LAHORE, Pakistan — Pakistan’s value-added textile exports decreased 9.8 percent in the four months through May, while exports of competitors have increased — India’s gained 23.9 percent, Bangladesh’s grew 7.9 percent and China’s were up 2.1 percent, according to industry estimates.
Mills here claim it is a temporary phase due to factors on the supply and demand sides, and are combating the situation by going up the value chain and aiming to produce trend-right and market friendly products.
On the supply side, Ahmad Kamal, chief executive officer of Kamal Mills in Faisalabad, said competent larger mills will survive the short-term energy crisis due to economies of scale. Electricity power shedding is typically 14 to 15 hours a day, though gas supply has increased to five days a week in the summer. Even if larger mills are self-reliant regarding their energy needs, they are still dependent on small local vendors, like those supplying dyes and packaging, which are not. However, so confident is he that at Kamal there is expansion under way with the addition of another state-of-the-art mill for bottom weight fabric and garments, with processing and finishing that will go into production in six months.
On the other hand, small- and medium-size mills are badly affected by erratic electricity supply, said Zaki Saleemi, managing director of Integrated Sourcing, a garment buying house in Lahore. The increase in the cost of production due to the expense of having backup power generation is greater than the price of orders booked, so Integrated Sourcing has resorted to shutting down production intermittently, adversely affecting deliveries.
On the demand side, Amer Hameed, director of Masood Textiles in Faisalabad, said there are two main reasons for the drop in volume. First, mills have had to cope with U.S. importers cutting the lead time for the main spring and fall seasons to 75 to 90 days from 120 days since last November. Orders normally placed in February are now placed in April, showing a drop in sales.
In addition, importers made a strategic shift from high-volume business to a better product fit business. For example, at J.C. Penney Co., the strategy shifted from stocking basic to fashion-oriented garments, resulting in cutting their existing orders at Masood, which stood at $100 million annually.
“Two months ago, they dropped a couple of programs for basic products worth 30 to 40 percent of their total business with us,” Hameed said. “We increased our blend of basic-to-value-added products from 10-15 percent to 40 percent in only three months, adding new U.S. importers to our client roster, like Under Armour, for whom we have started supplying fleece last winter and Kohl’s for men’s tops of interlocked fabrics, as well as Macy’s and Aéropostale. Consequently, overall sales at Masood this year will remain at par with last year.”
Saleemi said in light of the international retail scenario and domestic challenges, the larger mills are investing in product development to distinguish their offerings from other manufacturing countries, such as developing innovative fabrics and offering greater value through functionality and performance. In addition, mills are expanding their product base, such as denim mills investing in sewing capacity to take on nondenim orders such as twill bottoms.
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