DANIËL ELOFF: Why manufacturing is making a global comeback

In the cult classic computer strategy game, Civilization, a global bestseller since the 1990s, players guide a nation of their choice from the Stone Age to the space age. Each decision shapes the course of history: where to settle, whom to trade with, when to wage war and how to invest in science, culture or the military. Among the game’s many mechanics, one quietly determines everything else: production. This refers to a city’s ability to turn resources into tangible outputs such as buildings, roads, weapons, wonders. In the hands of a skilled player, high production turns the Aztecs under Montezuma into a global nuclear superpower while Theodore Roosevelt still figures out how to build wooden ships.

In Civilization, production helps you dominate. 

What is “production” in the Civilization computer game is manufacturing in real life — the capacity to make things with speed and at scale. And though we are often told we are now in a knowledge or services economy, production remains a decisive advantage in peace and war. As historian Adam Tooze observed, it wasn’t ingenuity or ideology that won World War 2, it was logistics, steel, and Detroit. 

The 20th century offers an industrialised masterclass in this principle. The US, once dubbed the “arsenal of democracy”, overwhelmed Axis powers with sheer output. Tanks rolled off assembly lines in minutes. In the Cold War, the Soviet Union matched the US’s might for decades by marshalling centralised production, even if at great inefficiency.

Fast-forward to 2010: China overtakes the US as the world’s largest manufacturer. In 2023, China produced $4.8-trillion worth of goods — 27% of its GDP. That includes everything from fertilisers to synthetic textiles to machine tools. In short, China makes things, and makes them fast. And while there are questions about their environmental and human costs, the manufacturing engine powers its geopolitical ambitions just as surely as aircraft carriers do. 

In contrast, the US now relies on manufacturing for just more than 10% of its GDP. The Joe Biden and Donald Trump administrations, in their own ways, have tried to reverse this trajectory through tariffs, subsidies and “Made in America” slogans but the hollowing out of US manufacturing remains a source of political anxiety, particularly as the temperatures for global conflicts rise.

Germany, ever the continental craftsman, has held its ground with precision engineering and a robust Mittelstand of small-to-medium-sized manufacturers. India is rising fast, albeit from a lower base, buoyed by its youthful population and government incentives. Russia, constrained by sanctions and kleptocracy, survives on resource extraction rather than complex manufacturing, but this has changed since the start of its war with Ukraine. 

The war in Ukraine has reminded the West, rather rudely, that wars are not won by ideology or diplomatic speeches. They are won by endurance, logistics and the ability to produce materiel at scale.

Russia, despite sanctions and corruption, has managed to ramp up domestic arms production, churning out drones, shells and artillery faster than many Western analysts predicted.

Ukraine, in contrast, depends heavily on Western military aid. Nato countries are rediscovering the hard truth that defence readiness isn’t just about hi-tech jets or cyber-units. It’s about whether you can produce 155mm artillery shells by the million. Suddenly, European leaders are talking about repurposing old arms factories and boosting military budgets. 

This war has exposed a postindustrial vulnerability. The West had outsourced so much of its production capacity that it now finds itself scrambling to reindustrialise under the shadow of war near its Nato borders and elsewhere. In peacetime, this deference to globalised supply chains was framed as economic rationality. Why make what you can cheaply import?

And this did make perfect sense, thought believers in Francis Fukuyama’s End of History — a world in which liberal democracy reigned supreme and great-power conflict was a relic of the past.

But in wartime the calculus changes. Dependence on others’ manufacturing ability becomes a liability.

For decades, defence production in Western Europe and the US was allowed to downscale. In an age of counterinsurgency and peacekeeping, stockpiles of munitions, spare parts and basic industrial capacity were allowed to dwindle. Factories were shuttered, skilled trades hollowed out and manufacturing outsourced. The result? When the guns of Europe roared again, Nato countries were caught flat-footed. By early 2023, Ukrainian forces were reportedly firing more shells in a month than some European arms manufacturers could produce in a year.

In times of crisis, the capacity to make things at home, at scale and under pressure becomes a form of national insurance.

This reawakened reality has triggered a frantic effort to rebuild what was dismantled. Not just in defence sectors, but in steelworks, chip fabrication plants and critical mineral refining. The fantasy of a frictionless global economy, in which manufacturing could be someone else’s problem, has given way to the logic of redundancy, resilience and reshoring. Manufacturing has made its comeback and price competitiveness is no longer the only consideration, sovereignty seems to have made its reappearance too. 

There are lessons here for any country, SA very much included, that treats manufacturing as passé. In times of crisis, the capacity to make things at home, at scale and under pressure becomes a form of national insurance. You cannot airlift a foundry. You cannot 3D print a workforce. And you cannot import manufacturing independence. 

Once the industrial jewel of Sub-Saharan Africa, SA finds itself in a twilight zone. Neither postindustrial nor industrialising. Manufacturing contributes about 13% to our GDP, a modest figure that has been in gentle but persistent stagnation. Our economy is overly reliant on services and raw commodities. 

Worse still, our productive capacity is constrained not only by a similar outsourcing of manufacturing as seen in Europe and the US but further by dysfunction. Load-shedding, logistics bottlenecks at ports and rail, policy zigzags and skills shortages have left our factories underutilised and uncompetitive. We all see the broken windows and derelict former factories in old heartlands such as the Vaal Triangle, East London and Pietermaritzburg.

While China opens a new industrial park, we wrangle over the diesel budget for backup generators or additional security to stop copper theft. 

The consequences are severe. Without manufacturing, a nation struggles to create stable, semiskilled employment. The downstream effects on inequality, social cohesion and political stability are immense.

In short: if you can’t build, you can’t rebuild. 

To be clear, a romantic return to the smokestacks of yesteryear is neither possible nor desirable. SA should not try to out-China China. But we can foster smart, regionally integrated production networks, linked to food processing, pharmaceuticals, green tech, and automotive assembly.

But the state must get out of the way if where it hinders and step in where it enables. Energy, infrastructure and regulatory clarity are prerequisites for this to happen. 

In Civilization, players who neglect production fall behind. In the real world, the same rule applies, only with far graver consequences. 

If SA is to remain sovereign, secure and socially stable, it must rediscover how to make things again. 

• Eloff, a writer and nonprofit executive, is a legal adviser to the mayor of Cape Town. He writes in his personal capacity.