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HRM PRACTICES IN PLASTIC INDUSTRY
UNIVERSITY OF CENTRAL PUNJAB
COURSE: SMALL AND MEDIUM ENTERPRISES PROJECT ON PLASTIC INDUSTRY
SUBMITTED TO: PROF. IRFAN SIDDIQUE
SUBMITTED BY: SAAD ALAM (L1F07BBAM2084) FARAN ALI (L1S07BBAM0042) ABDUL MOEED (L1S07BBAM2061)
DATE OF SUBMISSION: 17/01/2011
SME PROJECT HRM PRACTICES IN PLASTIC INDUSTRY PET BOTTLES PET BOTTLES MANUFACTURING SMEs SUMMARY 2|Page .
The personal atmosphere of small firms is reflected in the high use of informal procedures like job posting and bidding. With respect to motivation of the employees. developing and retaining human resources. the growth-rates and not least diversity in the qualitative aspects of management practices. better trained employees will choose for opportunities elsewhere leaving the small firm behind with its less trained employees and a depleted training budget. In their articles Arthur and Hendry and Storey explain ‘economies of training’ for HRM implementation in plastic SMEs and also in other SMEs by the fact that small firms have a higher probability of labor turnover. Thus HRM plays a vital role in the establishment of sme in china. Other interesting differences concern small firm recruitment policies. china is one of the biggest country producing massively plastic products for different countries in the world. A proposed solution to this problem would be to use company specific (on-the-job) training. This is done by china by the change in their policies in managing of their human resources. As a result. because they offer less opportunity to career development. a positive effect in smaller firms is found because compensation was more directly related to employees’ performance. which has little value to other firms. In plastic industry. business strategy and firm performance. three main arguments can be discerned. The first one relates to our earlier observation that HRM aims at attracting. The lower labor cost in china allows it to capture high world market share. The third and final argument is that in smaller firms strategy development is 3|Page . This production of plastic products contributes 18% to china’s GDP in 2007 and 21% in 2008 that are exported in all over the world. The second argument is that implementation of modern management approaches such as JIT and TQM largely depend on HRM factors .SME PROJECT HRM PRACTICES IN PLASTIC INDUSTRY PET BOTTLES The increasing attention on human resource management (HRM) in small and medium enterprises (SMEs) is a comparatively recent phenomenon. and for many small firms human resources are the core of their competitive advantage. Small firms make extensive use of job try-outs which are inexpensive and very well suited to evaluate the actual fit of a person with the demands of the job. even though smaller companies could be fruitful subjects for empirical investigation because their numbers. As to the existence of a relation between HRM. HR-researchers have largely ignored the SMEs. They identified human resource as one of their most important part of their smes. which does not have any product that is manufactured in china. According to journalist bongiorni. he was unable to find a single store.
as to the relation between HRM and small firm performance no empirical proof has been found yet. However very little is known about HRM practices with in small to medium size business (sme) and even less is known about the practice within a family business. and thus resist generalization. for example country specific (legal) factors that largely determine health and safety policies of all firms. Consequently. other specific factors may be very important. Such an interactive continuous process calls for HRM thinking to contribute as a full partner to strategic decision making as it unfolds . LITERATURE REVIEW Much of the literature relating to human resource management has attempted to demonstrate that the human resource is the most valued asset in a company. Obviously. According to Storey (1999).SME PROJECT HRM PRACTICES IN PLASTIC INDUSTRY PET BOTTLES often an emergent process in contrast with a deliberate and planned process in which supporting functions such as HRM only come into the picture after the strategic decisions have been made. Many large organizations are implementing and practicing HRM in their organizations. that outshine possible internal (e. Relevant topics that have received much less attention are the quality of SME-jobs and the possible link of HRM with strategy and competitive advantage and firm performance. HRM practices do exist and are applied in some small businesses. this could be explained by the dependence of SMEs on external developments. This diversity is not only a size effect. at that time. the industry was ill-organized and progressed in a haphazard manner producing low quality toys and household 4|Page . Large Companies have revolutionized their approach to the training and development of their personnel in order to maximize their competitive edge. Plastics industry in Pakistan is one of the oldest in the country and its existence can be traced out even in the year 1947 when Pakistan came into being.However. even though they are generally not formalized and extremely diverse. But in small SMEs this concept need a lot of awareness and training for implementation. we miss adequate theory based guidelines systematically prescribing how HRM could help small firms to successfully adapt to the new demands they are confronted with. HRM) efforts.g. Therefore we conclude that most studies concentrate on description and lack theoretical explanation. In Pakistan implementing HRM is somehow a new concept.
