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Pakistani textile firms struggle to survive
Tue Aug 11, 2009 8:13pm EDT
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By Jason Subler
FAISALABAD, Pakistan (Reuters) - Pakistani textile makers are holding on for dear life through a perfect storm of shrinking global demand, crippling power shortages and the blow to buyers' interest dealt by terrorist attacks.
The source of over half the country's exports and about 40 percent of manufacturing jobs, their fate will be vitally important to the country's social and political stability.
In Faisalabad, the sector's traditional heartland located in the central province of Punjab, the mood is decidedly downbeat.
Tens of thousands of looms have been sent literally to scrap heaps over the past several months, and an estimated 200,000 people have lost their jobs in the city's textile sector alone over the past year, industry officials say.
"We're already dead," said Rehan Naseem Bharara, vice chairman of the Pakistan Textile Exporters Association.
While that might be an exaggeration, the reasons for Bharara's despair are evident during an interview in his office.
He and his guests sweated in the dark as the electricity cut out for an hour, and his arrival was delayed by nearly as long because a shoot-out in which two people died had blocked traffic.
The most crippling challenge loom operators and garment makers have had to face since the end of last year is the phenomenon of "load-shedding," as electricity grid companies regularly cut service because of an acute lack of generating capacity.
Faced with unscheduled power cuts for 12, 16, even 18 hours a day in much of June and July, many smaller mills had no other choice but to close shop, said Muhammad Akram Ghouri, vice chairman of the All Pakistan Cotton Power Looms Association.
The situation has improved significantly this month, Ghouri said, as industry worked out a deal with the grid companies to limit power cuts for factories to about four hours a day, according to a fixed schedule.
"At least now we can work," he said, the deafening churning of his dozens of antiquated looms shaking the ground beneath his small office, off a dusty Faisalabad alleyway.
But the return of some semblance of a reliable power supply hardly means the sector can expect a return anytime soon to the heady days of 2001 to 2005, when textile exports quickly went from around $6 billion a year to over $10 billion.
Exports have stagnated since then as Western buyers in an already weak demand environment have increasingly shunned Pakistan, with its spate of militant attacks and kidnappings, particularly since the end of global textile quotas in 2005.
Overall textile exports, which range from relatively cheap yarn and woven cloth to high-quality towels and garments made for Western brands, stood at $9.6 billion in the fiscal year that ended on June 30, down nearly 10 percent from a year earlier. Continued...
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