Textile Industry Resource

 

The textile industry is one of the most important sectors of Pakistan. It contributes significantly to the country’s GDP, exports as well as employment. It is, in fact, the backbone of the Pakistani economy.

 

Established capacity

 

The textile industry of Pakistan has a total established spinning capacity of 1550 million kgs of yarn, weaving capacity of 4368 million square metres of fabric and finishing capacity of 4000 million square metres. The industry has a production capacity of 670 million units of garments, 400 million units of knitwear and 53 million kgs of towels.

 

The industry has a total of 1221 units engaged in ginning and 442 units engaged in spinning. There are around 124 large units that undertake weaving and 425 small units. There are around 20600 power looms in operation in the industry. The industry also houses around 10 large finishing units and 625 small units.

 

Pakistan’s textile industry has about 50 large and 2500 small garment manufacturing units. Moreover, it also houses around 600 knitwear-producing units and 400 towel-producing units.

 

Contribution to exports

 

According to recent figures, the Pakistan textile industry contributes more than 60% to the country’s total exports, which amounts to around 5.2 billion US dollars. The industry contributes around 46% to the total output produced in the country.

 

In Asia, Pakistan is the 8th largest exporter of textile products.

 

Contribution to GDP and employment

 

The contribution of this industry to the total GDP is 8.5%. It provides employment to 38% of the work force in the country, which amounts to a figure of 15 million. However, the proportion of skilled labor is very less as compared to that of unskilled labor.

 

Textile Industry is the major economic sector of Pakistan and for quite some time to come it will continue to be the main driving force in the industrial and agriculture area. It contributes more than 66% to the total export earning of the country, accounts for 46% of the total manufacturing and provide employment to 38% manufacturing labor force. The availability of cheap labor and basic raw cotton as raw material for textile industry has played the principal role in the growth of the Cotton Textile Industry.

 

Potentials of Textile Industry

 

During the boom periods Pakistan has emerged as the major supply source of cotton textiles in the world market confirming its competitive strength. Pakistan’s share in the world yarn trade is about 30% and the share in cloth is 8%. This describes its competitive position in international market and future potentials for improvements & growth. The Textile Industry has an in built potential for performing better both in production as well as in export by virtue of its inherent competitiveness in the international market for its conventional products. However, to sustain its position and to move in high value added products as well as for the increased market share, a large investment in machinery equipment and new technology is essential.

 

Textile Vision – 2005

 

In order to revitalize the Textile Industry the Government of Pakistan has developed a Textile Vision – 2005 to serve as broad target to aim at;

 

An open, market driven, innovative & dynamic Textile Sector which is:

 

- Internationally integrated.
- Globally Competitive
- Fully equipped to exploit the opportunities created by the MFA phase out.

 

Current & Future Investments

 

Textile Vision – 2005 has envisioned an investment program of approximately US$.6 Bln. by next five years. The current trend is for establishment of Air jet Looms unit & open width Textile Processing Units. In printing the major strength is of Rotary Printing Machine. Trends is the past had been for wider width fabrics, however, recent tread is for continuous bleaching, dyeing in medium width to cater to Garment sector. The processing industry is catering the needs of both “Home Textiles” & Readymade Garment Industry (local & export). Besides, processed fabric is also exported in bulk. Introduction of Cad-Cam & laser techniques in Printing & Garment Units is recent phenomenon however; “Inkjet-Direct Printing & Weave – Gate network system” are being studied with interests.

 

Almost all the major machinery manufacturers of E.U.& Japan in Spinning Weaving – Bleaching – Dyeing – Printing – Finishing – Knitting – Readymade Garments etc. are quite active through their agents in Pakistan. Major imports are from Germany – Holland –Switzerland – Italy – UK – France & Japan. The local agents have good liaison with their principals and also have back up service facilities.

 

Industrial Policy

 

Developing countries, regardless of their ideologies have in the recent year been re-assessing their industrial development policies with the basic aim of facilitating industrial change and re-develop competitiveness. With the onset of trade liberalization under W.T.O. and phasing out of quota restrictions under Agreement on Textile & Clothing’s a highly competitive Textile Trade environment is anticipated by the year 2005 and beyond. It is clear that between developed and developing countries no one is prepared to lose its international market positions. The restructuring programs in future would thus aim at not to meet low-cost competition, but to meet high efficiently competition. The Industrial Development Policy should therefore stress on shifting the emphasis from creation of industrial capacity to the encouragement of more efficient use of resources, with the aim of increase in supply response in the short term, and broader industrial base that can sustain growth in output employment and productivity in the long run. Besides grooming the domestic industry another way is to develop strategic alliance with internationally progressive foreign firms in the form of joint venture with equity participation, technical know-how or marketing tie-up. In textiles Japanese and Chinese firms can be persuaded for setting-up of joint venture in Pakistan.

