Tiny Factories – what it means for South African businesses and entrepreneurs.

In this article, I examine how short-run customized manufacturing is turning supply chains upside down and the reasons why it will be successful here in SA.

This article is not about Nanotechnology (Micro manufacturing) or SMT ( Surface Mount Technology) processes found in all electronics manufacturing plants. I will focus on the Tiny Factory ‘the business in garage – or double garage’ concept which means a floor space of less than 50 square metres where any citizen can combine several machines in a small space and make one or 101 items affordably. The era of small-run manufacturing has arrived.

Before the first industrial revolution from mid-1700 – to almost mid-1800 – home businesses and custom (bespoke) design and making was common. From the finest furniture, watches, clothing and robes, etc. It was all handmade. The advent of the steam turbine allowed automation to gain traction and the era of the factory started. Today, truly handmade craftsmen have all but disappeared and the 4th industrial revolution digital maker has emerged. You just never know what lurks behind your neighbour’s garage door.

How did we get there – when everything seemed so organized and productive? In the post-WW2 years, purchasing reliable products was key. Factories were large and product design flexibility was almost impossible. Remember the FORD car company’s pitch – You can have any colour so long as it is black. It was not that bad in the ’70s but product variety was limited and company agility was not a management term – there was none! Then the business focus centred on pricing, the world moved production to the East and factories became bigger. There seemed to be no end to satisfying demand as lower prices attracted new consumers.

The Chinese migration was underway. You may want to think back to the era of mainframe computers – which in the ’80s (IBM, ICL etc.) were the poster boys of successful IT companies. As were the companies that bought them. Fast forward to the turn of this century and they had all gone, barring specialist mainframes in niche research and state institutions.

What actually happened was that the power of computers was transferred from corporations to individuals. The hot business opportunity in the late ’80s was buying a PC and starting a DTP (DeskTop Publishing) business from home! Well the same thing has happened to manufacturing machinery – it has gone MICRO and like PCs, the prices have dropped and now it has become home manufacturing reality. The choice is bewildering.

I will discuss suitable home and small business microfacturing technologies in more depth later.

Why the sudden boom? There has never been a period in history that independent economic, social and technological forces have been so in sync and it is driving an entrepreneurial revolution.

Example of a TINY FACTORY with 4 machines (2 x Laser cutters, Ecosolvent printer and Fiber Metal engraver)

There are a number of basic forces at play accelerating this trend.

Community and social influences

  1. The economy is stagnating all around us, but there is an insatiable demand for handmade products.
  2. The digital economy has always been about customization and individuality. Now it’s migrating to physical items. Consumers are determined to create their own bespoke item – whether it be a gift or a piece of furniture. The drive to individuality is driving a whole new ‘Personal Aesthetic’ statement. You can see this problem of ‘sameness’ in every SA shopping centre. They essentially all have the same retail offerings. Consumers are rebelling.
  3. Websites like instructables.com and makezine.com or third party design sites like fiverr.com make it easy to purchase or request designs. The next step is easy. You improve them or adjust the scale, make allowances for different materials (or substrates) and then press print or cut or shape.
  4. Many entrepreneurs find themselves drifting into a new business, as often the design and manufacturing process starts as a hobby and then there is a lightbulb moment. I Can make this. I can make money doing what I love or what I have come to enjoy. One of life’s greatest joys is to design and make something, hold it and sell it, or for that matter redesign it, improve it and then try again. After all failing (trying) is all part of entrepreneurship.
  5. For everything you have ever dreamed of making, there is an assortment of YouTube videos to teach you step by step.
  6. Software available to design and optimize the quantities you can achieve from a given substrate size is now readily available and relatively inexpensive.

