GROUP MEMEBERS

AHSAN MURTAZA (sp07-bb-0016) S.M HASAN KUMAIL (sp07-bb-0136)

 1. 2.

Source of data: Book www.plgmea.com

AGENDA
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Introduction Tannery Tanning process Leather sector units Raw Materials Live stock population Major products Exports Country wise exports Export potential. Imports Cost of Productions

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SWOT Analysis Leather types Hazards Environmental challenges Precautions Contribution in global market Sectarian issues in leather Actions take by government

INTRODUCTION

 

Leather is defined as “animal skin that has been chemically modified to produce a strong, flexible material that resists decay”. Leather is produced from “hides” and “skins”. Being an agrain economy, Pakistan has a natural advantage in the area of livestock population, which is the major input (hides and skin) in the leather sector

CONT…
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 

The leather industry is the second largest export-oriented sector of the country. This sector provides employment to more than 240,000 people. In total GDP of Pakistan, leather’s contribution is 1%. In manufacturing GDP, leather contribution is 6%

TANNERY SECTOR

TANNERY
 A facility where the tanning process is applied to

hides to produce leather. OR  It’s a place where process of raw leather to finished leather.

TANNING PROCESS
 Tanning is the process of converting putrescible skin

into non-putrescible leather, usually with tanning, an acidic chemical compound that prevents decomposition and often imparts color.

LEATHER SECTOR UNITS

Approximately 2500 units are working in leather sector

NO OF UNITS
Tanneries Leather garments Footwear Leather gloves Leather goods Leather sports 725 461 524 348 142 160

MANUFACTURING SECTOR

RAW MATERIAL
Pakistan is endowed mainly with hides and skins obtained from following animals
 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.

Cont…
 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.

LIVE STOCK POPULATION (MILLION NO’S)
SPICIES Cattle Buffalo Sheep Goat Camel Horses 2001-02 22.8 24.0 24.4 50.9 0.8 0.3 2002-03 23.3 24.8 24.6 52.8 0.8 0.3 2003-04 23.8 25.5 24.7 54.7 0.7 0.3 2004-05 24.2 26.3 24.9 55.6 0.7 0.3 2005-06 25.5 28.4 25.5 61.9 0.7 0.3

MAJOR PRODUCTS
The major leather products manufactured by the sector include:  Footwear  Leather garments  Leather gloves  Handbags  Purses  Key chains  Wallets etc.

EXPORT SECTOR

EXPORTS (IN $)
PRODUCT JUL 07MAR-08 Leather Leather garments Leather footwear Leather gloves 304,958 406,385 67,094 101,781 Change from 2006 39.00% 42.49% -8.32% 1.88% -77.00% Change from 2005 46.05% 2.71% -22.82% -6.71% -86.67% Jul '06 - Mar Jul '05 - Mar '07 '06 219,395 285,199 73,185 99,901 29,999 208,810 395,672 86,930 109,102 51,753

Leather 6,899 manufacturer TOTAL

887,117

25.36%

4.09%

707,679

852,267

EXPORT POTENTIAL
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 etc..

COUNTRY WISE EXPORTS (IN $)
COUNTRY 2007-06
SOUTH AFRICA U.S.A SPAIN GERMANY UNITED KINDOM FRANCE 89,780 47,898 36,934 35,379 31,896 21,725 2006-05 83,725 47,334 28,503 31,062 31,032 23,869 CHANGE 7.23% 1.19% 29.58% 13.90% 0.42% 16.15%

IMPORT

 • • • • • •

The leather industry of Pakistan is meeting its 75% need of raw material from local land resources while remain 25% is met through imports. Pakistan import leather from the following countries: China Iran Kenya Australia Sudan Italy

COST OF PRODUCTION

Cost of production is very high in Pakistani industry as compare to the other competitors like India and China. The high cost of various inputs specially utilities and taxes make our leather products uncompetitive in international market. The analysis show that the average cost of a leather jacket in Pakistan is around 14 percent more expensive compared to china and 10 percent as compared to India

SWOT ANALYSIS

STRENGTH
Access to international market Meat eating habits of population Availability of skilled workforce

1. 2. 3.

WEAKNESSES
Shortage created in local market due to exports of raw and finished leather High cost of electricity Requirement of high working capital

1. 2. 3.

Cont….

OPPORTUNITIES
World export trade market of leather goods is growing at an average of 8% showing goods prospects of exports of leather garments Low to medium end garments stitching being shifted from china to Pakistan Recent policies announced by the government for livestock sector would result in higher availability of hides and skins in future.

1.

2. 3.

Cont…

THREATS
Non availability of leather during peak production season Exponential increase in prices of finished leather due to exports Increasing prices of utilities

1. 2. 3.

