Leather Ind 5

8/14/2019 Leather Ind 5

1/65


2/65

GROUP MEMEBERSGROUP MEMEBERS

AHSAN MURTAZA (sp07-bb-0016)AHSAN MURTAZA (sp

07-bb-0016)

S.M HASAN KUMAIL (sp07-bb-0136)S.M HASAN KUMAIL (sp

07-bb-0136)

Source of data:Source of data:

1.1. BookBook

2.2. www.plgmea.comwww.plgmea.com


3/65

AGENDAAGENDA

IntroductionIntroduction TanneryTannery

Tanning processTanning process

Leather sector unitsLeather sector units

Raw MaterialsRaw Materials

Live stock populationLive stock population Major productsMajor products

ExportsExports

Country wise exportsCountry wise exports

Export potential.Export potential.

ImportsImports Cost of ProductionsCost of Productions

SWOT AnalysisSWOT Analysis Leather typesLeather types

HazardsHazards

Environmental challengesEnvironmental challenges

PrecautionsPrecautions Contribution in globalContribution in global

marketmarket

Sectarian issues in leatherSectarian issues in leather

Actions take byActions take bygovernmentgovernment


4/65

INTRODUCTIONINTRODUCTION

Leather is defined as animal skin that has been chemicallyLeather is defined as animal skin that has been chemically

modified to produce a strong, flexible material that resistsmodified to produce a strong, flexible material that resists

decay.decay.

Leather is produced from hides and skins.Leather is produced from hides and skins.

Being an agrain economy, Pakistan has a natural advantage inBeing an agrain economy, Pakistan has a natural advantage in

the area of livestock population, which is the major inputthe area of livestock population, which is the major input

(hides and skin) in the leather sector(hides and skin) in the leather sector


5/65

CONTCONT

The leather industry is the second largest export-orientedThe leather industry is the second largest export-oriented

sector of the country.sector of the country.

This sector provides employment to more than 240,000This sector provides employment to more than 240,000

people.people.

In total GDP of Pakistan, leathers contribution is 1%.In total GDP of Pakistan, leathers contribution is 1%.

In manufacturing GDP, leather contribution is 6%In manufacturing GDP, leather contribution is 6%


6/65

TANNERY SECTORTANNERY SECTOR


7/65

TANNERYTANNERY

A facility where theA facility where the tanningtanning process is applied toprocess is applied to

hides to produce leather.hides to produce leather.

OROR Its a place where process of raw leather to finishedIts a place where process of raw leather to finished

leather.leather.
http://en.wikipedia.org/wiki/Tanninghttp://en.wikipedia.org/wiki/Tanninghttp://en.wikipedia.org/wiki/Tanning


8/65

TANNING PROCESSTANNING PROCESS

Tanning is the process of converting putrescible skinTanning is the process of converting putrescible skin

into non-putrescible leather, usually with tanning, aninto non-putrescible leather, usually with tanning, anacidic chemical compound that preventsacidic chemical compound that prevents

decomposition and often imparts color.decomposition and often imparts color.


9/65

LEATHER SECTOR UNITSLEATHER SECTOR UNITS

Approximately 2500 units are working in leather sectorApproximately 2500 units are working in leather sector

NO OF UNITSNO OF UNITS

TanneriesTanneries 725725

Leather garmentsLeather garments 461461

FootwearFootwear 524524

Leather glovesLeather gloves 348348Leather goodsLeather goods 142142

Leather sportsLeather sports 160160


10/65

MANUFACTURINGMANUFACTURINGSECTORSECTOR


11/65

RAW MATERIALRAW MATERIAL

Pakistan is endowed mainly with hides and skinsPakistan is endowed mainly with hides and skins

obtained from following animalsobtained from following animals

BuffaloBuffalo

Buffalo is considered as the specialty of Pakistan inBuffalo is considered as the specialty of Pakistan inWorld, because of its ample availability in PakistanWorld, because of its ample availability in Pakistan..

CowCow

The cow row material is considered a superior raw materialThe cow row material is considered a superior raw materialupon buffalo because of its fine, tight and comparativelyupon buffalo because of its fine, tight and comparativelyuniform structure.uniform structure.


12/65

ContCont

GoatGoat

It is good for making shoe upper leathers, garment andIt is good for making shoe upper leathers, garment and

goods leather.goods leather.

SheepSheep

Leather made from sheep raw materials has a very goodLeather made from sheep raw materials has a very goodand softer touch and considered best for leather garments.and softer touch and considered best for leather garments.


