Your SlideShare is downloading. ×
Competitiveness Of Pakistan Textile Industry
Upcoming SlideShare
Loading in...5
×

Thanks for flagging this SlideShare!

Oops! An error has occurred.

×
Saving this for later? Get the SlideShare app to save on your phone or tablet. Read anywhere, anytime – even offline.
Text the download link to your phone
Standard text messaging rates apply

Competitiveness Of Pakistan Textile Industry

4,907
views

Published on

Issues and Challenges …

Issues and Challenges

By. Syed Mumtaz Ali


0 Comments
1 Like
Statistics
Notes
  • Be the first to comment

No Downloads
Views
Total Views
4,907
On Slideshare
0
From Embeds
0
Number of Embeds
2
Actions
Shares
0
Downloads
139
Comments
0
Likes
1
Embeds 0
No embeds

Report content
Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
No notes for slide

Transcript

  • 1.
    • Competitiveness of Pakistan Textile Industry
    • Issues and Challenges
    • By. Syed Mumtaz Ali
  • 2. Presentation Structure Globalization & Changing Scenarios Competitiveness in Textile Trade Competitiveness of Pakistan Textile Industry Issues and Challenges
  • 3. Textiles and Apparel: Factors of Competitiveness
    • Business Climate
    • Infrastructure and Proximity to Markets
    • Market Access
    • Labor and Management
    • Raw Material Inputs
    • Level of Service Provided and Reliability of Supplier
  • 4. Textiles and Apparel: Factors of Competitiveness
    • 1. Business Climate
    • Political Stability
    • Safety of Personnel
    • Security of Production and Shipping
    • Transportation and predictable legal, commercial and regulatory system
    • Minimal administrative burden and corruption
    • Compliance with internationally recognized health and labor standards
    • Subsidies and tax credits
    • Free trade zones
    • Real exchange rates
    • Market demand and economic growth
    • 2. Infrastructure and Proximity to Markets
    • Roads, Ports, Rail and airports for
    • moving goods into and out of the
    • country
    • Shipping and other transportation
    • times and costs
    • Proximity to major markets
    • Access to reliable sources of energy,
    • water and telecommunications
    • 3. Market Access
    • Preferential access in major markets
  • 5. Textiles and Apparel: Factors of Competitiveness
    • 4. Labor and Management
    • Availability of workers and competition for workers from other sectors
    • Compensation rates
    • Labor Skills and productivity
    • Availability of qualified managers, including middle management
    • 5. Raw Material Inputs
    • Access to quality and cost competitive domestic or regional yarn and fabric production
    • Rules of origin for trade preferences
    • Cost and availability of capital to invest in new machinery and purchase raw materials
    • 6. Level of Service Provided and Reliability of Supplier
    • Reputation for quality and on-time
    • delivery
    • Existing business networks (supply
    • chain linkages, relationship with
    • customers)
    • Level of service provided (e.g. full-
    • package versus assembly)
    • Flexibility and variety in styles or
    • products and lot sizes offered
    • Lead time and flexibility to respond to
    • quick turnaround orders
  • 6. Globalization & Changing Scenarios
  • 7. Global Trade is Growing US$ Bn CAGR Textile: 5.8% Apparel: 9.6% 482 Bn 583 Bn 655 Bn Projections of World Textile and Apparel Trade Source: ITC
  • 8.
      • Developed Countries will remain the Major Consumers
      • PER CAPITA CONSUMPTION
    Source: Werner Int’l
  • 9.
      • Market Share of Total Apparel for USA Market - 2010
    Asian countries would gain in US… Source: KSA
  • 10. … As Well as in EU Source: KSA
      • Market Share of Total Apparel for EU-15 Market - 2010
  • 11.
      • Synthetic Fibers Filling the Gap
  • 12. Changing Requirements of Customers
    • Customers are……
    • Focusing more on Retail end
    • and
    • Looking to Optimize Sourcing Costs
    • Therefore………
    • Identifying Their Strategic Partners …..and
    • Increasing Direct Sourcing
  • 13. Traditional VS Strategic Relationships
    • 80%
    20% Past Transactional Vendors Relationship Strategic Partnerships Future 20% 80%
  • 14.
      • Redefining Supplier’s Responsibilities
    Ware- housing Distribution Retailing Client’s Responsibilities Design Sampling Manu- facturing Shipping Ware- housing Distribution Retailing Design Sampling Manu- facturing Shipping Present share of services and responsibilities ...and for the future? Supplier’s Responsibilities
  • 15. Buyers are looking for complete Solutions Convenience Compliance Cost Flexibility Speed Innovation Buyer Requirements
  • 16. Successful Suppliers would need to build new competencies
    • In addition to price and quality buyers would increasingly evaluate their supplier on:
      • Innovations
      • Cycle Time Reduction
      • Product Design & Development
      • Supply Chain Optimization
      • Service Levels
      • Strategic Partnerships with Buyers
  • 17. Globalization Equally easy access to latest technologies for all players. Capital not technology is the only restricting factor to set up new capacities Fully integrated textile chain becomes a strategic asset Reliability in services and short lead times being THE KEY purchasing factors for buyers initiating partnership and alliances The strategic choice for textile manufacturers is between high volume low cost products or niche products Closures or reduction of textile production capacities in high cost countries, mainly EU, Japan, USA Exchangeability of the products, price becomes major factor of differentiation In a Nutshell the Effects of Globalisation are…..
