For years, the story of South African manufacturing was mostly about load-shedding. But now, as we reach mid-2026, the blackouts have mostly eased, only to be replaced by a bigger challenge: rising input costs that could undo much of the country’s industrial gains.
Electricity is more stable than before, but running factories has become really expensive. Manufacturing accounts for over 12% of South Africa’s GDP, yet right now it’s stuck between falling local demand and a global supply chain that feels unpredictable and unfair, at least according to industry experts.
The metals and engineering sector is bearing the brunt of this. The Steel and Engineering Industries Federation of Southern Africa says upstream steel production is down 12% from last year. This isn’t just a minor setback. It suggests there’s a deeper problem.
Some companies, like Ferroglobe, have even said their South African operations are barely hanging on. It’s ironic: electricity is available now, but higher tariffs have made energy-heavy industries like smelting very hard to sustain. When energy costs jump and global steel demand shrinks, keeping manufacturing afloat gets very tough.
It’s not just factory costs that are rising. Shipping goods to ports stays expensive despite reforms at Transnet. Global issues like tensions between the US and Iran have pushed Brent crude oil prices near $70 a barrel this April, which hits manufacturers through higher fuel and shipping costs.
See also: The South African startup that is making powerful AI run without data centres
Trade barriers are also making it harder to access the information manufacturers used to rely on. Aggressive tariffs from the US and Europe mean South African exporters are losing ground in key markets. SEIFSA’s CEO Tafadzwa Chibanguza calls this a “crisis-level” problem, with capacity utilization down to 74%—the lowest since 2008’s financial crisis.
But not all sectors are struggling. While heavy manufacturing faces these pressures, industries like automotive and renewable energy show some promise. After President Ramaphosa’s 2026 State of the Nation Address, a 150% tax deduction for investments in New Energy Vehicles has boosted local production.
Companies like BMW and Toyota are changing their assembly lines to keep up with growing electric vehicle demand. In special economic zones, the focus seems to be on steady growth rather than the decline seen in steel plants.
The coming months will be crucial for the many small and medium businesses that don’t have the resources of big manufacturers. The Industrial Development Corporation has promised billions in funding for SMEs, but real improvements depend on bigger shifts, like creating a more competitive energy market to help lower electricity tariffs.
South Africa’s manufacturing sector has bounced back before, but this time feels different. It’s no longer just about being tough; manufacturers need enough flexibility to manage rising costs and find solutions that actually work here at home.
