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Economies of scale does matter in a downturn – experts

31
Mar '10
The economic turmoil which swept across the globe in 2008, affected most of the industries, big or small, across the entire gamut of the textile and clothing sector in most of the countries, including Pakistan.

But one redeeming feature, according to experts is that those companies who have been able to develop economies of scale and also have consolidated their operations in the last few years, were able to better manage the impact of the tsunami.

According to them the big spinning, weaving and clothing manufacturing units were able to face the impact due to their size and economies of scale, rather than the small fragmented units across the textile value-chain.

As per statistics there are 18,000 knitting machines and 450,000 stitching machines in the country across small, medium and big size units, However, almost one third of the total clothing export of around $3.2 billion, was done by just three composite units.

Analysis of SBP data on industrial growth suggests that the best performing sector in the textile industry is still the spinning sector. Experts attribute the same to the sheer size of the spinning units as well as capacity expansion of those units in the last few years.

According to another data, the average number of spindles in APTMA member mills stood at 14,000 spindles in 2003-04, which has now increased to 31,000 spindles per mill and it stands at 25,000 spindles per mill for the whole spinning industry.

According to them, those spinning units with a capacity of above 40,000 spindles were in a better shape during the depression phase faced by the spinners in the last three years, compared with those having lesser number of spindles.

There are around 300,000 different types of powerlooms in the country, which include plain, auto and shuttle-less. Most of the plain and auto powerlooms are again fragmented in to small units, due to which they are in dire straits.

On the other hand, the composite mills which have around 80 percent of the installed shuttle-less powerloom capacity in the country are in better shape, due to the better efficiencies and the high-value fabrics they can churn out on those looms.

Fibre2fashion News Desk - India


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