  • 18. Competitiveness of Pakistan Textile Industry Issues and Challenges
  • 19. Pakistan Textiles & Apparel industry
    • G enerates about 64 % of total exports
    • Constitutes 46 % of Manufacturing Industry
    • Employs 40% of Country’s working population
    • Contributes 11% of the total GDP
    • Pakistani clothing export growth slowed to 8% in 2006, following three years of double digit increase.
  • 20. Pakistan’s Textile & Apparel Industry… % Share in Global trade
  • 21.
      • Pakistan Textile Exports – Major Categories
  • 22. 8,926 10,117 Textiles include raw cotton, yarn, fabrics, made ups, towels, tents etc
  • 23. Pakistan Export Performance 1995-2006
  • 24. Pakistan vs Major Competitors
  • 25. Cost parameter Pakistan India China Bangladesh Indonesia Egypt Average Labour wages including all benefits 39 47 57 27 52 60 Factor Cost - Labour wages including all benefits (US Cents per hour) Source: Country data / Gherzi analysis Factor Costs: Labour wages 29 Vietnam Labour costs still differ greatly in the reference countries and range considerably within the reference countries. Based on industry sources we estimate the hourly average wages as follows: Although labour costs in Pakistan are low, due to a lower labour productivity in many mills, this advantage is neutralized. Pakistan vis-à-vis Bangladesh, Indonesia, Egypt, China, India and Vietnam INDEX 100 120 146 70 133 154 74
  • 26. Source: Country data / Gherzi analysis Factor Costs: Power Cost parameter Pakistan India China Bangladesh Indonesia Egypt
    • Power cost
    • from grid
    • captive
    6.0-7.0 5.0-6.0 (gas) 10.0 8.5 -- 6.0-7.0 3.0-4.0 (gas) 6.3 4.0 Factor Cost – Power (US Cents per kWh) 6.0-7.0 -- Vietnam In most of the reference countries, power costs show an upward trend as a result of the increased oil prices India has by far the highest power cost compared with the reference countries, but some state subsidize power cost. Pakistan vis-à-vis Bangladesh, Indonesia, Egypt, China, India and Vietnam Power rate taken for the study 6.1 10.0 8.5 5.0 6.3 4.0 6.5 INDEX 100 164 139 82 103 66 106
  • 27. Factor Cost - Raw water (US Cents per m 3 ) 2006 Source:Gherzi analysis Cost parameter Pakistan India China Bangladesh Indonesia Egypt Raw water cost US Cents per m3 18.2 * 60 *** 14 * 46 ** 42.0 Ground water, only treatment costs River water, only treatment costs 0.23 24.0 Vietnam Factor Costs: Raw Water and Steam
    • In Bangladesh and Indonesia most mills use ground water from their own wells, which results in low water costs
    * Borewell ** Industrial Development Corporation *** Tanker Water (Karachi) India and China have the highest water rates of the reference countries Compared with Pakistan and China, India has a lower cost of steam Pakistan vis-à-vis Bangladesh, Indonesia, Egypt, China, India and Vietnam Factor Cost - Steam (US Cents per kg of steam) 2006 Cost parameter Pakistan India China Bangladesh Indonesia Egypt US Cents per kg of steam Generated from 2.0 Furnace Oil 1.1 Coal 2.0 Coal 0.8 Gas 1.0 Furnace Oil 2.0 Furnace Oil Vietnam 1.6 Furnace Oil
  • 28. Raw Material and Power Costs are the key cost drivers BIG ADVANTAGE AAAA ADVANTAGE AAA MEDIUM ADVANTAGE AA NO ADVANTAGE A Raw material * Power * Wages Key Cost drivers and Pakistan’s position * Key cost drivers Exchange Rate Pakistan vis-à-vis Bangladesh, Indonesia, Egypt, China, India and Vietnam Pakistan Bangladesh Indonesia Egypt China India AAA A AA AA (Long Staple only) AAAA A A AAA A A AAAA AAAA AA AAA AAA AAAA (Short and Long staples) A AAA A AAA AAAA Vietnam AAAA A A AAAA AA A AA
  • 29. Pakistan’s Textile & Apparel Industry… SWOT
    • 4 th largest Cotton producer
    • 64% of country’s export volume
    • 1.4 Mn people employed with 50% in apparel
    • Low labor cost at US$ 0.39 per hour
    • Low Price Image
    • Lower marketing initiatives
    • Limited use of modern technology
    • Confusion in political / religious scenario
    • Low levels of managerial capabilities
    • Rising Cotton Prices
    • China and India being considered as countries for high value added garments
    • Price Pressures
    • Better laid down factories on ‘best practices’
    • Potential of improving confidence in buyer by working directly & closely
    • Home Furnishing from Pakistan have made a big name worldwide
    • Women’s wear has a huge potential
    Strengths Weakness Opportunities Threats
  • 30.
    • What Needs to be done
  • 31. Improve capabilities in key performance areas Use of Technology Collaboration in Product Development Increase Efficiency and Productivity Consistent Manufacturing Standards
  • 32.
    • Build capabilities in the following areas:
      • Productivity Improvements across Supply Chain
      • Consolidating Operations
      • Building Logistic Capabilities
      • Developing long term relationships with Clients
      • Collaborating with buyers on forecasting and inventory management
      • Investing in IT infrastructure and compliance
    What Needs to be done
  • 33. What Needs to be done
    • Think Value Not Price
    • Be on the Cutting Edge of Performance
    • Reduce Cycle Time, Improve Flexibility
    • Redefine Strategic Partnerships
    • Align With a Few Truly Strategic Partners
  • 34. Thank You