Vol. No. 027 - June, 2012 Monthly Magazine
Pakistan Hosiery Manufacturers and Exporters Association
PHMA MAGAZINE I n f o r m a t i o n - Yo u r E x p o r t P a r t n e r
Magazine Inside Pg 1 Pg 2 Pg 3
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The Budget Game Exporting Value in Textile Knitted Garments Production Competitiveness: A Way for Sustainability Readymade Garment Industry-EU Package Delay Worries Exporters News of the Month Call for Write – up
The Budget Game
Editorial Note
Budget is no longer a secret magic. It is obvious and prepared within the given circumstances of the economy. Hopes of business circles were already at a very low end, and that is well proved after announcement of the Finance Bill 2012-2013. State of economy as portrayed in the Economic Survey of Pakistan 2011-2012 by the government itself speaks of the bitter facts about worst condition of every section of economy. It therefore demands that social sectors like education and health should be given top most importance. Thereafter, every possible effort and its related focus should be on growth of economy, provision of employment to population and progress of industry that pose far reaching impact on all aspects of the economy. Value added textiles, being the most important sector for providing jobs to population must have been taken care of but it seems that priorities of the government lie at a far distance. Economic managers of the country must keep in mind that job opportunities for public lie in the growing industrial sector only and that must be given due importance in every economic policy of the country. It is pity that the federal budget does not speak of any steps required for improvement of the industry or to address the power and energy related issues confronted there. Such burning and important issues have not been even touched in the budget. We need to square off with a strong will and determination to change the lives of our people by way of providing them job opportunities for their prosperity. Mohammad Ayub Secretary PHMA (North Zone)
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Exporting Value in Textile Value addition in industry brings many folds more money and profit to the industry. Therefore, the industries in value addition business are always backed by the respective government through value addition friendly policies. The state support for value addition sector reflects in export of value addition, business facilities and import of high tech machinery for that very sector.
Export through value added Pakistan is known as agriculture country leading to one of the largest textile sector in the country. The apparel sector represents value addition in entire chain of textile. Ideally, the apparel sector should be backed by policy interventions and reflects high level of growth. In contrast to above stated fact, apparel sector in Pakistan is being ignored for many years. The following graph reflects export of different players in entire chain of textile. The knitwear sector representing value addition sector has registered modest growth during last five years. The cotton yarn and thread has increased its export at high rate. Similarly the export of cotton fabric also showed recent jump growth in export.
Investment in value added sector The investment through high technology base
Imports of Textile Machinery & Parts Sector
US$ Million
167.65 Weaving 97.81 Knitting 29.32 Finishing 78.89 Embroidery 46.78 Garments 29.04 Non-Woven 1.08 Source: Megatech Pakistan 2012 Spinning
machinery is very clear indicator of growth in the sector. The spinning sector has invested largest amount of $ 167 million in import of new machinery followed by weaving sector. The garment industry invested only $ 29 million in 2010, which reflects the ignorance of this sector. The less investment in value added sector indicates less favorable policies and zero attention of authorities. The unavailability of energy adds fuel to the fire which encourages flight of investment in value added sector of Garment.
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Knitted Garments Production Competitiveness A way for sustainability Dr. Muhammad Mushtaq Mangat The article aims to highlight the issues of Knitting It is believed that more than 50% improvement is productivity and its improvement. More specifically this article identify 1) Areas where drastic improvement is possible with less knitting faults , more production per possible 2) Develop a relationship between productivity and different factors of production 3) Cost benefit analysis machine, better fabric quality, less consumption of and 4) Recommendations knitting parts and improve labor productivity etc. The Knitting Productivity:
Knitting is the first process of whole process to convert yarn into a value added knitted garment. It has been observed during survey that at the time of panel inspection in cutting department, more than 50% rejection of panels is due to knitting faults. Moreover, 20% garments rejected before packing due to this. Knitting Technology: Twenty years ago the maximum production of one machine was 300 Kgs a day and now more than 1500 Kgs a day due to technology. There are machines that can run at speed of 50 above revolution per minute, gauge more than 40, diameter plus 60 inches and feeders up to 316, fully garment knitting machines, stripers and jacquard on same machine, interchangeable structure, totally computerized etc. In addition to that people have made machine (still not commercially used), on which we can feed sliver (align fibers) and machine will convert this sliver into yarn. In this way no need of full fledged spinning mills. Unfortunately, our industry is still stick with still stick to old management practices resulting ourselves less competitive in the international market. Knitting Process Explanation: Knitting is a process in which fabric is made by inserting loop into loop. In this process yarn loops are made with the help of needle hook and these loops are passed through previously made loops already hold by the needle Loops are mainly responsible for elasticity and resilience of the fabric. Knitting Fabric Production Process: There are number of factors involve in production process having significant impact on productivity of the knitting as ;
1. 2. 3. 4. 5. 6. 7. 8. 9.
