Weaving profits impossible without upgrading technologies
LAHORE: In Pakistan, every textile entrepreneur concedes that the future of textiles lies in efficiently producing value-added apparel for exports, and upgrading the existing basic textile units with efficient technologies. Despite this realisation only a few are on the right path.
Nishat Mills Limited Executive Director Ahmad Jehangir says that entrepreneurs, who have been in the textile business for generations are aware of the importance of regularly upgrading their technology. “The rule of thumb is to reinvest 85 percent of the amount earned in last three years in balancing and modernisation.”
Those who do so, cope with the ups and downs in the local and global markets. Quite a few companies follow this rule, while those that fail to regularly upgrade, remain in trouble.
The buzz word is sustainability! Companies making efforts to lower the carbon foot print in their processes would be ahead of their competitors.
“At Nishat, we have gone for lean production having reduced the use of water and chemicals to barest minimum. We have replaced inefficient spindle with power efficient machines that use 30-40 percent less power than older models. The human resource has also been reduced by 30 percent,” Jehangir said.
Currently, apart from operations and technology, there are also issues about subsidy and the tax regime that are hindering the growth of this sector.
While there is appreciation for the government initiative to subsidise power and energy rates for the exporting industries, there is concern that the advantage of the subsidy gets nullified by the withdrawal of zero-rated tax regime.
This uncertainty, despite the government’s assurance that this subsidy would continue in the long run, persists because the official notifications are issued for six months. This impedes investment, as an investor is uncertain about when the facility might get withdrawn.
Moreover, the impact of 17 percent sales tax on all inputs including power and gas has devastated the small and medium size exporters. The refund cycle is still not clear; however it looks certain that refunds would be made after at least five to six months.
A delay of five to six months means, depriving the exporters of 80 percent of their working capital for that duration. The larger players might survive this situation, but small exporters would be wiped out.
If the system is not improved we may see a drop of around 30 percent in our exports after February.
The textile industry in Pakistan was basically developed on the strength of cotton, the basic raw material of yarn available in Pakistan. Not much effort was needed to market yarn.
However, when the same entrepreneurs tried to shift to apparel they found strenuous efforts were needed to succeed. The apparel buyers were very strict on quality, starting from stitching to the exact matching of colours.
Therefore, most gave up after seeing the exercise needed to execute apparel orders. But those who realised that once they master the system and operate vigilantly, the rewards will be higher than what they got in basic textile business; they remained in the driving seat.
There is an oft repeated assertion that labour productivity in Pakistan is very low.
NTML CEO Mian Omar Mansha said this perception has little to do with the efficiency of the technical staff, but was mainly due to the security apparatus that all entrepreneurs have to employ. He said productivity was calculated on the basis of value of final output by the total number of workers.
In Pakistan, the number of extra workers in security apparatus and those employed to deal with different government departments increase the number of workers and the efficiency looks low.
Absence of skilled workforce was another issue. Most companies now provide on job training to their workers.
Gender balance in textiles is another issue. Our culture looks down on girls working after sunset. This restricts their job opportunities to 1/3 in garment factories that operate 24/7.
Then most girls after getting fully trained leave the job when they are married. They either move to some other locality or their spouses do not allow them to work.
Some that continue to work even after marriage leave the job on the birth of their first child. Women are the major and most talented workforce in garment factories the world over.
In Bangladesh over 80 percent of garment workers are women, but in Pakistan they make up hardly 16 percent of the garment workforce. We will have to change this culture to move towards more efficient garment production.