When factories close, South Africa loses more than jobs; communities, skills development and long-term economic growth are affected across the entire value chain.
The past few years have been challenging for South Africa’s automotive manufacturing sector, with the economy losing more than 2000 direct jobs following the closure of key tyre factories. The rapid growth of unfairly traded tyre imports is pulling cash-strapped consumers away from established locally manufactured brands in droves, with many hidden long-term effects.
The market share of locally manufactured tyres has declined from 60% in 2016 to 40% by 2024, already triggering a cascade of factory closures. In 2025, Goodyear shut down its Kariega plant after 78 years of operation, leaving Sumitomo, Continental and Bridgestone as the three remaining producers.
Multiplier effect
These 2000 (or more) lost manufacturing jobs should not be viewed in isolation, as their impact has a long half-life throughout the supply chain. It can be argued that manufacturing has the strongest job multiplier effects of any other economic function, serving as the base and a barometer of a healthy economy.
Firstly, according to the UN Industrial Development Organization, one manufacturing job typically creates approximately 2,2 additional jobs in other sectors of the economy. For instance, suppliers of materials e.g. raw materials and other inputs and services including logistics, technology and support services to tyre producers will not be counted among the direct 2000 jobs lost, but their impact will be felt.
Maybe not today, but somewhere down the line. Even the emergence of “smart” manufacturing creates employment in the supply chain. While automation and AI are changing the factory environment, they are also creating opportunities for new skills development, with tyre manufacturers and labour unions working together to build training programmes that strengthen skills capacity and support long-term growth in the tyre industry.
This is due to their reliance on technical services and global export logistics, as even fully autonomous factories still require highly skilled remote operators, service technicians, programmers and data analysts to ensure efficiency and accuracy.
Third-order multiplier
While standard multiplier models capture the immediate supply chain benefits as well as employee consumer spending, they don’t account for the intangible and third-order effects that define long-term structural changes in the economy. Chief among these is the incubation of knowledge and advanced skills that takes place in world-class manufacturing operations.
In addition to their economic contributions, factories effectively serve as learning hubs where workers are trained in specialised techniques that they can then apply in other companies or industries.
Manufacturing is a critical linchpin for innovation, nurturing the coalescence of industry and the academic community, where new scientific theories and experiments can be tested, confirmed and scaled.
Import dumping collapses the system
Over decades, a strong, growing manufacturing sector can fundamentally shift a country’s GDP and employment structure. It not only generates more jobs but also higher-quality, locally relevant expertise. However, when unfair traded imports are allowed to be dumped into a country, apart from the immediate economic and even safety harms, they bring these third-order effects to a grinding halt.
When a factory closes, for instance, local vocational colleges and engineering bursaries typically dry up. Truckers go out of business. Research and development investment ceases, and innovation declines as fewer university programmes clearly linked to a thriving regional manufacturing hub can be sustained. The effects are slow, but they compound.
The bottom line is that if the South African economy is to pull out of its slump, both its short- and long-term job creation policies and strategies need to put manufacturing at their centre.
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