13/65

LIVE STOCK POPULATIONLIVE STOCK POPULATION

((MILLION NOSMILLION NOS))SPICIESSPICIES 2001-022001-02 2002-032002-03 2003-042003-04 2004-052004-05 2005-062005-06

CattleCattle 22.822.8 23.323.3 23.823.8 24.224.2 25.525.5

BuffaloBuffalo

24.024.0

24.824.8

25.525.5

26.326.3

28.428.4

SheepSheep 24.424.4 24.624.6 24.724.7 24.924.9 25.525.5

GoatGoat 50.950.9 52.852.8 54.754.7 55.655.6 61.961.9

CamelCamel 0.80.8 0.80.8 0.70.7 0.70.7 0.70.7

HorsesHorses 0.30.3 0.30.3 0.30.3 0.30.3 0.30.3


14/65

MAJOR PRODUCTSMAJOR PRODUCTS

The major leather products manufactured by the sector include:The major leather products manufactured by the sector include:

FootwearFootwear

Leather garmentsLeather garments

Leather glovesLeather gloves

HandbagsHandbags

PursesPurses

Key chainsKey chains

Wallets etc.Wallets etc.


15/65


16/65


17/65

EXPORT SECTOREXPORT SECTOR


18/65

EXPORTS (IN $)EXPORTS (IN $)

PRODUCTPRODUCT JUL 07-JUL 07-

MAR-08MAR-08ChangeChange

from 2006from 2006ChangeChange

from 2005from 2005Jul '06 - MarJul '06 - Mar

'07'07Jul '05 - MarJul '05 - Mar

'06'06

LeatherLeather 304,958304,958 39.00%39.00% 46.05%46.05% 219,395219,395 208,810208,810

LeatherLeather

garmentsgarments

406,385406,385 42.49%42.49% 2.71%2.71% 285,199285,199 395,672395,672

LeatherLeather

footwearfootwear67,09467,094 -8.32%-8.32% -22.82%-22.82% 73,18573,185 86,93086,930

LeatherLeather

glovesgloves101,781101,781 1.88%1.88% -6.71%-6.71% 99,90199,901 109,102109,102

LeatherLeather

manufacturermanufacturer6,8996,899 -77.00%-77.00% -86.67%-86.67% 29,99929,999 51,75351,753

TOTALTOTAL 887,117887,117 25.36%25.36% 4.09%4.09% 707,679707,679 852,267852,267


19/65

EXPORT POTENTIALEXPORT POTENTIAL

The leather sector is basically an export-oriented sector. MajorThe leather sector is basically an export-oriented sector. Majorbuyers of Pakistani leather and leather products are:buyers of Pakistani leather and leather products are:

ItalyItaly

SpainSpain PortugalPortugal South KoreaSouth Korea GermanyGermany FranceFrance

UKUK USA etc..USA etc..


20/65

COUNTRY WISE EXPORTSCOUNTRY WISE EXPORTS

(IN $)(IN $)COUNTRYCOUNTRY 2007-062007-06 2006-052006-05 CHANGECHANGE

SOUTHSOUTH

AFRICAAFRICA

89,78089,780 83,72583,725 7.23%7.23%

U.S.AU.S.A 47,89847,898 47,33447,334 1.19%1.19%

SPAINSPAIN 36,93436,934 28,50328,503 29.58%29.58%

GERMANYGERMANY 35,37935,379 31,06231,062 13.90%13.90%

UNITEDUNITED

KINDOMKINDOM31,89631,896 31,03231,032 0.42%0.42%

FRANCEFRANCE 21,72521,725 23,86923,869 16.15%16.15%


21/65

IMPORTIMPORT

The leather industry of Pakistan is meeting its 75% need ofThe leather industry of Pakistan is meeting its 75% need of

raw material from local land resources while remain 25% israw material from local land resources while remain 25% is

met through imports.met through imports.

Pakistan import leather from the following countries:Pakistan import leather from the following countries:

ChinaChina

IranIran

KenyaKenya

AustraliaAustralia SudanSudan

ItalyItaly


22/65

COST OF PRODUCTIONCOST OF PRODUCTION

Cost of production is very high in Pakistani industry asCost of production is very high in Pakistani industry as

compare to the other competitors like India and China.compare to the other competitors like India and China.

The high cost of various inputs specially utilities and taxesThe high cost of various inputs specially utilities and taxesmake our leather products uncompetitive in internationalmake our leather products uncompetitive in international

market.market.

The analysis show that the average cost of a leather jacket inThe analysis show that the average cost of a leather jacket inPakistan is around 14 percent more expensive compared toPakistan is around 14 percent more expensive compared to

china and 10 percent as compared to Indiachina and 10 percent as compared to India


23/65

SWOT ANALYSISSWOT ANALYSIS

STRENGTHSTRENGTH

1.1. Access to international marketAccess to international market

2.2. Meat eating habits of populationMeat eating habits of population

3.3. Availability of skilled workforceAvailability of skilled workforce

WEAKNESSESWEAKNESSES

1.1. Shortage created in local market due to exports of raw andShortage created in local market due to exports of raw andfinished leatherfinished leather

2.2. High cost of electricityHigh cost of electricity

3.3. Requirement of high working capitalRequirement of high working capital


24/65

Cont.Cont.

