TOPIC:-

LOCAL MANUFACTURING EFFECT ON LOCAL SOCIETY

MANUFACTURING:
The process of converting raw materials, components, or parts into finished goods that meet a
customer's satisfactions or expectations.

LOCAL MANUFACTURING:
Local manufacturing is a form of decentralized manufacturing practiced by enterprises using a
network of geographically dispersed manufacturing facilities that are coordinated using
information technology.

There are many benefits of Local manufacturing some are as following:

1. Development of new technologies and innovation in industry.

2. Economic development.

3. Wide-spread utilization of IT due to affordability of locally assembled products.

4. Increase in Foreign direct exchange.

5. Respectability of products "Made in Pakistan" due to government support.

SOCIETY:
The aggregate of people living together in a more or less ordered community. It can be defined
as group of people that share territory and who have a shared culture.

LOCAL SOCIETY:
Local society has been defined as a group of interacting people living in a common location. It
refers to large group of people that is organized around common values and is attributed with
social cohesion within a shared geographical location.

MANUFACTURING PROCESS:
1. Casting

2. Imaging and coating

3. Molding

4. Forming

5. Machining

6. Joining

7. Additive manufacturing

8. Packaging and labeling

Manufacturing systems changes in methods of manufacturing.

Examples of Local Manufacturing:

The manufacturing sector is closely connected with engineering and industrial design. Examples
of major manufacturers in North America General Motors Corporation, General Electric,
General Dynamics and Pfizer.

Toy manufacturer, Smartphone accessory maker, textile producer, furniture maker, candy maker,
bread maker, shoe maker, belt maker, makeup production, carpet maker, picture frame makeup,
pillow manufacturer, kitchen utensil manufacturer and leather manufacturer.

Manufacturing companies in Pakistan:

1. Fit Professionals:

Main products are leather goods, fitness clothing, accessories and casual apparels.

2. Aaron Traders:

Main products are sportswear, tracksuit, hoodies, T-shirts

3. Vafir Industry:

Main products are team uniform, sportswear, sports jacket, sports bag, sports accessories.

4. Mega Impex:

Main products are all types of sportswear, casual wears, sports products, caps
5. Zimka Sports CO. :

Main products are polo shirts, T- shirts, track suits, coach jackets and jackets.

6. Star Force International:

Main products are boxing wear, martial arts wear and fitness gear.

7. Inmate Industries:

Main products are weight lifting belt, power belt, lever belt and fitness wears.

ADVANTAGES OF LOCAL MANUFACTURING TOWARDS LOCAL

SOCIETY:

Quick Turnover Intervals & Internal Boost for Economy:

As communication is more efficient and production under control, domestic development and
manufacturing timelines can be about half or even one-third of that of overseas. Clear
communication and keeping production under control also helps to eliminate hold-ups in
customs and delays with overseas shipments. Meaning, making profit out of produced goods
doesn’t come with an immense delay, so the return can quickly be invested elsewhere within the
business. Also, you may consider that by using domestic labour you also contribute to the local
economy, which means fair wages controlled by the government and more honest tax payers. It’s
a real win-win no overseas production plan can easily surpass.

Waste Reduction & Transparency:

If you ask me, the production’s effect on the environment needs to be considered among the first
in line. Small-scale local production helps to eliminate the waste of unneeded products made to
adhere to overseas minimums, reduce emissions and energy usage. Controlling the development
of the product first-hand enables greater quality control and helps to reduce waste and
overproduction, ensuring the item remains sellable. Obsolete inventory quickly becomes a thing
of the past. Not to mention the waste caused during shipment: excessive packaging and labels,
aligned with multi-channel transportation, emissions and cost of fuel (whether cargo plane or
ships). Don’t forget the cost of (clearly underpaid and sometimes child) labour operating as a
mediator channeling all these processes. The cost of these operations can be reduced by
localizing your supply chain. With less money being sunk into logistics, there will be less
weighing down the company’s bottom line. All these tiny particles of production altogether
impose a tremendous weight on the environment, which could all be alleviated choosing local
production.

Quality Control:
Often, the further away the company is from the elements of its supply chain, the less control
they have over them. Quality standards may greatly fail due to remote or missed communication.
Many unexpected issues may arise, and hands-on approach is definitely preferred when trying to
solve them. Fabric flaws, special polishing techniques and the quality of other minor production
details can cause hiccups. Face-to-face communication, however, will allow companies to
address any concerns and ensure all products adhere to production standards. You cannot fail to
notice them with personal connection in effect, when it comes to domestic manufacturers. Then,
whatever issues surface, they can be communicated and solutions can be found fast and
effectively. This keeps production running smoothly and ensures the quality of the product
actually meets all standards and stands for your values as a business. Being present also keeps
you more grounded and there’s less chance of commands being ‘lost in translation’. Not to
mention, direct communication with your employees helps to build trust.

