Leather industry of pakistan


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Analysis of Leather Industry of Pakistan

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Leather industry of pakistan

  1. 1. What is leather? Leather, in the largest scope is any hide or skin taken from an animal that has been processed by tanning. There are many different ways of tanning leather. The end result of the leather being tanned is subject to the method used. The term “hide” is used for the skin of cattle The term “skin” is used for the skin of smaller animals like goats, sheep and calves.
  2. 2. Where does leather come from? The animals from which the hides are taken vary depending on what leather product is to be manufactured. Each hide can be split into layers to manufacture different products some animals that are used are cowhide, goatskin.
  3. 3. History • At the time of independence there were only a few tanneries producing sole leather and that too at a very small scale. • In the early days of independence some tanneries were established in Karachi • In 1950's some were established in Lahore and adjoining areas. • The 1960's saw the installation of more units in other parts of the country like Multan, Sahiwal, Kasur, Gujranwala and Sialkot. These units were well-equipped with the latest and modern facilities.
  4. 4. • More advanced units were established in the 1970's and Pakistan started production of finished leather. • The era of 1980's saw a period of improved quality production. • In 1990 the leather sector jumped to become the second largest foreign exchange earner for the country by contributing 10.41 percent toward the total export revenue. • During July-November 2008-09, the leather exports of Pakistan faced a decline of 27 percent while India, which exported 43 percent more leather garments, witnessed 27 percent increase in its leather exports during the same period.
  5. 5. Present scenario • PAKISTAN is considered to be the hub of producing high quality Leather and Leather Products, and there are about 800 Tanneries in the country actively engaged in producing best quality finished leather of Cow, Buffalo, Sheep & Goat skins. • Pakistan is rich in agricultural products and has a large livestock population which plays an important role in the economy of Pakistan by producing around 13.0 Million Hides and 47.4 Million Skins per annum (2009-10)
  6. 6. • The quality of goat skins, cow, buffalo hides in Pakistan is satisfactory. The type of sheep skins we have in Pakistan is better in respect of grain, substance and compactness of fibers. Leather manufacturers & exporters are determined to increase export of quality finished leather and leather products. • The industry is playing their positive role in activating WTO with quality consciousness and full sense of responsibilities to uphold the perfect image of Leather Industry of Pakistan. As being the most significant contributor or the country’s GDP and foreign exchange earnings, •
  7. 7. • The Leather Industry of Pakistan is employing more than 500,000 peoples directly and indirectly. (2009-2010) • It contributes 5% of GDP and 5.4% to the overall export earnings of the country and is considered to be the most significant sector.
  8. 8. Raw Materials 1. Hides • Cow: The cow raw material is considered a superior raw material upon buffalo because of its fine, tight and comparatively uniform structure. • Buffalo: It is considered as the specialty of Pakistan in World.
  9. 9. 2. Skin • Goats: It is good for making shoe upper leathers, garment and goods leather. • Sheeps: Leather made from sheep raw materials has a very good and softer touch and considered best for leather garments.
  10. 10. Major Products • Footwear • Leather garments • Leather gloves • Handbags and purses • Key chains • Wallets • Sports goods
  11. 11. TYPES OF LEATHERTYPES OF LEATHER In general, leather is sold in three forms • Full-Grain leather or Top-Grain is referring to the upper section of a hide that contains the epidermis or skin layer. • Corrected-Grain leather is any Top-Grain leather that has had its surfaces sanded, buffed or snuffed in order to remove any imperfection on the surface due to insect bites, healed scars or brands • Split leather is leather that is created from the fibrous part of the hide left once the Top-Grain of the raw hide has been separated from the hide.
  12. 12. PRODUCTION PROCESS • Vegetable-tanned leather • Chrome-tanned leather • Aldehyde-tanned leather • Synthetic-tanned leather • Alum-tanned • Rawhide
  13. 13. Vegetable tanning • Vegetable tanning is a method of using plant material like bark and leaves to convert animal skins into durable leather . • Vegetable tanned leather is created by tanning the animal skin, using a natural product found in plants and trees. • Tannins produced by plants and trees, give the roots and stem their natural brown color. • By extracting the tannin or boiling the leather with the plant or tree material, the leather is dyed a natural brown color depending on the type of plants or trees
  14. 14. CHROME TANNED/WET BLUECHROME TANNED/WET BLUE • It was invented in 1858 and introduced in 1980’s in Pakistan. • It is tanned using chromium sulfate and other salts of chromium. • It is more supple and pliable than vegetable-tanned leather, and does not discolor or lose shape as drastically in water as vegetable-tanned. • Also known as wet-blue for its color derived from the chromium. More esoteric colors are possible using chrome tanning.
  15. 15. Tanning Process 1. Warehousing and sorting 2. Soaking 3. De-Fleshing 4. Liming 5. Bating, pickling, tanning 6. Samming 7. Splitting
  16. 16. 8. Skiving 9. Sorting 10. Neutralizing, filling out, dyeing and greasing 11. Drying 12. Staking 13. Finishing 14. Quality Control 15. Dispatch