Today the domestic consumption of plastics stands at 2. With the 175 million strong population of Pakistan growing at an annual rate of 2. they were small in number and all set in Lahore. The plastics industry in Pakistan has taken great strides in quest for its success. The entire industry is self-financed and SME. Today plastics material constitutes as the fourth largest item of imports and this sector alone contributes significantly to the national exchequer in different heads. Major concentration of plastics processors whether they are injection. which was virtually unheard of in recent years. where the use of plastics was seen rising to a leading force in the country. it is expected that the per capita consumption of plastics is like to increase to 4. the customs duty on plastics raw material was on unrealistically higher side of about 110 % which has been gradually brought down to the current level of 20%. coupled with new foreign and local investment and the government policy advocating use of PP woven bags for industrial packaging. 5|Page . the usage of plastics in auto industry has reversed the consumption trend. Till the early years of 1990s. Faisalabad. Peshawar.SME PROJECT HRM PRACTICES IN PLASTIC INDUSTRY PET BOTTLES utensils on hand molding machines. yet Pakistan is the second largest domestic market in South East Asia after India. Whatever the quantity of those machines was. has become an export industry in Pakistan. Hyderabad . Gadoon and Hattar. with a sizeable base. The period from 1965-1975 was notably the turning point. is still low. woven or tubular films manufacturers. Presently there are 6000 plastics processors in Pakistan. For instance. far less than the international average. but again this low consumption level indicates that there is a lot of potential for this industry. extrusion. The industry is growing at an annual average of 15% and in the process of development it has surpassed all other industrial sectors. The industry contributes around Rupees 8 billion annually to the national exchequer by way of custom duty. The per capita consumption in the country has also shown an upward trend during the last 15 years [except post 9/11 events and standoff with India]. Gujranwala.7 kgs.0 kgs by 2007. the exports of plastics auto parts.2%. Rawalpindi. Lahore. As mentioned above the per capita consumption of plastics as compared with the neighboring and other regional countries. an important commercial centre of Punjab till date. With due attention to enhance the productivity and improving quality through innovative technique. blow. sales tax and income tax. is in and around the industrial hubs of Karachi. There is a tremendous scope for expansion in the plastics sector.
plastic industry was built up with natural and 6|Page . Thermoplastics are the plastics that don't undergo chemical change in their composition when heated and can be moulded again and again. 1800 0 42000 PUNJAB S H IND N. after they have solidified. polystyrene. Monomers of plastic are either natural or synthetic organic compounds.F . Thermosetting polymers can melt and take shape once.P BALOC ITAN H 180000 360000 PLASTIC INDUSTRY A plastic material is any of a wide range of synthetic or semi-synthetic organic solids used in the manufacture of industrial products. building construction. There are two types of plastics: thermoplastics and thermosetting polymers. polyvinyl chloride and polytetrafluoroethylene. In the early phases. Plastic industry also includes fields like biochemicals. and may contain other substances to improve performance and/or reduce costs. Plastic industry encompasses areas of activities including manufacturing polymer materials (natural and synthetic compounds). petrochemicals and ceramics. examples are polyethylene.W. Plastic industry covers a large area ranging from aerospace to electronics industry and that is why plastic industry has a huge business potentiality over the other associated industries. bulk material handling.SME PROJECT HRM PRACTICES IN PLASTIC INDUSTRY PET BOTTLES Along with this plastic industry in Pakistan contributes a lot in labor market in all four provinces of Pakistan which raise a huge demand of HRM practices implementation in this industry. packaging or transportation. Plastics are typically polymers of high molecular mass. This plastic industry is a vivacious and global industry that covers sectors from household commodity to polymer. they stay solid.
677 billion. plastic clothings. plastic bins. plastic films. 5. Common finished products of plastic industry include industrial plastic products. In 1971 Plastics raw materials imports are recorded at 30. plastic dies and molds. In 1971. plastic industry started developing on the basis of organic compounds (a material that contains carbon and hydrogen and other elements). The Pakistan Plastic industry comprises of an up-stream organized segment having 7 units. and was registered with the Ministry of Commerce in the month of May. An estimated Rs 10 billion has been invested by the down-stream plastic industry of Pakistan. plastic toys and so many. plastic containers. plastic cans. plastic bottles.7 million rupees. attributes and appearances. A down-stream segment dominated by a large informal sector of over 5. plastic foams. almost half of which was foreign direct investment (FDI).05 per pound in local markets. plastic glasses. plastic lenses. which later on provides highly qualified and skilled manpower to the plastics industry. Arkoy Chemical Industries becomes the first unit in Pakistan to manufacture PVC pipes in 1966. Plastics resin is sold for Rs. plastic boxes. With the inauguration of the center in October. polymer sciences education begins in Pakistan. Plastics Technology Center (PTC) was established by FCCCL (The Federal Chemicals & Ceramics Cooperation Limited) in Karachi.3.SME PROJECT HRM PRACTICES IN PLASTIC INDUSTRY PET BOTTLES synthetic materials of different forms. rather than natural and other synthetic materials. Total investment made by the large-scale upstream plastic industry is around Rs. plastic fountains. Pakistan Plastics Manufacturers Association was formed.000 units & the downstream plastic processing industry also comprises of an estimated 700 organized units. Particular growth is being seen in exports of plastic components 7|Page . The industry attracted investment amounting to more than US$ 260 billion. plastic bags. plastic aircraft products. plastic trays. plastic basins. plastic tubes. In 1988. In 1980. PLASTIC INDUSTRY IN PAKISTAN First plastics and polymer research center created in 1953 with the establishment of Pakistan Council of Scientific and Industrial research (PCSIR) in Karachi. Over time. Famous brand of PVC pipes "Galco" is introduced in local markets in 1967. the products manufactured by nylon become widely popular. plastic caps.