Controlled environment in knitting hall (moisture and temperature) Machine maintenance Quality of compressed air Quality of needles and sinkers Yarn storage place and methods Fabric storage Lubricants quality Fluff level in the environment Skill of workers
manufacturers of knitting machines recommend controlling environment in the knitting hall for more better results.
Controlled Moisture Percentage and Temperature: In Pakistan, knitting industry is confined only in three major cities of Pakistan; Lahore, Faisalabad and Karachi. There is a significance difference in climate of Punjab and Sindh. Even in Punjab, temperature varies from -2 to above 50 C째 in different parts of the year. Same is the case with moisture %. In rainy season it crosses 80% and in dry season it reduces to 20% and sometime less than it. It is also worth to note that that in knitting we use more than 80% pure cotton yarn and rest is polyester cotton blend. We use very rare 100 synthetic yarns. Cotton is highly absorbent. It can absorb up to 8.5 % moisture. Tensile strength of cotton increases with the increase of moisture. Furthermore, it gains weight which is quite logic. To avoid variation in the strength and weight, the moisture must be around 65% (Relative Humidity) and temperature must be near to 20C째. Kindly note that this paper has been written in the perspective of textile and clothing industry of Pakistan.
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Cost and Benefit Analysis of an Air Conditioning Plant the cost benefit analysis of an air conditioning plant for a knitting mill, where 20 knitting machines are installed. As per our calculation, pay back period of whole investment is less than six months. Table 1.1: Fixed Cost and Variable Cost of an Air Conditioning Plant Price of an air conditioning plant including Rs. 2,000,000 installations for 15000 Sq ft area Financial Charges @ 15% per Annum Rs. 300,000 Depreciation 10% Annually RS. 200,000 Cost of electricity and maintenance per year Rs. and labor 1,000,000 Total working annual cost Rs. 1,500,000
Table 1.2: Benefit of Air Conditioning Plant Total Number of Knitting Machines Total Annual Production based on average 300 Kgs per day per machine, 300 days in a year Increased in production (20 -25% ) Commercial Knitting Charges of Extra Production @Rs. 10 per Kg
20 1,980,000 Kgs 396,000 3,960,000
There is a direct saving of more than three million Rs. Moreover, there will be another benefit of less needle and sinker breakage, less knitting faults, along with better fabric quality, above all healthy, pollution free environment for workers. It shows that whole investment has pay back period less than one year, which is quite attractive. it is recommended that all knitting mills should have air conditioning plant to improve their productivity. We also recommend that instead of a big knitting hall, we should focus to have an efficient hall.
Cool and Dry Compressed Air Second important factor is compressed air of 125-150 pounds per square inch pressure, which is used in knitting for cleaning and oiling purpose. It goes into the deeper parts of the knitting machine to remove fly from the machine. Furthermore, it is used along with oil to make inner parts of the machine fully lubricant to avoid any friction. It is one of the most important inputs in knitting productivity factor. When air is compressed in a vessel its temperature increases and at the same time, moisture percentage in the compressed air also increases. High temperature and high level of moisture both are dangerous for knitting. Particularly, needles and sinkers are the main victim of high moisture. To avoid it, it is recommended by all machine manufacturers that we should use compressed air free from moisture and it should have low temperature (less than 20C°). The advantages of cool, free from contaminant and dry air are; Reduction in needle breakage, Avoiding rust on machine, Smooth running of machine and Reduction in accidents . In our knitting industry, mostly people use compressed air without treating. There are machine and equipments, available to reduce the moisture level and keep air temperate low. Other than the two above-mentioned areas, knitter should focus on the following points: 1. Yarn and greige fabric storage 2. Machine maintenance 3. Lifter to move yarn and fabric in knitting hall It is expected that by focusing these points one can have the following advantages: 1. Avoiding Mixing of yarn 2. Less yarn variation 3. Less left over yarn 4. Less yarn wastage 5. Better machine maintenance helps in better production, a universal truth Adopting all above recommendation it is expected that knitter can increases its profitability more than 25% along with a better
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image of the firm in the minds of the customers, internal and external both. “Knitting Technology“, published by Mayer and Cie.
