03-27-2009, 06:20 PM
Adil,
My point was not to reduce the finance charge. Rather, I explained that liquidity, availability of funds (equity+debt) at appropriate gearing level, capacity to incur and hold and economy of scale would be determining the survivals.
I, however, said that finance should be made available to the textile sector at cheaper rates and this is the area where economist have to concentrate. This was mentioned to draw a line (as per my apprehension) between the role of economists and others.
I guess, going for value addition products and processes and the BMR/revamp of existing facilities is very important. Further, our competition is primarily with China and then India and Bangla Desh. The textile units at China are of such scale that our normal entraprenuer can't even think about. The solution could be uniting of interests to achieve the economy of scale and compete with the people who can serve any order by using the production facilities available within one premises. We know so many orders don't come to Pakistan because none of our industry can isolatedly serve it and ensure timely supply. So, either uniting of interests (at least by isolated family concerns or otherwise) or enhancing the production scale through new investment can achieve the objective. This is in fact very hard task to be achieved.
Our production people are largely unskilled and inefficient. The CEO of a large stitching unit at Karachi told me that the efficiency of a skilled woker at Bangla Desh is many times better than the efficiency of our skilled worker. We can see it every where be it stithcing, CMT, packing, loading, shifting, processing, dyeing or whatever. This is also a big challenge and may need investment on HR areas, training and dissemination of all policies and procedures. If we analyze per worker pieces of output, or sales per worker, or throughput per worker, we may come to know that a greater difference exists even at Pakistan from one industry to the other. At least, people should compare the similar industries to calculate workers per spindle, per machine, per piece of out put and other such analysis, to judge where does one fall. Lay offs may be necessary where inefficiency is evidenced.
Apart from it, industries have so many adhoc based appointments, e.g unnecessary peons, security, admin, cooks, helpers, sweepers, time keepers and so on who in fact do nothing except for increasing the costs. In my view there is a need of very efficient time office to and attendance system. The people wandering hither and thither un-necessarily must be identified and fired out. Outsourcing could be an alternative to save costs and must be analysed.
The costs which you are pointing out are off course unbearable given the competition in the market. Still, our industry faces anti-dumping and opponents prove it always. I can only comment that unless the ecomomy of scale is achieved and large and diversified composite units are in place survival would be very difficult, although it may not be impossible. This needs funds.
Do you know Six Sigma? Some Pakistani industries are following six sigma approaches to reduce the costs. Even in textile sector I have seen its implementation. This, if doing nothing, at least increases the awareness to reduce the costs. Its implementation and training is also costly for small industries.
These are a few comments. The subject is very large and cannot be summed up in short posts. I would request you to raise very specific queries if you like so that every question could be specifically discussed.
You may also provide us the insights which you have experienced at this sector.
If some one will discuss other sectors in the way textile is being discussed, it would be good to concentrate and share the knowledge.
Regards,
KAMRAN.
My point was not to reduce the finance charge. Rather, I explained that liquidity, availability of funds (equity+debt) at appropriate gearing level, capacity to incur and hold and economy of scale would be determining the survivals.
I, however, said that finance should be made available to the textile sector at cheaper rates and this is the area where economist have to concentrate. This was mentioned to draw a line (as per my apprehension) between the role of economists and others.
I guess, going for value addition products and processes and the BMR/revamp of existing facilities is very important. Further, our competition is primarily with China and then India and Bangla Desh. The textile units at China are of such scale that our normal entraprenuer can't even think about. The solution could be uniting of interests to achieve the economy of scale and compete with the people who can serve any order by using the production facilities available within one premises. We know so many orders don't come to Pakistan because none of our industry can isolatedly serve it and ensure timely supply. So, either uniting of interests (at least by isolated family concerns or otherwise) or enhancing the production scale through new investment can achieve the objective. This is in fact very hard task to be achieved.
Our production people are largely unskilled and inefficient. The CEO of a large stitching unit at Karachi told me that the efficiency of a skilled woker at Bangla Desh is many times better than the efficiency of our skilled worker. We can see it every where be it stithcing, CMT, packing, loading, shifting, processing, dyeing or whatever. This is also a big challenge and may need investment on HR areas, training and dissemination of all policies and procedures. If we analyze per worker pieces of output, or sales per worker, or throughput per worker, we may come to know that a greater difference exists even at Pakistan from one industry to the other. At least, people should compare the similar industries to calculate workers per spindle, per machine, per piece of out put and other such analysis, to judge where does one fall. Lay offs may be necessary where inefficiency is evidenced.
Apart from it, industries have so many adhoc based appointments, e.g unnecessary peons, security, admin, cooks, helpers, sweepers, time keepers and so on who in fact do nothing except for increasing the costs. In my view there is a need of very efficient time office to and attendance system. The people wandering hither and thither un-necessarily must be identified and fired out. Outsourcing could be an alternative to save costs and must be analysed.
The costs which you are pointing out are off course unbearable given the competition in the market. Still, our industry faces anti-dumping and opponents prove it always. I can only comment that unless the ecomomy of scale is achieved and large and diversified composite units are in place survival would be very difficult, although it may not be impossible. This needs funds.
Do you know Six Sigma? Some Pakistani industries are following six sigma approaches to reduce the costs. Even in textile sector I have seen its implementation. This, if doing nothing, at least increases the awareness to reduce the costs. Its implementation and training is also costly for small industries.
These are a few comments. The subject is very large and cannot be summed up in short posts. I would request you to raise very specific queries if you like so that every question could be specifically discussed.
You may also provide us the insights which you have experienced at this sector.
If some one will discuss other sectors in the way textile is being discussed, it would be good to concentrate and share the knowledge.
Regards,
KAMRAN.