rubber. Consumption in China. According to an estimate.69 per cent. This. cardboard and leather etc. Japan and other regions. In view of rapidly depleting natural resources. it has the benefit of conservation of energy. however. Polypropylene (PP).5 percent. The South East Asian countries have registered fastest growth of 15 percent and are expected to continue growing at much higher rate in future. glass. stone. The industry is contributing more than Rs7. the consumption of all types of polymers has increased from 8 million tons in 1960 to around 180 million tons in 2003. plastics consume much less energy than the traditional materials and can save millions of dollars. 5 workers are required for processing 10 tons of plastics. In addition to domestic consumption. Such industries are ideally suited for creating employment opportunities. Its contribution to the gross domestic product (GDP) was 1. WORLD Production of major plastics raw material like Polyethylene (PE). wood. Europe. Plastics consumption has traditionally been the highest in USA. The downstream plastic processing industry is mostly concentrated in the small-scale sector owing to high labor to capital ratio. This is primarily due to a spread-out effect as consumption in other parts of the world has increased. 50 percent in 1998 and is expected to decrease to 40 percent by 2010. Polyvinyl Chloride (PVC) and Polystyrene (PS) is a capital-intensive activity and is thus confined to large scale manufacturing sector. Plastics can be made to resemble and replace such diverse materials as metal. these countries have become leading exporters of plastics products to USA. plastics have become smart alternative. The reason for this shift is the comparatively low cost of production in these countries. Europe and Japan amounting to 75 percent of global consumption.5 billion annually to the national exchequer in shape of custom duty. With a global annual average growth rate of around 7.SME PROJECT HRM PRACTICES IN PLASTIC INDUSTRY PET BOTTLES for the automobile industry. decreased to 70 percent in 1985. Malaysia and India has increased manifold during the last few years. Korea. SOME FACTS ABOUT PLASTIC INDUSTRY In this modern era a world without plastics is unimaginable. Over its life cycle. 8|Page . cloth. Taiwan. Thailand. sales tax and income tax. Not only plastics industry can generate employment for thousands.
storing and serving our favorite beverages. millions of consumers rely on the safety and ease of plastic bottles to help to preserve the quality and freshness of what we drink and serve our families. safe. Plast (Pvt.e. PET resin has superior properties i. as majority of the players in these industries have shifted to PET bottles. good barrier.SME PROJECT HRM PRACTICES IN PLASTIC INDUSTRY PET BOTTLES PET BOTTLES MANUFACTURING SECTOR The PET Bottles Manufacturing is a project of Plastic Sector. CURRENT PET BOTTLES INDUSTRY STRUCTURE Majority of the businesses in Pakistan are converting from the bottle containers of traditional material to plastic substitutes for packaging of their products. the share of PET bottles has grown from 2-3 percent to 18-20 percent in the carbonated beverage market. With every passing day. Because of the high demand of PET bottles. edible oil and mineral water industries are good examples for the increasing demand of PET bottles. attractive. PET has become the material of choice for bottled beverages because it is lightweight and shatter resistant. etc.K. there has been an increase in small manufacturing units of PET bottles in the main cities of Pakistan. design flexibility. recyclable.) Ltd. Al Quresh Bottles etc. no leakage. Uni Plast International. in which. Sme’s are still working with 9|Page . There are around 35 small and medium units working in Lahore including Mega Plast. The domestic manufacturing of plastic products is growing at 10-15 percent annually. S. ranging from bottles for mineral water to packaging for pesticides. pure. the most conveniencesize bottles are made from Polyethylene Terephthalate. Businesses from different fields are shifting from conventional packaging to PET bottles. Bottles made with PET are widely used for everything from water and fruit juice to soft drinks etc. and PET has been extensively tested for safety. Every day. Plas Pack. Within five years. The major players of the industry are Gatron and Five Star Industries. These units manufacture variety of products. and today’s convenience-size bottles are an increasingly popular choice for busy people everywhere. new industries are shifting to PET bottling because of lower cost and better preservation of their product. Plastic make possible an array of opportunities for transporting. Carbonated beverage.
