By  on October 1, 2012

LAHORE, Pakistan — As Pakistan’s textile industry becomes more vertical and upgrades its woven apparel capacity, it also must deal with the aftermath of the tragic factory fires that killed more than 300 people last month.Brands and mills are having formal discussions here regarding systems to ensure worker safety in light of the disasters. Some brands are even conducting surprise audits to monitor fire safety arrangements at their respective locations. The Karachi factory fire at Ali Enterprises killing nearly 300 people was audited by Social Accountability International the week before the accident.RELATED STORY: Pakistan Factory Fire Brings Working Conditions to Fore >> “Passing a compliance audit is not the issue,” said Raza Ahmad, chief operating officer of Matrix, a textile buying house based in Lahore and Dhaka. “It’s more important for mills to have an ongoing compliance process. Due to the travel advisory restricting importer access, there is no margin of error for mills here and most go by the book. We have never had a fire in any of the mills with which we work.”He said brands that Matrix represents locally have a stringent compliance standard. There is a direct correlation between the standard upheld by the factory and the brand or importer that sources from there, as there will be some increase in the cost of production. Good corporate social responsibility and compliance requirements do increase the cost and price, Ahmad said, although that does not discount their importance.Yusuf Abdullah, director of Sapphire, which is based in Lahore, said mills in Punjab province have a strong record of compliance with labor laws and workplace fire and safety regulations. He said there is no extra cost added to the product price at Sapphire, which has some 14,000 employees and annual sales of $435 million, as the safety features were a onetime investment at plant construction, and “we have a full labor force so there is little overtime that needs to be factored in.” Punjab is representative of Pakistan’s vertical capacity, as it is home to cotton farms and more than 11,000 textile facilities.When compared regionally to China’s human rights problems and labor unrest, and a minimum wage that is below the poverty line in Bangladesh — Pakistan’s minimum wage was raised 28 percent this year — Pakistan’s record is favorable, he contended.To compensate for ongoing power and gas shortages, many backup sources for fuel are used by mills here, said Abdullah. Some are more expensive sources of fuel, but the cost averages out. Because Punjab is an agriculture-based province, agricultural waste, such as corn cob, rice husk and cotton sticks, is used as alternative fuel.The Karachi tragedy came at a time when the Pakistani textile and apparel industry is trying to upgrade itself.Mills are either converting their fabric capacities to woven apparel from home textiles, such as Nishat Linen in Lahore and Gul Ahmed and Al Karam in Karachi, or are setting up new plants, like Kamal in Faisalabad, said Zaki Saleemi, director of Integrated Sourcing, a garment buying company here. These mills have also started producing apparel for middle-class consumers who are becoming a growing percentage of Pakistan’s 170 million population. Relaxation of bilateral business procedures between India and Pakistan has also given local brands a taste of India’s vast market.In the year through July, the country’s woven and knitted garment exports to the U.S. declined to $3.6 billion from $4 billion in the previous year, according to the Trade Development Authority of Pakistan. But industry executives feel more investment in upgrading the industry, and improvement in the global economy, will help boost exports.Pakistan is more competitive with more cotton-intensive products, like heavy fleece tops, with product complexity through detailing and printing, and sports socks. In denim, Pakistan had always been strong in the basics, Saleemi said, but has been upgrading to more high-end jeans.The women’s jeans category has generated much European interest due to the duty waiver being extended on exports to European Union countries, which will mean a savings to the importer of 9.6 percent, he noted. On Sept. 13, the European Parliament approved duty-free access to the EU for 75 Pakistani products, mostly textiles, starting Nov. 1 through the end of 2013, but linked it to quotas and the country’s human and labor rights. It was proposed to help Pakistan recover from floods in 2010 that caused $10 billion in damage, according to World Bank estimates.But Ahmed Sheikh, director of Azgard 9 in Lahore, which produces jeans for brands such as Miss Sixty, Diesel, Zara, Mango and H&M, noted that Pakistan exports $1 billion worth of denim fabric out of total textile exports of $14 billion, and only about 20 percent of this is made up of jeans.He said fabrics versus finished goods are an easier sell because they require less hands-on involvement from the buyer. There is a travel advisory restricting travel to Pakistan and customers, especially from the U.S., are wary of visiting, Sheikh noted. The production of Azgard 9 is 30,000 units of garments daily and 34 million meters of denim a year.“However, we are definitely getting more inquiries than before,” said Sheikh.Ahmad of Matrix said the fastest-growing product categories in Pakistan are woven bottom-weight fabrics denim and twill, and the finished goods they’re made into, jeans and chinos.Abdullah of Sapphire said finished fabric, such as canvas and twill, is being exported to Bangladesh, Sri Lanka, India and Vietnam to be made into garments and reexported to Western countries.“Right now, our fabric mill is running at full capacity, producing 4.2 million meters per month,” Abdullah said. “In fact, we are short of capacity. The same is the case with other mills here. There is a shift of business here from China.”

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