Manufacturers should use rand strength to their advantage by investing in new technology to become more competitive in the long term, rather than lobby for "short-term gains" that may flow from a weaker rand, says Ian Cruickshanks, Nedbank Treasury head of strategic research.

Some manufacturers and labour unions lobby for government intervention to weaken the rand, although it is understood this is not getting any attention at Nedlac. And some think a weaker rand will help gain global market share and increase employment, but not organised business.

Guy Harris, facilitator of the manufacturing circle and proponent of a weaker rand, says that despite manufacturers' efforts to be more competitive since the early 1990s, structural economic challenges will continue to make life difficult for manufacturers.

"Locational disadvantage" means exporters face huge international logistical costs while transport is not efficient. Small neighbouring markets offer little opportunity for local producers to reach economies of scale.

A weaker rand is seen as a "leg-up" to help level the playing field with international competitors. "We need a step change in the level of the rand - a gradual shift from R7.30 to R7.50 won't help anyone," says Harris. But Cruikshanks prefers targeted support structures for manufacturing to relying on the rand to solve manufacturers' woes.

"Infrastructure has to be made available at the right time and place, and a friendly tax regime is needed.

"Incentives have to be structured on an industry-by-industry basis . if we want to compete globally."

Rand weakness will lead to higher inflation and interest rates, he says. "You will price yourself out of business very soon. We can either take the short-term view and go for the quick gain, or we can have a more long-term view, and follow the examples of China and South Korea. What they did was to invest in technology when they could afford it. We haven't ... We're stuck with this short-term, looking for a quick gain attitude," Cruickshanks says.

Atlantic Asset Managers warned this week an "apparently weak government that appears to be caving in to public sector demands will only continue to exacerbate the structural inflation and sub-trend growth problems".

"If not supported by a commensurate productivity gain, weakening the rand will only continue to mask a weak, unproductive, way-too-powerful labour force, moving us ever further away from our lofty ambitions of mirroring the BRIC (Brazil, Russia, India and China) performance."