  17. 17. Pricing strategy • The grading system is the method manufacturers use to present their pricing structures to retail dealers. Leather suppliers also use a grading system to distinguish their leathers and prices to manufacturers. • Grades may vary according to different producers. One producer's “A" may be another producers grade “3" or “4". • Leather craft's grading system features five grades • The lower grades represent various different leather qualities ranging from painted hides to corrected hides to anilines. • This year the price of a cow hide ranges from Rs 1,600 to Rs 1,900, goat Rs 240 to Rs 250 per skin and for sheep the price stands at Rs 370 to Rs 400 per skin. (2009)
  18. 18. Problems faced by the industry • Quality • Cost of production • The issue of chrome • Shortage of water
  19. 19. • Energy Issues • Environmental challenges • Waste water • Solid waste • Air emissions
  20. 20. Leather industry may receive 20 per cent less animal hides DAWN.COM November 18, 2010 • KARACHI: The relatively soaring price of animals and their less numbers could result in 20 per cent less hides to the leather industry this year. • Due to inflation, high prices and low number of animals, people preferred collective sacrifice of animals. According to an estimate, around 70 per cent cows and 30 per cent other small animals have been sacrificed this year. • This scenario shows the leather industry may face 20 per cent less hides this year. Also, soaring prices of hides may disturb the industry and leather exports. — DawnNews
  21. 21. How many cattle died and its recent prices • Visiting the rain-effected areas, Prime Minister Syed Yusuf Raza Gilani claimed that 64,000 cattle heads had been lost in 21 districts of the province. (2011- dawn news) • According to Sindh Livestock Department Secretary Laeeq Memon, only 12,066 cattle heads were lost during the monsoon rains till September 10. Of these, 729 were cows, 1,154 buffaloes, 3,505 sheep and 6,068 goats. (2011 - dawn news) • The price of a healthy goat is no less than Rs 15,000, while a medium weight heifer (young cow) may cost around Rs 40,000 this year. Last year, price of a sheep/goat ranged between Rs 9,000 to Rs 10,000 and a heifer was sold between Rs 20,000 to 30,000 per head ( 2011 - business recorder)
  22. 22. Five Years Export of Leather & Leather Products
  23. 23. Percentage share of Leather Products in Export Performance (2009-10)
  24. 24. Where does leather Industry fall in WTO • General : Hides and skins and leather are covered under the Agreement on Agriculture of WTO. Moreover, the Agreement on Agriculture also has indirect implications for the sector through meat and dairy policies. • Tarrifs: No import tariffs are applied to raw hides and skins in Pakistan at present. Tariff escalation (Increase in price, specially due to inflation) . is an issue for leather and leather products as import tariffs vary according to the level of processing; i.e. finished leather, leather bags, leather shoes etc. Carry high tariffs in some countries. • Export subsidies : Direct export subsidies/refunds are hardly used in the sector. However, at present Pakistan is giving 25 per cent freight subsidy on exports of leather garments for a period of one year, starting from January 1 to December 31, 2005 . • Environmental measures Tanning industry can be highly polluting, The cost of meeting environmental standards is one reason for shift of activity from developed to developing countries.
  25. 25. • Food security Provides income for processors and is a source of employment in tanning and manufacturing. • Export restrictions and prohibitions Export prohibitions, export taxes and combinations are used in a number of developing countries. Pakistan at one time was using export prohibitions against raw hides and skins. However, there are no more export restrictions at the present. • Food security Provides income for processors and is a source of employment in tanning and manufacturing. • Rural Development : Important. • Safeguard measures: Limited
  26. 26. STRENGHTS • Eid- ul- azha • Availability of cheap manpower. • High demand in international markets. • Skins can be obtained in huge amount because there is a lot of meat consumption in pakistan • Fashion*
  27. 27. WEAKNESS • Rising production cost makes leather industry uncompetitive. • Hides and skins are lost due to skin diseases, malnutritions, and primitive slaughtering techniques • Environmental Issues. • Energy crisis. • Smuggling of raw materials and live animals. • Meat prices and the prices of raw hides and skins are also indicative of this unchecked draining out of live animals.
  28. 28. OPPRUTUNITIES • Export of garments using allowable fox fur trimmings for decoration should also be permitted for boosting export of value added leather garments. • Export of wetblue grain and split leather is another demand of leather industry which is not been taken care of. • Latest plant and machinery is available off the shelf in the international markets and can be purchased in short span of time in pakistan.
  29. 29. Threat • Competitors in the market. • According to sources approximately 1.5 million animals were killed due to the devastating floods in the country. (business recorder 2010) • High cost of production
  30. 30. Recommendations 1. Introducing Brand Names 2. Focusing on Footwear Sector 3. Control on Smuggling 4. Control on Diseases of Livestock 5. Reduction of Duties on Machinery
  31. 31. 6. Imports should be made duty free 7. New process and new machinery should be introduced that could improve the quality and reduce the cost of production 8. Training must be given to the work force.
  32. 32. References • http://www.streetdirectory.com/travel_guide/62681/modelling/leather_ what_is_it.html • http://www.fashionnetasia.com/en/BusinessResources/2285/AN_OVERVI EW_OF_PAKISTAN_LEATHER_INDUSTRY.html • http://www.dawn.com/2010/11/18/leather-industry-may-receive-20-per- cent-less-animal-hides.html • http://www.pakistantanners.org/ • http://www.textilesindepth.com/index.php?page=about-leather • http://www.scribd.com/doc/24975694/Analysis-of-Leather-Industry-in- Pakistan