Overseeing Work Conditions Health & Safety Check:

Every company has its own value system and T&C. Yet, more emphasis should be put on risk
assessment and health and safety checks of those participating within the production chain.
Manufacturers should be more careful than ever dragging their production too far overseas, as
they have past events to learn from: collapse of Rana Plaza, for example. Local production
enables using all encompassing methods to oversee the real work conditions and machinery, and
make sure workers partake in regular health and safety checks. Some companies, in fact, by
being more present and understanding, place more emphasis on workers’ wellness, offering
regular gym memberships or some alone-time in a yoga class organized by the company itself.
We all know that a mind that’s not well, or a body that’s not entitled to rest, cannot produce great
results. Regulation of work hours can also be optimally restricted within domestic production:
worker’s rights are protected by local laws and work hours and break clearly stated in a contract,
considering the provision of local authorities and interest groups. Also, if something doesn’t
seem just right, workers can communicate that to authorities, whereas the producer will be forced
to take action and make improvements, or pay a fine. It’s entirely fair, as we’re taking about the
well-being of workers here.
As customers are demanding transparency, I doubt a company with questionable health and
safety standards could get away with it so freely. That way more and more emphasis should be
put just on that: making your workers feel well. That also brings more great results and increases
productivity. Happy, well-paid employees are also more likely to invest in local businesses, so it
works altogether more or less similarly to circular economy. Additionally, respected and well-off
local business is also a catalyst for a thriving, healthy community benefitting local economy and
the people who live there through fundraising, volunteering and other sponsored activities.

THE ECONOMIC BENEFIT OF BUYING LOCAL:

When you buy local, your money stays local, and it strengthens the local economy in two ways.
First, buying local fuels new employment and job opportunities for people within the
community. Studies show, locally owned businesses employs more people per unit of sales, and
retain more employees. For example, during the previous economic recession, a study by
American Economic Review found that from 2008 to 2009 the employment growth rate of large
employers fell 1.65 % more than the growth rate of local employers. Furthermore, the expansion
and growth of local businesses helps create a more stable, recession resistant local economy and
community alike.
Second, buying local keeps money circulating within the local economy. Cash flow is vital for
prosperity and local businesses recirculate a greater share of every dollar, as they create locally
owned supply chains and invest in their employees. An additional study found that local retailers
return a total of 52 percent of their revenue to the local economy, compared to just 14 percent for
the national chain retailers. Money circulating through the local economy benefits everyone who
receives a transaction. As an example, let’s look at a local farmer growing produce. First they
could sell it to a local restaurant, which in turn prepares the fresh produce and sells it to
customers. The restaurant uses said sales to buy supplies at a local hardware store. This example
illustrates the recirculation of money in the local economy, leading to a stronger financial
foundation.

WHY MANUFACTURING MATTERS:

The issue of what has been termed the “deindustrialization” of the developed world has been
exercising academics and policy makers since at least the 1980s. Low productivity growth and
the emergence of new challenger nations such as Japan and Taiwan led to a shift in the majority
of industrial economies.

As manufacturing jobs were moved offshore there was a significant amount of structural
unemployment. By the end of the 1980s the majority of employment was to be found in the
services sector and there was talk of a “post-industrial society”. Over the past two decades the
emergence of China as a global manufacturing powerhouse has further challenged the existing
manufacturing base within other countries. This raises further concerns over whether or not it
matters that an economy retains a manufacturing sector.

According to some analysts manufacturing does matter and the loss of manufacturing jobs is not
good for an economy. Such a view over the importance of manufacturing was articulated
recently by Professors Gary Pisano and Willy Shih of Harvard University’s Business School. In
an interview undertaken in March 2011, they argued that manufacturing is essential to the longer
term health of the United States economy.

According to Pisano and Shih, without a manufacturing sector it will become very difficult for
the US economy to sustain innovation. The “exporting” of manufacturing work overseas in the
form of off-shoring, they claim, risks the erosion of America’s industrial commons.

They point to the off shoring of semiconductor manufacturing by American companies in the
past. This led to the competencies within the workforce and production systems for the
production of such technology to be largely lost to American industry. Over time this provided
an opportunity for the Taiwanese, South Koreans and increasingly the Chinese to build their
manufacturing base. From semiconductors there was a transition to the production of flat
screens. This trend is now moving to LED technology and they suggest that soon high-efficiency
lighting will be largely sourced to Asian manufacturers.