Readymade Garment Industry-EU Package Delay Worries Exporters Dr. Noor Ahmed Memon Institute of Business and Technology, BIZTEK Pakistan apparel and garment sector have expressed concern over delay in the implementation of the eagerly awaited EU Trade Concessions Package. The EU announced the package for Pakistan to grant relief and help offset the losses suffered due to devastating floods in 2010. Under the package 75 Pakistani items, including 65 textile and garment items, qualify for concessional duty access to the EU. However, a meeting of the EU Parliament, the economic package is announced by the EU for Pakistan got politicized, following which the chances of its implementation have decreased. When EU last year announced the two-year package, extendable to third year, India raised an objection at the WTO. Subsequently, Bangladesh and a few other countries too objected the package. India withdrew its objections after Pakistan granted it the Most Favored Nation (MFN) status in November last year. After appeasing Bangladesh and other countries objecting to the proposal to take back their objections, WTO approved the EU concession package early this year. Currently, the package awaits approval from the EU Parliament, before it comes into effect. However, with Spain, Portugal and Germany raising objections to the concession package citing economic downturn in Europe, the package is currently being redrafted. The authorities said if the redrafted package fails or is not implemented, it is likely to negatively impact Pakistan's bid for GSP Plus status that is scheduled to commence from January 1, 2014. Readymade garment industry has emerged as one of the important small scale industries in Pakistan. Its products have large demand both at home and abroad. The local requirements of readymade garments are almost wholly met by this industry. Its exports in 2010-11 stood at US $ 1.77 billion or 7.1% of the total exports. Garment industry is also a good source of providing employment opportunities to a large number of people at a very low capital investment. In Pakistan woven garments have grown rapidly in recent years and now account for almost 10% of Pakistan's total export earnings. North America and the EU are the major markets supplied by Pakistan and together account for over 50% of Pakistani garment exports. Raw Materials: The readymade garment industry uses both locally produced and imported raw-materials, but it mainly uses locally produced raw materials. The production of cotton and cotton blended cloth, which are largely used by the garment industry, is not only sufficient but also surplus for exports for domestic market. Besides the mill sector, the non-mill sector also produces cotton cloth which is widely used by the garment industry. The non-mill sector is scattered and unorganized. Its production is decreased to 8.95 billion square meters in 2010-11, from 9.00 billion square meters in 200102. According to an estimate there were about 2, 50,000 looms operating in the non-mill sector. The power loom sector produces pure cotton, polyester, viscose and blended fabrics, which usually fetches low prices in the market. The other locally produced raw materials of the readymade garment industry which include lining, thread, buttons, interlinings, labels, polythene etc. are whether imported or manufactured by the un-organized sector. The production data of these is not available. However, these are also produced locally in fairly large quantities and have easy availability. The quality of some of the locally produced raw materials, such as threads, buttons, interlining, etc., is not as good as the imported. Secondly, some items of the readymade garment industry are not produced locally, the requirements, of which are met through imports. Import of Machinery: Pakistan import various kinds of sewing machinery and part from world wide. The industrial sewing machines are mainly imported from China and Japan and are capable of working at high speed up to 4,500 stitches per minute. These are especially suitable for assembly line operation and are mostly used by the organized sector. Besides industrial sewing machines, household sewing machines along with parts and electric irons are also being imported. Imports of sewing machines and their parts are given in Table-1 and country wise imports of industrial sewing machines are given in Table-2. The other important machines used by the ready-made garment industry are the over-locking machines, which is used to trim and overlock the edges of cut cloth. In addition, specialized machines are used for cutting, making button holes and stitching of buttons.