LEATHER TYPES

ANILINE LEATHER

SEMI ANILINE LEATHER

PIGMENTED LEATHER

FULL-GRAIN PIGMENTED LEATHER

CORRECTED GRAIN PIGMENTED LEATHER

SPLIT LEATHER

WAXY LEATHER

EFFECTS

HAZARDS RELATED TO TANNERY WORKER
 CURING

HAZARDS CONT….
 SOAKING

HAZARDS CONT…
 Un-hairing and Liming  Deliming and Bating

ENVIROMENTAL CHALLENGE
 Leather tanneries in Pakistan produces three   

categories of waste Wastewater Solid waste Air emissions

WASTE WATER
 Tannery

wastewater is highly polluted and the contamination observed is many times beyond the limits set by the National Environmental Quality Standards (NEQS) for all important wastewater parameters

SOLID WASTE
 Solid

waste include dusted curing salts, raw trimmings, wet trimmings, dry trimmings, wet shavings, dry shavings, buffing, and packaging material.

AIR EMISSIONS
 Emissions

were found to be well below the NEQS level. Ammonia emission during processing and washing of drums, though intermittent, has adverse effects on workers health.  Hydrogen sulphide emission during mixing of acid and alkaline wastewater in drain is also a serious health hazardous.

PRECAUTIONS
 Efficient weakness drying should be provided at the

point of dust generation especially at buffing and shaving machines and at rotating drums.  The raw hides and skins should be disinfected using proper antiseptic before processing those for tanning.  Use of tanning kit.

WORLD SCENERIO

GLOBAL MARKET

Increase in tanneries in Pakistan is because of rising world demand for tanned leather of tanned leather in developed countries has decreased due to closure of tanneries or strict environment-control laws, the demand for leather from developing countries has been on the rise

 Production

CONTRIBUTION IN GLOBAL MARKET

LINKAGES

LINKAGES
Cattle Farmers Butchers LEATHER INDUSTRY
SUPPLIERS OF INDUSTRY PRODUCT SELLERS FINAL GOOD BUYER

SECTORAL ISSUES IN LEATHER

TANNING
 High proportion of damaged local hides and skins

due to diseases,  improper slaughtering/preservation.  Compliance to environmental standards

FOOTWEAR
 Undeveloped industry  Non availability of quality shoe

components/accessories  Lack of marketing linkages  Lack of trained human resources

LEATHER GOODS
  

Undeveloped industry Low technological levels Lack of marketing linkages

WORLD TRADE ORGANIZATION
[WTO]

GENERAL IMPACT
 Lack  Low

of Technology

quality of products of capital intensive production of skilled labor.

 Lack  Lack

IMPACT OF WTO
 The

Agreement on Technical Barriers to Trade (TBT) and the Agreement on the application of Sanitary and Phytosanitary Measures (SPS) can have significant impact on Pakistan’s ability to increase the exports in this sector

IMPACT OF WTO
 The

environmental issues related with the leather industry in Pakistan could have significant negative effects on its exports . the Pakistani exporter does not improve the quality of the product, the current competitive advantage that Pakistan has in this field could quickly fade away.

 If

SHORT TERM ACTIONS

Latest plant & machinery is available in the international markets and can be purchased, shipped and installed in a short span of time For growth to be sustainable, time bound policies must be given to the industry This would create an investment friendly atmosphere to foreign as well as local investment resulting in increased growth. The policy of lowered tariffs would bring a change in relative prices of products. It will introduce innovation, new production structures and changing patterns of competition.

LONG TERM ACTIONS

To achieve higher growth, special incentives may be provided for setting up of industries for the manufacture of international quality trimming, accessories and component required by the leather industry. Technological up-gradation through joint ventures with leading international manufacturing houses. Government may utilize the Global Environmental Facility to obtain credits for effluent. Under the existing situation, the small manufacturers cannot afford to comply with international standards on effluent control.

PROBLEMS

The cost of production is 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 Due to shortage of live stock in the country the cost of raw hides has been on the increase regularly. Leather garment industry is facing the problem of non availability of raw materials for their finished goods. Good quality leather is mostly exported and is not available for high value-added Leather Garments

SOLUTION

We have to reduce our cost of production and also maintaining the improvements in Productivity Tanning to finishing chemicals should be provided at cheaper rates. Modernization of live stock farming on scientific pattern is needed for better growth of live stock. Ban should be imposed on the export of hides and semi tanned leather or imposition of export duty on export of semi finished and finished leather. Duties on tannery machines spare parts and raw materials should be reduced or should be made duty free.

SOME INITATIVES TAKEN BY GOVERNMENT

Action Strengthen the tanning institute

Cost Rs.100 million

Time Short-Term

Impact Improved product quality

Adoption of Environment Rs.450 million Friendly Technologies

Medium-Term

Complying with the international norms would increase the leather exports. Increased export market share

Establish Leather Garments Centre in Sialkot and Karachi Establish Footwear Design Centre in Sialkot and Karachi

Rs.500 million

Short-Term

Rs.250 million

Short-Term

Improved quality and variety would enhance the exports of footwear.

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