opportunities.

Reindustrialisation is possible, but it becomes more expensive and more difficult the longer decline is allowed to continue.

That is why the latest manufacturing figures deserve more attention than they have received. They are not simply another disappointing economic statistic. They are another warning that the country’s productive base continues to weaken.

Without reliable and competitively priced electricity, efficient transport infrastructure, policy certainty and a renewed commitment to improving productivity, South Africa will continue importing more of what it once made itself.

The 4.3% decline is therefore not the story.

It is merely the latest crack in a foundation that has been weakening for years.

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