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Table 1: Import of Sewing Machines and Parts
(Value: Rs. Million)
2008-09 2009-10 Quantity Value Quantity Value Sewing machines / CKD (household) 000 kg 1 2.4 27 61.2 Other Sewing Machines (household) No 21,434 101.0 16,091 34.26 Automatic Sewing Machines No 288 38.2 968 93.23 Other Sewing Machines (Industrial) No 40,433 33.8 88,773 1318.8 Sewing Machines needles 000 kg 71 780.0 77 160.0 Furniture Sewing Machines 000 kg 1 142.6 1 1.0 Parts of Sewing Machines 000 kg 166 1.2 143 161.9 Total -- 1099.2 -- 1830.39 Source: Federal Bureau of Statistics, Government of Pakistan. Machines / Parts
Unit
2010-11 Quantity Value 46 101.0 28,594 60.7 1,137 48.0 89,898 1687.2 78 166.0 4 4.1 112 146 -2213.0
Table 2: Country-wise Import of Industrial Sewing Machines 2010-2011 Quantity (No) Value (Rs. 000) China 43,868 617,738 Germany 8,210 258,105 India 2,160 28,262 Italy 1,213 36,959 Japan 22,195 445,811 Korea Republics 1,605 40,341 Asian Countries 3,774 96,507 Singapore 2,962 74,940 Hong Kong 779 17,329 Malaysia 669 16,126 Turkey 478 11,998 Vietnam 250 15,564 All others 1,735 27,570 Total 89,898 1,687,250 Source: Federal Bureau of Statistics, Government of Pakistan. Country
2009-2010 Quantity (No) Value (Rs. 000) 40,377 453,956 186 3,943 3,414 27,016 313 9,321 22,788 406,050 3,841 77,910 8,505 141,330 2,442 65,517 1,734 23,757 796 22,258 --655 14,944 3,722 72,754 88,773 1,318,756
Exports: Production of garments by units depends on export orders directly or indirectly. Table 3: Exports of Readymade Garments from These orders have somewhat risen in terms of value, but they have fluctuated widely in Pakistan terms of quantity. Generally export earnings from garments have increased Quantity Value tremendously. Exports increased from 28 million dozens of various types of readymade Year (Million Doz) (US $ Million) garments worth US$ 1.30 billion in 2009-10 to 36 million dozens worth US$ 1.77 billion in 2000-01 36 827 2010-11, thus showing an increase of 38% in terms of value. Export of readymade 2001-02 41 875 garments is given in Table-3. 2002-03 61 1,093 Pakistan exports garments to a number of countries. Major buyers of readymade 2003-04 28 993 garments during 201-11 were USA, Germany, UK, Spain, France, Italy and Netherlands. Major Thrust: At present the major thrust of garments exports from Pakistan is on the USA market. The European Union is the second largest market for garment manufacturers from Pakistan. Pakistan's export success in the US is limited to categories men and women's knitted shirts. Pakistan's share of all US garments exports is 28%.The share of the EU market in knitwear is 10% in the following products groups: USA - Playsuits, baby-wear, nightwear, underwear and sweaters. EU- gloves, socks, shirts, nightwear, trousers, baby-wear, sportswear.
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2004-05 34 1,088 2005-06 37 1,310 2006-07 41 1,385 2007-08 42 1,592 2008-09 29 1,230 2009-10 28 1,269 2010-11 36 1,774 Source: Trade Development Authority of Pakistan.
Local demand of readymade garments during the past five years increased due to increase in GNP, urbanization and population. Growing tailoring charges will induce the people to purchase readymade garments in larger quantities in the coming years. On the other hand industry also provides an impetus to many other allied industries such as spinning, weaving, printing /dyeing processing and also provides employment to various artisans, such as embroidery art-work, block printing and hand screen printing, cutting, stitching and packing etc. At present Pakistan is fast losing its share in the global garment market, because of high cost of production. Garments exports from Pakistan's traditional competitors in the region - Bangladesh, Sri Lanka, China and India - have picked up dramatically because the exporters of those countries are getting hidden subsidies from their respective governments. The apparel segment is the highest value added link in the entire textile value chain. The global trade in the sector accounts for 53% of the total value of global textiles trade and is consistently growing since the last two decades. On the other hand Bangladesh gets duty-free access to the neighboring countries in the US. At present Bangladesh has earned $US 17.91 billion in the fiscal year to June 2010-11 by exporting ready-made garments. Garments accounted for three-quarters of the country's total export income. Garment exports, including readymade garments, primary textiles and knitwear, account for more than 80% of national export income. Bangladesh apparel exports have grown to Germany, USA, UK, France and Netherland. Bangladesh is in the process to get duty-free export of garments to Russia, Malaysia, Pakistan and the member countries of the Association of South-East Asian Nations. Export of readymade garments from Bangladesh is given in Table-4.
