The Department of Trade and Industry in South Africa (DTI) recently held their 2nd Industrial Parks Symposium. The theme, as laid out by DTI Director General Lionel October was focused on industrial parks as the vital engine towards industrialization and transformation. This is seen as a much-needed strategic approach to economic development in South Africa. There were a number of interesting discussions around ecosystem and value chain development. It all comes down to making things practical and accessible from a development perspective.
Practicality and accessibility is a key element that was echoed by a number of attendees, representing amongst others, state owned industrial parks at various stages of development. In the current challenging environment of political and economic instability, not to mention climate change, can industrial parks create a safer haven for small manufacturing businesses to develop, unleashing the much-desired economic development? We explored this in two sessions.
What are the critical success factors for businesses to not only survive but thrive? Having industry park and cluster wide cooperation, data transparency and strong innovative centers of excellence have all been highlighted as essential requirements to create a good ecosystem. There is a focus on encouraging innovation, resource efficiency and sustained growth. Working within a robust industrial ecosystem can have important environmental and sometimes even social impacts, leading to strong socio-economic development. This means that industry parks must be designed and developed with future focus in mind.
- Be transparent while harnessing the power of a collective. Ecosystems can create more robust, efficient manufacturing loops while treating waste as a resource.
- Working with key members of the value chain can positively support trade, particularly when leveraging resources. Develop partnerships with other industries to trade by-products.
- Support tenants to increase efficiency of their manufacturing processes – leverage programs like those offered by NCPC.
- Reduce virgin materials and energy, while becoming resource efficient. Reuse or substitute with eco-friendly materials to conserve resources.
- Incorporate items like energy supply within the ecosystem. This is essential to growth, particularly in decentralized areas.
Data driven economies
It is widely recognized that we live in an era where data is key but accessing, managing and analyzing it are separate things. Juxtaposed to this is the relative cost of data management and the infrastructure needed, particularly in a South African context. How can small businesses engage in this environment, become globally competitive and overall thrive? Industrial parks may present an option where shared infrastructure becomes a gateway platform. But then the parks have to come to the party. Key points to leverage include:
- Establishing an open dialogue with tenants – not to push their agenda but to understand key tenant business requirements.
- Getting technology buy-in. Both the parks and tenants have to see this as a gateway to future development and understand what this means from a medium to longer term perspective.
- An audit has to be done to assess the state of both the park and the tenants for a data driven economy. What are the needs and costs?
- Where to start. Access to expertise is needed. What systems are out there, what is robust and what is most appropriate for purpose?
Value add services
But perhaps the strongest bridge lies with the industrial parks management agencies offering value add support services, evolving from a landlord-tenant relationship. This relationship represents a significant opportunity for economic development by leveraging pivotal services that offer operational value. To maximize impact, industrial parks may need to consider a more strategic approach, particularly in decentralized areas to attract and incentivize new tenants. Items to consider include identifying key local industries, developing a profile of desired tenants and knowing what value added services are essential to attract and retain these tenants. All of these come down to a strong engagement strategy. Once they enter the park, a retention strategy needs to kick in. Some of the key drivers include:
- Supporting compliance and good governance structures.
- Identify essential basic service offerings such as legal, accounting, labour brokers.
- Creating an engagement forum / platform for tenants to engage with each other and the park – identify key lessons learned and benchmarking opportunities.
- Future value add focus with the parks invested in SMME growth.
What role can industry parks management agents play in this economic agenda? Should you transition beyond landlord status? The answer is yes and the gateway is through value add services. If you build it they might not come but if you cater to their needs, you could become first choice!