SME PROJECT HRM PRACTICES IN PLASTIC INDUSTRY PET BOTTLES traditional techniques. Lack of financial assistance. Interrupted power supply is not only affecting production but also damaging the expensive machines. Lack of information on potential export markets is an impediment to export growth. inefficient labor etc. • • • • 10 | P a g e . Tariff on High Impact Polystyrene (HIPS) has been reduced to 10 percent from 25 percent that is hurting the local industry. Intellectual property and copyright laws are not strictly enforced. • • • Export Promotion Bureau needs to enhance its cooperation with the manufacturers in international exhibitions. Lack of adequate training institutes. Lack of proper human resource practices in an sme causes high labor turnover rate inefficient manufacturing etc. SOME PROBLEMS IN PLASTIC INDUSTRY OF PAKISTAN • Human resource management practices are absent in this SME sector which create high labor turnover rate.
SME PROJECT HRM PRACTICES IN PLASTIC INDUSTRY PET BOTTLES MODEL FOR IMPROVING HUMAN RESOURCE PRACTICES IN SME OF PET BOTTLE MANUFACTURING HUMAN RESOURCE DEPARTMEN T NEED ANALYSIS FINANCE DEPARTMEN T MARKETING DEPARTMEN T NON TRAINING TRAINING NEEDS NEEDS PRODUCTIO N DEPARTMEN 11 | P a g e T IMPLEMENT POSSIBLE SOLUTIONS .
SME PROJECT HRM PRACTICES IN PLASTIC INDUSTRY PET BOTTLES - QUESTIONNAIRE NAME: _____________________ DATE: _____________________ SME: ______________________ What is the total number of employees working in your company? • • • 1-15 16-50 51-250 AGE: ______ Is this business your family business? • • Yes No 12 | P a g e .
SME PROJECT HRM PRACTICES IN PLASTIC INDUSTRY PET BOTTLES Which department in your sector you pay more attention? • • • • Human resource department Marketing department Finance department Production department What difference you can make? • • • • Providing quality products Provide cheaper products In time delivery Innovative products Do have a proper training session for you new employees? • • Yes No How did you enter in this business? • • • • Opportunity Investment with friend Own idea Family busiess 13 | P a g e .
SME PROJECT HRM PRACTICES IN PLASTIC INDUSTRY PET BOTTLES Do you agree human resource practices are a productive source if adapted in a SME? • • Yes No How long have you been in this business? • • 1-2 years 3-5 years 6-7 years More than 8 years • • How did you arrange finances? • • • • Bank loan Own deposits Own + friends and family Own + loan Where do you think you should concentrate on? • • • • Raw material Quality Timely delivery Quantity How you can stand apart from your competitors in the local market? • Good connection with the buyers 14 | P a g e .
SME PROJECT HRM PRACTICES IN PLASTIC INDUSTRY PET BOTTLES • • • Quality of your product Timely delivery Innovative products Do you think that the employees of the company are an asset for the company? • • Yes No How you can stand apart from your competitors in the international market? • • • • Cheap labor Cheaper products Good quality in less price Innovative products What are the main problems of SMEs in your sector? • • • • External problems Human resource problems Finance problem Managing problems What do you think is most important to survive as an sme? • Experience 15 | P a g e .
pure. plastics have become smart alternative. recyclable. Holding national and international exhibitions. millions of consumers rely on the safety and ease of plastic bottles to help to preserve the quality and freshness of what we drink and serve our families. no leakage. In view of rapidly depleting natural resources. • CONCLUSION Plastics industry in Pakistan is one of the oldest in the country and its existence can be traced out even in the year 1947 when Pakistan came into being. Export ware-houses in target markets.e. There is a tremendous scope for expansion in the plastics sector. With every passing day. EPB should ensure participation of genuine exporters. design flexibility. safe. good barrier. Pet bottles have superior properties i. exports.SME PROJECT HRM PRACTICES IN PLASTIC INDUSTRY PET BOTTLES • • • Resources Finance Education THANK YOU FOR YOUR TIME SUGGESTIONS • • • • • Strictly implementation of HRM practices in plastic industry of Pakistan. plastics processors in Pakistan. attractive. Creation of a plastics desk in the Export Promotion Bureau (EPB). new industries are shifting to PET bottling because of 16 | P a g e . Every day. etc. Establishment of plastics website providing information on imports. international associations.
For a better future of plastic industry of Pakistan. 17 | P a g e . human resource practices should be implemented. Many large organizations are implementing and practicing HRM in their organizations. But in small SMEs this concept need a lot of awareness and training for implementation.SME PROJECT HRM PRACTICES IN PLASTIC INDUSTRY PET BOTTLES lower cost and better preservation of their product. In Pakistan implementing HRM is somehow a new concept.
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