Table 4: Bangladesh: Export of Readymade Garments (RGM) (US $ Million) Year
Woven
1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-011
2,483 2,985 3,083 3,364 3,125 3,258 3,538 4,084 4,658 5,167 5,919 6,013 8,432
Knitted 940 1,035 1,270 1,496 1,459 1,654 2,148 3,817 4,554 5,533 6,429 6,483 9,482
Total 3,783 4,020 4,353 4,860 4,584 4,912 5,686 7,901 9,212 10,700 12,348 12,496 17,914
Source: Bangladesh Knitwear Manufacturers and Exporters Association.
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News of the Month 1. Cotton Production in Pakistan Pakistan's cotton production for the year 2012-13 as 10% increase in area and production. It is forecasted that Pakistan's cotton cultivation on 3.3 million ha and production as 11million bales (480 lbs per bale) equivalent to 14.1 million bales (170 kg).Looking at the ground realities, the Government of Punjab has approved 8 and not 11 new biotech and 6(not 3) non biotech varieties. With Thanks to: Ministry of Textile, Pakistan 11th May 2012 2. Import of PolyesterYarn, Cotton Cloth Rises As the industries bow out of production due to excessive power and energy crisis there has been a sharp increase in import of polyester yarn and cotton cloth in Pakistan cutting into the share of domestic textile industry. Citing the figures of Federal Bureau of Statistics (FBS), he said that in 2009-10, Pakistan imported 5.19 million tons of polyester yarn. In the fiscal year 2010-11, the imports increased to 27.616 million tons, while in the first six months of 2011-12, during July-December, the imports of polyester yarn increased to 63.29 million tons and are expected to cross 150 million tons by the end of this fiscal year. With Thanks to:The News, 25th May 2012 3. Global Demand for Nonwoven Fabrics to Reach 9.3 Mt in 2015 Global sales of nonwoven fabrics are forecast to increase 6.9% annually to 9.3 Mt in 2015, according to a new study from The Freedonia Group. Growth rates in developing regions will remain higher than those projected for developed areas (see Table above), mainly owing to continued industrialization efforts and increasing personal income. With Thanks to: Research Development and Advisory Cell (RDACELL), 29th May 2012 4. Rupee Depreciation Troubles Indian Apparel Exporter Normally, any depreciation in the value of the Indian currency against the US dollar is welcomed by garment exporters. But, not so this time as the situation is different. In financial year 2010-11, India's apparel exports stood at Rs. 11.4 billion. The garment exports increased to about Rs. 13.4 billion in 2011-12.However, the growth in clothing exports in 2011-12 was not due to rise in volume of exports. It was because of increase in prices of raw material and weakening of the rupee With Thanks to: Fibre2fashion, News Desk - India 30th May, 2012. 5. Relocation of Industry Out of Pakistan Nobody can deny that a sizeable number of value added textile units have been shifted from Pakistan in different countries like Bangladesh, Jorden etc.This is alarming for already ailing economy of the country. News media is elaborating this alarming condition With Thanks to:The News , 30th May 2012. 6. H&M to Raise Apparel Sourcing From Bangladesh Sweden-based Hennes & Mauritz (H&M), the world's second-largest clothing retailer, is looking at increasing its sourcing from Bangladesh. A recent study undertaken by McKinsey, a leading research company in US, states that Bangladesh's apparel exports are expected to grow almost two-fold by 2015 and three-fold over the next 10 years. This is because leading buyers from China are shifting to Bangladesh as capacity constraints and rising labor costs in China are eroding their profit margins. With Thanks to: Fibre2fashion, 31st May, 2012
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