External drivers

  1. Covid and Ecommerce (Online businesses) go hand in hand. Whilst we will learn to live with new Covid strains, eCommerce is accelerating month to month From 2% to over 12% and this % grows monthly.
  2. Business premises rates and taxes, electricity charges, security costs, the risk of crime, loaded insurance bills, fiber costs (if available) make business premises viable for fewer businesses.
  3. Buying local is the only way countries like South Africa can 100% guarantee a decrease in our disastrous unemployment rates.
  4. The globalization trend to go offshore and manufacture in China is slowly ending. The appeal is dwindling. Chinese labour costs are rising, Intellectual Property rights are not safe, Illegal night shift production where well-known brands continue to be produced happens all too often. In fact, copies of copies is a big problem. Most importers have not been to China for 2 years and this is forcing companies to look at local production. The love affair with China is coming to end. Add in trade wars between the USA and China, and possible conflicts with Taiwan, tension with Australia and harsh lockdowns effectively ending visits to China and the realisation soon emerges that local is better.
  5. Logistics congestion at our ports of entry such as Durban – where container vessels regularly ‘sunbathe’ for days – waiting for berthing space and subsequent unloading delays causes costs to escalate. Even getting a container loaded truck out of Durban harbour takes up to a day. And that is before you have a customs or NRCS or Border Control container stop and inspection at a private facility which can cost up to R40,000 for only a few days and massive inconvenience. And inside every container, every item looks the same and feels the same.
  6. Exorbitant freight costs provide entrepreneur protection. No import tariffs are needed! The greatest trigger to increased local production will be the cost of sea freight shipping to South Africa. It actually is not necessary to raise tariffs – which is generally only allowed in proven dumping circumstances as the cost of a 40ft (12m) container from China to South Africa is now almost R200,000. Now you know why bulky items such as furniture, cars and large appliances are rocketing upwards and not just because of the exchange rate. Add to this the annual peak season charge of R20,000 and no wonder annual profits of shipping companies will exceed 200 billion USD this year. This is exactly the opportunity entrepreneurs need to manufacture locally.
  7. Social media comments and discussions reward innovation, service and design. Social media provides the ideal platform for users to share the latest, greatest and most stylish items they have bought or used. This need to share consumers’ ‘amazing’ purchases suits agile entrepreneurs perfectly.
  8. The unpaid army. These market, social and political influences are merely accelerants. The real reason why micromanufacturing is taking a grip in SA is because the range of machines has become bigger, more compact and cheaper. Material variety has increased and social media influencing – your ‘unpaid army of volunteers’ likes shares and comments speed up sales market acceptance.
  9. Protection of your designs. It’s not just offshore manufacturers that steal your designs. Local ones are just as guilty. They can also delay your prototyping. Your client needs samples tomorrow, not next week, and they want changes by tomorrow morning. You outsource at your peril, and the joys of incremental design changes evaporate what with delays, and when the bills have to be paid. The real flaw in this process is that your designs, by virtue of the need to have someone else make them (and every time you place an order), confirm the market validity. South Africans are skelm too – as we well know and have read about all too often.
  10. Buy South African made… it’s a no-brainer, whether your motives are ecological, job creation or patriotic.

To be continued.

Part 2 will be released before the end of 2023.

In the next and final part of this article, I will look at :

  1. The top 10 machines for your garage
  2. What software to use and elementary cost and profit calculation templates
  3. Achieving a balance between machines and outputs and processes – for example, laser, fiber, colour and CNC, metal and wood and plastic, etc.
  4. Moving towards small automated production runs
  5. What can you get for R20k, all the way up to R250k. Yes, far less than that car that will park outside!
  6. How and where to start
  7. Examples of products made at home /or small workshops all around you.
  8. Recommended sales practices

Warwick Smith Chandler was educated in Cape Town and completed a Bachelor of Business Science degree at UCT. His first post-graduate company was listed on the Johannesburg stock exchange on June 8 1987 and subsequently sold into the Altron group. After 15 years in the small business and IT publishing environment, the lure to Johannesburg was too strong and in 2014 he moved to Johannesburg where Perfect Laser Technologies was started. It is now a nationwide company.

See my “CEO’s Overview for 2022” here.