Manufacturing in South Africa is in serious trouble and the situation continues to worsen. The sector's share of the economy has shrunk from 20% in 1983 to 16% in 2013.If nothing is done by our policymakers, the situation is certain to be dire in 2023, when, as a country, we will be expected to have created many more jobs.But current conditions are a recipe for disaster, especially if the rand should continue its downward spiral.Concretely, what are the challenges facing manufacturing?A growing number of manufacturers, but especially companies in the metals and engineering sector, are simply unable to compete against the deluge of cheap imports flooding South Africa.This is not because they lack experience, are not sufficiently sophisticated or rely on antiquated technology. They have a variety of factors working against them.For a start, much of the international competition facing them is unfair in nature and the playing field is uneven. Many of the Asian imports they compete against are directly or indirectly subsidised by governments whose primary concerns are creating jobs for their citizens and improving their balance of payments.Generally, their input costs are also much lower than those faced by their South African counterparts, who are lumbered with relatively higher labour costs for the same calibre of unskilled or low-skilled employees, and ever-spiralling administered costs.In the metals and engineering sector in particular we have seen a growing number of smaller, mostly family-owned, companies closing down in the past few years. Formal employment levels have declined from 413515 in 2007 to 374959 in 2014.Before the dawn of democracy in 1994, South Africa was a pariah among civilised nations, with few countries openly trading with it. Its economy was insular, with high tariffs in place to protect local business.Being part of the civilised international community presented South African business with an opportunity to access new markets abroad, but it also exposed sheltered local business to aggressive international competition.Full membership of the international community and its structures such as the World Trade Organisation meant the high protective tariffs that had been in place to shelter the local economy had to be jettisoned or reduced to WTO-approved levels. Regrettably, in most cases South Africa moved from one extreme to another, with high tariffs eliminated altogether instead of being reduced to accepted levels.As a result, as of 2014 local manufacturers exported an estimated 35% of their production, while imports captured nearly 45% of the domestic market. In the metals and engineering sector, 60% of products were exported and imports accounted for the same percentage of the domestic market.Indications are that imports are gaining the upper hand.Several subsectors in the metals and engineering industries continue to shrink, with devastating consequences for business owners and their employees.Companies that were previously manufacturers now import products that they used to produce.One business - with a 33% capacity utilisation because of low demand and our relatively small market - now manufactures only 40% of its own products and imports 60% of what it sells domestically."If we can manufacture it competitively, we manufacture it. However, if we cannot do so, then we import it," said the business owner.The veteran manufacturer - a member of our federation who has been part of the family business and has worked in the sector throughout his life - added ruefully that some of his imported products were landed in South Africa for less than half what it cost him to manufacture them here. Like many others, he felt strongly that "the government has no clue what manufacturing is about or what is going on".Although the Department of Trade and Industry is doing its best to support business - its manufacturing competitiveness enhancement programme is a commendable initiative - it would appear that there is little or no policy coherence at national government level, sometimes within the same ministry.We sense at times the existence of different - and sometimes conflicting - priorities among departments.The aforementioned business owner captured the challenges as follows: "Our biggest problem in South Africa is volume. The unit costs are quite high because we are not able to use our factories 24 hours a day. We use our factories for only a third of the time."The main cost factors, he said, were raw materials (he manufactures hand tools) and labour costs. He pointed out that while he and other local manufacturers have to comply with the South African Bureau of Standards' quality specifications, many of the imports competing with his products are not of the same standard.Compounding matters for manufacturing is our state of industrial relations. For instance, the five-month strike in the platinum mining sector and the month-long strike in the metals and engineering sector last year severely affected many companies.But, despite the obstacles, the businessman was still optimistic that solutions could be found.Concluding our meeting, he said : "I think that there are still many opportunities in South Africa, but we just need to work together."I concur. This beautiful country will not realise its potential until all stakeholders pull together in the same direction, putting South Africa's interests first.That requires all of us - the government, business and labour - to put our differences aside and rise above our respective selfish interests. It requires that we engage openly, robustly and constructively.The Southern African Metals and Engineering Indaba on May 28 and 29 in Gauteng is an opportunity for such engagement.Nyatsumba is CEO of the Steel and Engineering Industries Federation of Southern Africa...