How to Establish a Local Manufacturing Facility

Setting up a local manufacturing facility is a crucial step in scaling a business.

Establishing a local manufacturing facility is probably the riskiest step in a company’s development. Up to this point a business can thrive on a “pay-as-you-go” basis, with design and development funded by growing cash flow from operations, though at lower margins.

However, building a manufacturing facility? That is a whole different ball game and a major change. It demands significant upfront capital, with returns trickling in years later. This investment normally requires equity or debt, and providers of these funds place significant obligations on the business and its owners to ensure they can execute the plans and strategies to recoup their investment. Owner entrepreneurs with manufacturing facilities move from independence, to working with and sometimes for the financiers.

Only consider building a Local Manufacturing Facility when you are confident the business can afford the capital investment.

Given the risks, your design and project management must be rigorous to ensure accurate cost estimation, flawless execution, and future efficient operations. Several risk mitigation steps should be undertaken before finalizing the decision. Addressing these in the process of designing and setting up a local manufacturing facility requires significant planning, focus, time, and resources. These tips, guidelines, and points to consider have been drafted to help you navigate the many issues you will face before designing and then seeking funding for your local production site. You will be doing this as you develop your product, produce your first batch, prove it in the market, grow your customer base, and build your “street-cred”.

Before

Proof of Concept

Before even contemplating your own local manufacturing facility, here are a few things we think you should have in place that are necessary to have the confidence the business can afford to make the capital investment in a Local Manufacturing Facility.

Go to Before page

During

Designing

Secured the funding and resources to undertake a proper facility business case and design? These are a few important considerations to integrate into your project design and plans, so that you can secure the funding for the actual facility itself.

Go to Designing page

After

Fund, Build & Operate

Armed with a compelling design and business case, one can now seek and secure funding to build the facility. Designing, Funding & Building a manufacturing facility has its challenges and plenty of excitement! BUT, only once the hard work of building the facility is done, does the REAL job of operations begin...

Go to Funding, Building & Operate page

The LSF & Funding?

The LSF does not fund Local Manufacturing, nor the design of specific facilities. The LSF leaves that task for organisations with specific funding mandates.

To learn more about the role of the LSF, and potential funding agencies... Click Here

Funding Manufacturing Facilities

The LSF does not fund specific businesses nor projects, nor does the LSF undertake and/or motivate business cases for companies or applicants. This is the role of the Industrial Development Corporation, the Development Bank of South Africa, and other financial institutions like commercial banks, development finance institutions and the like.

In line with this, the LSF does not assist companies with the design and funding of manufacturing facilities. Rather, the LSF conducts research, communicates the latest developments and facilitates where appropriate, to assist the whole industry.

The LSF is acutely aware of the criticality of assisting those wishing to establish local manufacturing facilities and hence has provided this guidance and step-by-step checklist.

Disclaimer

The LSF provides this information to prospective applicants, and the public who may be contemplating establishing a local manufacturing facility in "good faith" and without prejudice. The LSF is explicit that information provided and referenced, is not exhaustive and following the suggestions and links does not in any way guarantee success. The LSF therefore provides such information on the express condition that the user acknowledges the LSF's indeminity in this regard and undertakes not to hold the LSF liable in any way for any negative consequence that may arise from directly or indirectly following the suggestions provided.