LEATHER INDUSTRY of PAKISTAN
S.M.ALI.RIZVI HARIS HAFEEZ PRESENTED TO : MR .AFAQ ALI KHAN
INTRODUCTION DEMAND IMPORT
AND EXPORT PROBLEMS WITH THE INDUSTRY GENERAL SUGGESTION
Leather plays a vital role in the economy of Pakistan. It is job oriented sector providing employment to a very large segment of the society besides earning foreign exchange for the country. The leather industry is the second largest export-oriented sector of the country. Pakistan produces very fine quality leather, which is recognized worldwide
UNITS RUNNING IN PAKISTAN
There are more than 2500 tanneries and footwear manufacturing units running in Pakistan which mostly located in: Karachi Lahore Sialkot Kasur
PAKISTAN'S RAW MATERIALS
Pakistan is endowed mainly with hides and skins obtained from following animals: 1) Buffalo 2) Cow 3) Goat 4) Sheep Buffalo: Buffalo is considered as the specialty of Pakistan in World, because of its ample availability in Pakistan.
Cow: The cow row material is considered a superior raw material upon buffalo because of its fine, tight and comparatively uniform structure. Goat: It is good for making shoe upper leathers, garment and goods leather. Sheep: Leather made from sheep raw materials has a very good and softer touch and considered best for leather garments.
DISTRIBUTION OF LIVESTOCK IN DIFFERENT PROVINCES
PAKISTAN CONTRIBUTION IN MANUFACTURING
Pakistan is well known in the world for very high quality and wide-range of finished leather, garments like: Sports jackets Gloves (working and industrial). Pakistan's contribution in leather goods Hand bags Purses Suit-cases Key chains belts etc…
The major leather products manufactured by the sector include: Footwear Leather garments Leather gloves Handbags Purses Key chains Wallets etc.
SHARE IN GLOBAL MARKET
The share of Pakistan is around 3% in the total world export of leather and leather made products (FY2004-05) as given in the table.
GRAPHICAL REPRESENTATION (FY2004-05)
CURRENT POSITION OF LEATHER INDUSTRY IN PAKISTAN
Factor Conditions. Raw material>>>>>>>>>>Available. Infrastructure>>>>>>Not very good Technology >>>>>>>> Intermediate Climate>>>>>>>>>>>>Favorable Human Resource> >>>>>Available Demand Conditions. Domestic >>>>>>>>>>>>>>>>Low International>>>>>>>>>>>>>>high
Supporting Industries. Chemicals industries>>Satisfactory Rivalry. Competition>>>>>>>>> Increasing Government. Government: Role>>>>>>Very important
NO OF INDUSTRIAL UNITS OPERATING IN PAKISTAN TANNERIES
LEATHER GARMENTS LEATHER FOOTWEAR LEATHER GLOVES LEATHER GOODS LEATHER SPORTS
770 355 523 347 134 160
PRODUCTION CAP. & UTILIZATION
EST. PRODUCTION CAPACITY
CAPACITY UTILZATION 67% 10% 50% 50%
90 million Sq meter
Leather garments 7 million Leather gloves 10 million
Leather footwear 200 million
(i) Demand From Industry :
Large industrial units demand high quality finished leather that they convert into consumer products for which there is big international demand. But the local industries only demand low or medium quality leather so as to decrease the cost of production and make a low priced product. The reason of this is because the purchasing power of the average consumer in Pakistan is very low and usually demand low priced products which compel the leather manufacturers to stick to low quality leather.
(ii)Demand From International Markets :
Export of leather garments decreased by 20 per cent from US $338 million in 1996-97 to US $306 million in 1999-2000, due to recession in the international market. With less sales to the Russian market there were large stocks of leather in Turkey and therefore Turkish tanners are making very few purchases of leather from the different countries of the world. This has resulted in a sharp decline of clothing leather prices in the world markets. However, comparing to this situation the prices of clothing leather has not reduced in Pakistan
(iii) Demand from Consumers:
Demand from consumers highly depends on the weather. The winter of 2001-2002 was quite warm in most of Europe. Consequently stocks of many European stores were stuck up for those seasons and they did not purchase stock for next season. They did not place orders for leather garments for the winter season, however, the situation was improved during season 2003, hence the leather industry in Pakistan reached close to the target. But even in hot climatic areas so many people demand leather garments and goods as fashion wear. Pakistani leather shoes, jackets and other accessories are very high in demand among consumers.
MAIN EXPORT MARKET
Italy Germany Spain Portugal China Korea..
present, the industry contributes at least 5 per cent to manufacturing GDP 7 per cent to total exports which provides direct employment to 200,000 people.
leather industry has been exportoriented for several decades. Until 70s Pakistan exported Raw hides Skins Semi-processed leather in the form of pickled
In 1980s finished leather and leather products become major export spinners. The export figures have increased from 77 million dollars in 1978 671 million dollars in 2001-02. The change has occurred not only in volume but also in the composition of leather exports
The leather sector is basically an export-oriented sector. Major buyers of Pakistani leather and leather products are: Italy Spain Portugal South Korea Germany France UK USA Dubai etc… .
PRODUCTION / IMPORTS:
industry is meeting its 75% needs of raw hides from local resources while rest of the 25-30 per cent is met through imports. Pakistan imports leather from Saudi Arabia, Iran, and China, Dubai, Sudan, Kenya, Australia and Italy.
PROBLEMS WITH THE INDUSTRY
PROBLEMS WITH THE INDUSTRY
Good quality leather is mostly exported and is not available for high value-added Leather Garments & Leather Products. Leather garments in Pakistan are made mostly from low grade & medium grade leather.
Cost of production:
Cost of production is also very high in Pakistan as compared to our competitors like China and India. The high cost of various inputs especially utilities and taxes make our products uncompetitive in international markets.
Environmental challenge: Leather tanneries in Pakistan produces three categories of waste: Wastewater Solid waste Air emissions
should modernize the livestock farming in order to maintain the standards and to upgrade leather industry in the country. Government should enforced ban on the export of live animals, and also a strict checking is required to control smuggling of cattle form the country.
Government must have launch an awareness program for the butchers through various media for careful slaughtering of animals and skilful fleecing of hides and skin, in order to have good quality raw material. Duty-free and unconditional import of raw material for exportable footwear products may be allowed.
To reduce the manufacturing costs of the leather products, reliance on imported chemical and basic tanning materials for processing and finishing the leather is needed to be reduced.