Micro-economic drivers of the South African foundry industry

Abstract

Background: The foundry industry plays an important economic role in South Africa and all efforts should be made to sustain the industry. However, the problem is that many foundries are closing down due to economic factors.Aim: The primary research objective was to identify from literature the micro-economic drivers applicable to the sustainable competitive advantage (SCA) of foundries in South Africa. The secondary objectives were to benchmark the perceptions of stakeholders in the most prominent micro-economic drivers identified from literature.Setting: With micro-economic drivers identified, management can then compile a SCA strategy to retain the industry. Foundry representatives from foundries located in all nine provinces of South Africa were invited to participate in the study.Method: An explanatory sequential mixed-methods approach was followed by first employing a quantitative approach, followed by a qualitative approach to identify the most prominent micro-economic drivers. Descriptive data analysis was utilised for the quantitative data and thematic analysis was utilised for the qualitative phase.Results: It was found that the most prominent micro-economic drivers are product quality, the ability to innovate, employees’ skills development, and investment in plant infrastructure.Conclusion and contribution: The article contributes towards the deficiency in literature by presenting the most prominent micro-economic drivers for the South African foundry industry. The article also makes recommendations on SCA strategies for foundries in South Africa based on the four micro-economic drivers.

Macroeconomic drivers affecting the foundry industry in South Africa

“…An industry that can substantially contribute towards job creation is the foundry industry (Phiri, Tolmay & Van Schalkwyk 2023). The metal foundry industry in South Africa is key in the supply of castings used predominantly in the manufacturing sector which includes the mining and automotive industries and has been faced with several challenges which have either resulted in the downsizing and/or closure of foundry companies (Phiri et al 2023;Statistics South Africa 2023).…”

“…Wang (2021:1) suggests that a better comprehension of SCA is crucial for firms that seek 'consistent growth'. Although factors internal to the firm (micro-economic factors) can influence competitiveness (Phiri et al 2023), research has also shown that the macroeconomic factors are also critical in 'facilitating or impeding the firm's ability to compete' (Siudek & Zawojska 2014:102-103). A strategic core concern for management should be understanding how a firm's macroeconomic conditions affect its long-term competitiveness (Phiri et al 2023).…”

“…Although factors internal to the firm (micro-economic factors) can influence competitiveness (Phiri et al 2023), research has also shown that the macroeconomic factors are also critical in 'facilitating or impeding the firm's ability to compete' (Siudek & Zawojska 2014:102-103). A strategic core concern for management should be understanding how a firm's macroeconomic conditions affect its long-term competitiveness (Phiri et al 2023). The study reported in this paper focuses on the macroeconomic factors influencing the sustainable competitiveness of foundries in South Africa and as a delimitation, the microeconomic drivers will not be addressed in this article.…”

“…A thorough review of the literature has revealed that the scant research on the foundry industry either examines entire quality management concerns (Boikanyo & Heyns 2019), the management of waste (Iloh, Fanourakis & Ogra 2019), energy consumption (Energy Intensive Users Group of Southern Africa 2017; Haraldsson & Johansson 2019;Rasmeni & Pan 2014 ), or foundry production efficiencies (Srivastava, Tiwari & Singh 2020). Research on the impact of macroeconomic factors on sustainable competitiveness is scarce (Phiri et al 2023).…”

“…Studies that have attempted to investigate competitiveness have invariably neglected the issue of sustainability of competitive advantage in favour of a single micro or macroeconomic cause (Phiri et al 2023). Hence, there is a scarcity of research on SCA versus macroeconomic causes that is the focus of this study.…”