OPPORTUNITIESOPPORTUNITIES

1.1. World export trade market of leather goods is growing at anWorld export trade market of leather goods is growing at an

average of 8% showing goods prospects of exports of leatheraverage of 8% showing goods prospects of exports of leathergarmentsgarments

2.2. Low to medium end garments stitching being shifted fromLow to medium end garments stitching being shifted from

china to Pakistanchina to Pakistan

3.3. Recent policies announced by the government for livestockRecent policies announced by the government for livestocksector would result in higher availability of hides and skins insector would result in higher availability of hides and skins in

future.future.


25/65

ContCont

THREATSTHREATS

1.1. Non availability of leather during peak production seasonNon availability of leather during peak production season

2.2. Exponential increase in prices of finished leather due toExponential increase in prices of finished leather due toexportsexports

3.3. Increasing prices of utilitiesIncreasing prices of utilities


26/65

LEATHER TYPESLEATHER TYPES


27/65

ANILINE LEATHERANILINE LEATHER


28/65

SEMI ANILINE LEATHERSEMI ANILINE LEATHER


29/65

PIGMENTED LEATHERPIGMENTED LEATHER


30/65

FULL-GRAIN PIGMENTEDFULL-GRAIN PIGMENTED

LEATHERLEATHER


31/65

CORRECTED GRAINCORRECTED GRAIN

PIGMENTED LEATHERPIGMENTED LEATHER


32/65

SPLIT LEATHERSPLIT LEATHER


33/65

WAXY LEATHERWAXY LEATHER


34/65

EFFECTSEFFECTS


35/65

HAZARDS RELATED TOHAZARDS RELATED TO

TANNERY WORKERTANNERY WORKER

CURINGCURING


36/65

HAZARDS CONT.HAZARDS CONT.

SOAKINGSOAKING


37/65

HAZARDS CONTHAZARDS CONT

Un-hairing and LimingUn-hairing and Liming

Deliming and BatingDeliming and Bating


38/65

ENVIROMENTAL CHALLENGEENVIROMENTAL CHALLENGE

Leather tanneries in Pakistan produces threeLeather tanneries in Pakistan produces three

categories of wastecategories of waste

WastewaterWastewater Solid wasteSolid waste

Air emissionsAir emissions


39/65

WASTE WATERWASTE WATER

Tannery wastewater is highly polluted andTannery wastewater is highly polluted and

the contamination observed is many timesthe contamination observed is many times

beyond the limits set by the Nationalbeyond the limits set by the National

Environmental Quality Standards (NEQS)Environmental Quality Standards (NEQS)for all important wastewater parametersfor all important wastewater parameters


40/65

SOLID WASTESOLID WASTE

Solid waste include dusted curing salts,Solid waste include dusted curing salts,

raw trimmings, wet trimmings, dryraw trimmings, wet trimmings, dry

trimmings, wet shavings, dry shavings,trimmings, wet shavings, dry shavings,

buffing, and packaging material.buffing, and packaging material.


41/65

AIR EMISSIONSAIR EMISSIONS

Emissions were found to be well below theEmissions were found to be well below the

NEQS level. Ammonia emission duringNEQS level. Ammonia emission during

processing and washing of drums, thoughprocessing and washing of drums, though

intermittent, has adverse effects on workersintermittent, has adverse effects on workershealth.health.

Hydrogen sulphide emission during mixingHydrogen sulphide emission during mixing

of acid and alkaline wastewater in drain isof acid and alkaline wastewater in drain isalso a serious health hazardous.also a serious health hazardous.


42/65

PRECAUTIONSPRECAUTIONS

Efficient weakness drying should be provided at theEfficient weakness drying should be provided at the

point of dust generation especiallypoint of dust generation especially at buffing andat buffing and

shaving machines and at rotating drums.shaving machines and at rotating drums. The raw hides and skins should be disinfectedThe raw hides and skins should be disinfected usingusing

proper antisepticproper antiseptic before processing those for tanning.before processing those for tanning.

Use ofUse oftanning kit.tanning kit.