MANUFACTURING ECONOPMIC IMPACT:

Two measures commonly used by the government to measure manufacturing’s overall impact on
society are badly underestimating the impact of that critical sector. One is the proportion of gross
domestic product for which manufacturing accounts. The other is the “multiplier effect,” which
measures the impact on other industries from an increase in economic activity by a specific
industry.

Official national statistics state that manufacturing’s proportion of GDP its annual value-added
divided by the value of all goods and services produced in the country stands at about 11%. The
U.S. Department of Commerce finds the total requirement manufacturing multiplier is around
1.4.

Both figures grossly understate manufacturing’s impact. By a long shot. Intuitively, we should
know this contemporary Americans are surrounded by and completely reliant on thousands upon
thousands of manufactured goods, whether we’re working, eating, driving, flying, sleeping,
playing, or relaxing. Judging by the sheer volume of stuff in our lives, how could manufacturing
represent only a tenth of the economy?

It doesn’t. New research by MAPI Foundation Chief Economist Dan Meckstroth, using analysis
of national input–output tables by Interindustry Forecasting (Inform) at the University of
Maryland, shows manufacturing’s total value chain actually accounts for about one-third of U.S.
GDP, or three times the impact that the narrow official data suggest. Moreover, manufacturing’s
multiplier is 3.6, also nearly three times as high as the simplistic estimates; we find that every
$1.00 of manufacturing value-added generates $3.60 of value-added elsewhere across the U.S.
economy.

CPEC’S LIKELY EFFECT ON LOCAL MANUFACTURING:

Local manufacturing industries have been finding it hard to dominate the local market for quite
some time mainly due to price difference between locally manufactured goods and imported
goods including smuggled goods. Unfortunately, CPEC is expected to exacerbate local
manufacturing units' woes.

CPEC is basically a collection of multiple projects including Gwadar port development, energy
projects, transport infrastructure projects and industrial development projects. However,
industrial development projects are not aimed at developing existing industrial units, but at
development of new industrial zones. This is advantageous because it will generate employment
opportunities for Pakistanis and increase boost Pakistan's GDP.

Special tax policies and rebates for industries established by the Chinese have been agreed upon
is a treat to local manufacturing industries that may get swamped by industries established by
China. Due to such agreements, local manufacturing industries would be facing unfair and unjust
competition from Chinese established industries and it would be near to impossible for local
industries to compete in the long run at low profit margins, or even break even for most of the
manufacturing sectors.

On the basis of the experience of Afghan Trade Transit (ATT), it is also anticipated that there
would be an increase in smuggling through the CPEC route, which means loss to the national
exchequer. If supply of smuggled goods increases in the local market, it would be impossible for
local manufacturers to maintain their market share, resulting in heavy losses to local
industrialists. Moreover, this would result in heavy losses to the government due to loss of duties
and taxes, which otherwise would be collected at the import stage. To address this issue, Pakistan
authorities have promised to design a mechanism to prevent smuggling. To ensure the safety of
their borders, Pakistan and China have agreed to build a mechanism to exchange intelligence
between their anti-smuggling bureaus, to strengthen customs controls at the border and to
exchange information to curb illicit trafficking and smuggling across the border. However, no
import action has been observed so far. There is a matter of concerns for local industries about
the growing treat of smuggling and illicit trafficking associated with CPEC and ATT.

Apart from all the advantages that might come to Pakistan, CPEC also brings a threat that may
force local manufacturers in the long run to limit their business activities and confine it only to
trading , buy from Chinese-established industries and sell it in the local market at a margin. The
resulting in elimination of existing local manufacturing unit and leave Pakistan dependent on
foreign-funded industries which eventually will repatriate profits to their own countries in the
form of dividends, management fees and transfer pricing.
Another problem which may surface as a result of CPEC is increase in inflation. Currently China
imports raw material from all over the world, including Pakistan, though Pakistani exports to
China only constitute around 8 percent of Pakistan's total exports. But when Chinese-established
industries start their operations in Pakistan, these exports would be reduced. Further, there would
be an increase in demand for industrial input in the local market, which will cause upward price
shift, resulting, in turn, in further increase in the cost of production for all industries (both local
for foreign-funded). On the bright side, we must not ignore the fact that about 27 percent of our
imports are from China, which are also expected to be reduced once Chinese-established
industries start operations in Pakistan and this will strengthen our balance of payment.