The political economy of technological change: transitioning to 4.0 in plastic auto components in South Africa and Thailand

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The present paper builds on a study of technological change within the plastic auto components sector in South Africa and Thailand. It analyses different trajectories towards a ‘smart factory’ and draws an assessment of whether the two countries are succeeding in developing their automotive supply chain. Within this discussion, it considers the political economy factors that put South Africa in a relatively disadvantaged position compared to Thailand, and that make the country’s plans to establish local capabilities much harder. Overall, the paper investigates balance and power dynamics between state and multinational capital, but also structural issues related to education, skills formation and labour market inequalities. Eventually, the work highlights the key ‘enablers’ that allowed Thailand to build a sounder technological competiveness and a deeper auto supply chain, and that today represent more successful ingredients in the transition towards an industry 4.0. In contrast, the paper explores the reasons that place South Africa farther from the 4.0 technological frontier. Overall, the paper looks at plastic auto components as a segment where technological change is likely to continue happening, and that offers opportunities for supply chain development.

The work builds on research developed for the South African Industrial Development Think Tank (IDTT), and it is based on fieldwork conducted in the plastic and auto component sector both in South Africa (Gauteng) and Thailand (Bangkok industrial cluster) in 2018. Such fieldwork involved interviews with auto and plastic associations (PlasticSA, AIDC, ASCCI in SA; TAPMA and PITH in Thailand) and some in-depth firm interviews involving factory visits. Drawing on a sort of ‘pilot’ comparative study, the paper does not aim at describing a statistically representative sample, but at exploring qualitative implications of the transition to a smart factory. Firstly, it analyses the ‘preconditions’ for such a transition – i.e. the factors that allowed Thailand, more than South Africa, to achieve sufficient technological competitiveness and local capabilities to sustain the transition, and that place the country in an advantaged position now. Amongst these, policy frameworks, the presence of clusters and of a regional market, and a more favourable state-foreign capital relation are discussed. Secondly, the paper builds on direct accounts from three firms in each country to reflect on implications of the transition to a factory 4.0 and of the adoption of smart technologies. Here, the paper discusses the following aspects: 1) the access to new technologies, and the possible imbalances this will create along the automotive supply chain; 2) the impact of new technologies in terms of factory management and production process; 3) the likely employment re-composition linked to the adoption of new technologies; 4) constraints and opportunities related to the transition to greener technologies and greener materials.

Overall, the paper is written from a South African perspective, and aims at drawing lessons from the Thai experience. While analysing Thailand’s successful trajectory, it also explores the obstacles and the limitations South Africa faces, in the light of its need to deepen the auto supply chain and to build competitive niches that will allow for an increasing participation in the global process of technological change.