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Poor utility services threaten to disrupt textile value chain

29
Oct '08

The once booming textile and garment industry, which accounts for 65 percent of total exports from the country is perpetually in crisis, due to poor infrastructure and utility services and other issues of its own making.

Electricity and gas are two major inputs needed for keeping the industrial wheels moving. But a hike in gas prices at the beginning of the year and now frequent electric load shedding of up to 9 hours since the last few months is keeping textile and garment manufacturers on tenterhooks.

According to estimates, total production value of all textile and garment related activities amounts to around US $13.17 billion. Out of this, roughly 85 percent is exported and the rest is consumed in the country.

But now, the frequent power cuts is threatening to turn the whole industry value chain upside down. The textile value chain is spread across fibres to yarn to fabrics to garments. Any disruption due to any factor in any of the crucial production segment leads to a crisis in the preceding or following categories across the value chain.

And this is exactly what is happening in textile and garment industry in Pakistan. The government has assured of providing 18 hours of electricity to its industrial consumers. But all units are not able to get the same. A few big units have their own electricity generating units due to which they are able to continue their production activities uninterrupted.

But the main victims are SMEs like yarn sizing, powerloom and fabric processing units, backbone of the textile industry in Pakistan. These SMEs due to frequent cuts in electric supplies have been forced to reduce production and this in turn has affected the demand for yarns, in turn forcing fibre and yarn manufacturing units to cut production due to low off take from down stream units.

Actually, these SMEs are receiving only 12-15 hours of electricity against 18 hours assured by the government due to a lopsided policy in the electricity distribution system. Units which are categorized under the industrial feeder get 18 hours of electricity while those under domestic feeder category get 12-15 hours of electricity.

The industry employs 2.8 million people and constitutes 38 percent of the work force in the country. But now the electricity outages are leading to large scale downsizing of workers in the textile units.

Experts aver that a majority of workers employed in the power loom industry have lost their jobs and the others who are still working are taking home lower wages.

Experts warn that if the current situation is allowed to continue, the production losses in yarn sizing and powerloom units will affect the demand for yarn from spinning mills and also lead to shortage of fabrics used in manufacture of garments, which in turn will also affect the burgeoning garment industry.

They add by saying that due to this severe disruption across the whole value chain, industry is already losing up to Rs 1 billion per day besides threatening to induce large scale joblessness and they fear that this will have severe repercussions on industry and economy of the country.

Fibre2fashion News Desk - India

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