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April 26 (Bloomberg) -- Chaudhary Maqsood Elahi, a Pakistani exporter of knitted garments, spent two years trying to save his factory in the textile hub of Faisalabad. He sold his house, cut down on staff and switched to air shipments to meet orders on time. It didnt work.
About six months ago, Elahi, whose Dilkhush Hosiery Mills Ltd. produced t-shirts for European mega-retailers Carrefour SA and Metro AG, shut down his 15-year old factory after booking losses for two straight years. He fired 550 workers, tore down his plant and divided the land into plots that he put up for sale to help repay loans, Bloomberg Businessweek reports in its April 30 issue.
I kept running the factory despite losses in the hope of finding a way out but the financial burden kept growing, said Elahi, 56.
Pakistan has one of the largest textile industries in the world, shipping 1.3 trillion rupees ($13.8 billion) worth of textiles in the year ended June 30 mostly to the U.S. and Europe. Textiles account for 63 percent of Pakistans exports and mills employ 20 percent of the nations workforce. Faisalabad, which generates the most tax revenue after Karachi, accounts for half of all textiles shipped from Pakistan.
The Pakistani textile industry has had a golden opportunity to capture markets lost by Chinese producers because of rising wage pressures in China and the appreciation of the yuan. But according to the Pakistan central banks annual economic report for the year ended June 30, 2011, the local industry hasnt been able to seize the advantage.
Bangladesh, Cambodia
Instead, Bangladesh and Cambodia have increased sales of apparel as Pakistani manufacturers struggle with energy shortages, the report says.
Power blackouts last as long as 20 hours at a stretch in Faisalabad, while shortages of natural gas, which power the looms, can go on for six days at a time. Demand for natural gas exceeds supply by as much as 15 percent in the city.
Half the citys 250,000 power looms have gone out of business in the past 12 months, 10 percent of the spinning mills and fabric printing units have shut down and half of the remaining plants are struggling to survive, says Muzammil Sultan, president of the Faisalabad Chamber of Commerce and Industry. At least 200,000 workers have lost their jobs since last year. Were shipping only half the quantity we used to from this city, Sultan says.
Cotton Belt
Faisalabad, a city of 5 million people surrounded by Pakistans biggest cotton belt, was once known for attracting workers from across the Punjab province to run its weaving mills, spinning units and garment factories.
Now, as the textile business faces its biggest ever crisis, workers have begun leaving the city for the first time. Ive already moved my family back to Peshawar and if I cant make this new tire repair business work, I will also move and try to find some other work, says Sher Shah Khattak, who came to Faisalabad 35 years ago to work in the textile trade and lost his job as a loom operator last year.
In March, thousands of textile workers came out on the streets of the city, burned tires and shouted slogans against the government. The change in the city is visible with just 10 percent of factories closed, and we see rioting by workers because of the growing frustration, says Sheikh Abdul Qayyum, managing partner of Em Que Fabrics in Faisalabad. We cant imagine what would happen if half of all mills stop working.
Turning to Crime
Omer Nazar Shah, who heads the Industrial Police Liaison Committee, a nonprofit group working with law enforcement authorities in Faisalabad, calls the loss of jobs a very big threat to security. Since October, 2,500 people are losing jobs every week from various industries in Faisalabad. Theyre either leaving the city or turning to crime, he says.
Prime Minister Yousuf Raza Gilani pledged in February to install new electricity and gas plants in Faisalabad to help end the energy crisis. So far little has been done, probably because this is the last year of Gilanis term. Elahi isnt among those waiting for this to happen. No matter what happens now, he says. I lost everything that I built.
To contact the reporter on this story: Farhan Sharif in Karachi, Pakistan at Fsharif2@bloomberg.net
To contact the editor responsible for this story: Chris Power at cpower3@bloomberg.net
Find out more about Bloomberg for Android: Bloomberg Mobile
April 26 (Bloomberg) -- Chaudhary Maqsood Elahi, a Pakistani exporter of knitted garments, spent two years trying to save his factory in the textile hub of Faisalabad. He sold his house, cut down on staff and switched to air shipments to meet orders on time. It didnt work.
About six months ago, Elahi, whose Dilkhush Hosiery Mills Ltd. produced t-shirts for European mega-retailers Carrefour SA and Metro AG, shut down his 15-year old factory after booking losses for two straight years. He fired 550 workers, tore down his plant and divided the land into plots that he put up for sale to help repay loans, Bloomberg Businessweek reports in its April 30 issue.
I kept running the factory despite losses in the hope of finding a way out but the financial burden kept growing, said Elahi, 56.
Pakistan has one of the largest textile industries in the world, shipping 1.3 trillion rupees ($13.8 billion) worth of textiles in the year ended June 30 mostly to the U.S. and Europe. Textiles account for 63 percent of Pakistans exports and mills employ 20 percent of the nations workforce. Faisalabad, which generates the most tax revenue after Karachi, accounts for half of all textiles shipped from Pakistan.
The Pakistani textile industry has had a golden opportunity to capture markets lost by Chinese producers because of rising wage pressures in China and the appreciation of the yuan. But according to the Pakistan central banks annual economic report for the year ended June 30, 2011, the local industry hasnt been able to seize the advantage.
Bangladesh, Cambodia
Instead, Bangladesh and Cambodia have increased sales of apparel as Pakistani manufacturers struggle with energy shortages, the report says.
Power blackouts last as long as 20 hours at a stretch in Faisalabad, while shortages of natural gas, which power the looms, can go on for six days at a time. Demand for natural gas exceeds supply by as much as 15 percent in the city.
Half the citys 250,000 power looms have gone out of business in the past 12 months, 10 percent of the spinning mills and fabric printing units have shut down and half of the remaining plants are struggling to survive, says Muzammil Sultan, president of the Faisalabad Chamber of Commerce and Industry. At least 200,000 workers have lost their jobs since last year. Were shipping only half the quantity we used to from this city, Sultan says.
Cotton Belt
Faisalabad, a city of 5 million people surrounded by Pakistans biggest cotton belt, was once known for attracting workers from across the Punjab province to run its weaving mills, spinning units and garment factories.
Now, as the textile business faces its biggest ever crisis, workers have begun leaving the city for the first time. Ive already moved my family back to Peshawar and if I cant make this new tire repair business work, I will also move and try to find some other work, says Sher Shah Khattak, who came to Faisalabad 35 years ago to work in the textile trade and lost his job as a loom operator last year.
In March, thousands of textile workers came out on the streets of the city, burned tires and shouted slogans against the government. The change in the city is visible with just 10 percent of factories closed, and we see rioting by workers because of the growing frustration, says Sheikh Abdul Qayyum, managing partner of Em Que Fabrics in Faisalabad. We cant imagine what would happen if half of all mills stop working.
Turning to Crime
Omer Nazar Shah, who heads the Industrial Police Liaison Committee, a nonprofit group working with law enforcement authorities in Faisalabad, calls the loss of jobs a very big threat to security. Since October, 2,500 people are losing jobs every week from various industries in Faisalabad. Theyre either leaving the city or turning to crime, he says.
Prime Minister Yousuf Raza Gilani pledged in February to install new electricity and gas plants in Faisalabad to help end the energy crisis. So far little has been done, probably because this is the last year of Gilanis term. Elahi isnt among those waiting for this to happen. No matter what happens now, he says. I lost everything that I built.
To contact the reporter on this story: Farhan Sharif in Karachi, Pakistan at Fsharif2@bloomberg.net
To contact the editor responsible for this story: Chris Power at cpower3@bloomberg.net
Find out more about Bloomberg for Android: Bloomberg Mobile