 

Performance of Textile Industry

 

The performance of Textile Industry during the last four years had been satisfactory. The market was responsive, the Govt. Policy was supportive and inputs were viable. The industry made profits and re-invested in new machinery for BMR and Expansion. This resulted into substantial increase in capacities of all products. Consequently yarn production has increased by 6%, cloth production by 14% and synthetic fibers by 26%. The exports showed positive improvements and textile export grows from $ 5.9 billion last year to 7.4 in 2002-03. The Fabrics – Bedwear – Knitwear & Garments crossed billion dollars level and consequently the share of made-up and clothing increased to 57% while share of yarn & fabric was 43%. The industry though followed “Low Road Scenario” but was moving in the right direction and preparing itself for the 2005 Scenario when a highly competitive environment would develop.

 

Robin Anson a renowned consultant on textile in his address in at ITMF gave an overview of world textile trade and production trends, and highlighted the regions which would be most at risk after the elimination of quotas in 2005.China is one sure winner. The country possesses almost unlimited human resources and very low labor costs. In general terms, its people are hard working and motivated by a desire to improve their living standards. And the surge in China’s exports to the USA and EU in 2002 and early 2003 was spectacular. Chinese exporters are equipped and able to respond quickly and flexibly to increases in demand. China has given companies in other developing countries a very loud wake-up call. They are worried about China’s potential to exploit the world’s markets when quotas are eliminated at the end of 2004. The conscious and forward looking entrepreneurs are pursuing one are more of the following strategies to prepare themselves for the competitive scenario of 2005.

 

• improving production efficiency through increased automation;
• re-engineering of production systems;
• expanding capacity and integrating operations;
• collaborations with foreign companies;
• backward and forward integration of operations;
• moving up the value chain; and
• enhancing marketing capabilities

 

For Mexico, quota-free access to the US market will cease to be a competitive weapon. However, Mexico will continue to enjoy the competitive advantages of market proximity, preferential tariffs and low labor costs. In addition, it will continue to benefit from close links and production-sharing arrangements with US manufacturers. Although China has taken over as the USA’s leading supplier — and stands to make further gains in 2005 and beyond — Mexico should be able to retain a high share. The same applies to Caribbean countries, which have been granted enhanced benefits in recent years. For suppliers in Central and Eastern Europe and the Mediterranean Rim, including Turkey, quota-free access to the European Union will similarly cease to be a competitive weapon once quotas have been eliminated for all. This is likely to lead to falls in market share at the expense of Asian suppliers. But major exporters in the region will continue to benefit from market proximity, duty-free access and low costs. Also, ties with importing countries will be strengthened for a number of the region’s exporting countries in 2004 when they join the European Union. Hong Kong is a likely loser but is a different case. Once quotas go, Hong Kong’s advantages as a major quota holder will become worthless. Market proximity will become an increasingly valuable competitive advantage as customers demand better quality of service, timeliness and reliability of delivery from their suppliers. As product life cycles become shorter, the risks of being left with unsold merchandise become ever greater. Market proximity can also help suppliers to carve out a competitive advantage by building close relationships with their customers. Furthermore, when quotas end, lower prices may even encourage consumers to buy more clothing — which would benefit everyone in the industry worldwide.

 

Textile City

 

Textile Vision 2005 proposed establishment of Textile City. To give boost to export of value added Garments at a quicker pace. The concept of Textile City is based on designing an exclusive production are specializing in production of value added textile products and making available all support activity and infrastructure to facilitate the units for concentrating on production activity with high level of productivity and quick delivery response of export orders. Infrastructure facilities such as sufficient water – gas – Stable voltage power and waste water disposal as well as treatment of waste water is planned and cleaner environment can be ensured. Further it is easier for the foreign buyers to visit and place orders for particular products with the units of their choices, economizing of their time traveling and hence ease in contacts with local manufacturers. The proposal is to create a board and integrated free Trade Zone specializing in textile companies particularly dyeing factories in order to gather the scattered textile companies together in the Textile City FTZ as much as possible. The proposal is to locate the FTZ in somewhere physically near or having good access to a seaport like Port Qasim in Karachi. Common facilities for wastewater treatment to be used collectively at reasonable fee will be provided to allow participating companies to meet ISO 14000 certificates as a requirement from their buyers in Europe and the US that is envisaged to be escalated after the elimination of the MFA quota at the end of 2004. It is critically necessary for Pakistan to provide infrastructure for Textile Industry to compete with China & India in the international market after the elimination of MFA quota by 1st January, 2005.

 

The industry has potential to perform better. There is need that both Government and industry should realize that sincere and appropriate approach has to be made to meet the challenges of the present day competitive environment and future scenario when Textile & Clothing sectors are to be fully integrated into the GATT – by 2004 where quality of product would be the major aspect to customers satisfaction besides price and after sales service. Investment in knowledge of markets, training of workers, improvement in labor productivity and product development would be immediate areas for each company to concentrate.