43/65

WORLD SCENERIOWORLD SCENERIO


44/65

GLOBAL MARKETGLOBAL MARKET

Increase in tanneries in Pakistan isIncrease in tanneries in Pakistan isbecause of rising world demand forbecause of rising world demand fortanned leathertanned leather

Production of tanned leather in developedProduction of tanned leather in developedcountries has decreased due to closure ofcountries has decreased due to closure oftanneries or strict environment-controltanneries or strict environment-control

laws, the demand for leather fromlaws, the demand for leather fromdeveloping countries has been on the risedeveloping countries has been on the rise


45/65


46/65

CONTRIBUTION IN GLOBALCONTRIBUTION IN GLOBAL


47/65

CONTRIBUTION IN GLOBALCONTRIBUTION IN GLOBAL

MARKETMARKET


48/65

LINKAGES


49/65

Cattle

Farmers Butchers

LEATHER INDUSTRY

SUPPLIERSOF INDUSTRY

PRODUCTSELLERS FINALGOOD

BUYER

LINKAGES


50/65

SECTORAL ISSUESSECTORAL ISSUESIN LEATHERIN LEATHER


51/65

TANNINGTANNING

High proportion of damaged local hides and skinsHigh proportion of damaged local hides and skins

due to diseases,due to diseases,

improper slaughtering/preservation.improper slaughtering/preservation.

Compliance to environmental standardsCompliance to environmental standards


52/65

FOOTWEARFOOTWEAR

Undeveloped industryUndeveloped industry

Non availability of quality shoeNon availability of quality shoe

components/accessoriescomponents/accessories

Lack of marketing linkagesLack of marketing linkages

Lack of trained human resourcesLack of trained human resources


53/65

LEATHER GOODSLEATHER GOODS

Undeveloped industryUndeveloped industry

Low technological levelsLow technological levels

Lack of marketing linkagesLack of marketing linkages


54/65

WORLD TRADEWORLD TRADE

ORGANIZATIONORGANIZATION[WTO][WTO]


55/65

GENERAL IMPACTGENERAL IMPACT

Lack of TechnologyLack of Technology

Low quality of productsLow quality of products

Lack of capital intensive productionLack of capital intensive production

Lack of skilled labor.Lack of skilled labor.


56/65

IMPACT OF WTOIMPACT OF WTO

The Agreement on Technical Barriers toThe Agreement on Technical Barriers to

Trade (TBT) and the Agreement on theTrade (TBT) and the Agreement on the

application of Sanitary and Phytosanitaryapplication of Sanitary and Phytosanitary

Measures (SPS) can have significantMeasures (SPS) can have significantimpact on Pakistans ability to increase theimpact on Pakistans ability to increase the

exports in this sectorexports in this sector


57/65

IMPACT OF WTOIMPACT OF WTO

The environmental issues related with theThe environmental issues related with theleather industry in Pakistan could haveleather industry in Pakistan could havesignificant negative effects on its exports .significant negative effects on its exports .

If the Pakistani exporter does not improveIf the Pakistani exporter does not improvethe quality of the product, the currentthe quality of the product, the currentcompetitive advantage that Pakistan hascompetitive advantage that Pakistan has

in this field could quickly fade away.in this field could quickly fade away.


58/65

SHORT TERM ACTIONSSHORT TERM ACTIONS

Latest plant & machinery is available in the international marketsLatest plant & machinery is available in the international marketsand can be purchased, shipped and installed in a short span ofand can be purchased, shipped and installed in a short span oftimetime

For growth to be sustainable, time bound policies must be givenFor growth to be sustainable, time bound policies must be givento the industry This would create an investment friendlyto the industry This would create an investment friendlyatmosphere to foreign as well as local investment resulting inatmosphere to foreign as well as local investment resulting inincreased growth.increased growth.

The policy of lowered tariffs would bring a change in relativeThe policy of lowered tariffs would bring a change in relativeprices of products. It will introduce innovation, new productionprices of products. It will introduce innovation, new productionstructures and changing patterns of competition.structures and changing patterns of competition.


59/65

LONG TERM ACTIONSLONG TERM ACTIONS

To achieve higher growth, special incentives may be provided forTo achieve higher growth, special incentives may be provided forsetting up of industries for the manufacture of internationalsetting up of industries for the manufacture of internationalquality trimming, accessories and component required by thequality trimming, accessories and component required by theleather industry.leather industry.

Technological up-gradation through joint ventures with leadingTechnological up-gradation through joint ventures with leadinginternational manufacturing houses.international manufacturing houses.

Government may utilize the Global Environmental Facility toGovernment may utilize the Global Environmental Facility to

obtain credits for effluent. Under the existing situation, the smallobtain credits for effluent. Under the existing situation, the smallmanufacturers cannot afford to comply with internationalmanufacturers cannot afford to comply with internationalstandards on effluent control.standards on effluent control.


60/65

PROBLEMSPROBLEMS

The cost of production is very high in Pakistan as compared toThe cost of production is very high in Pakistan as compared to

our competitors like China and India. The high cost of variousour competitors like China and India. The high cost of various

inputs especially utilities and taxes make our productsinputs especially utilities and taxes make our products

uncompetitive in internationaluncompetitive in international

Due to shortage of live stock in the country the cost of rawDue to shortage of live stock in the country the cost of raw

hides has been on the increase regularly.hides has been on the increase regularly.

Leather garment industry is facing the problem of nonLeather garment industry is facing the problem of non

availability of raw materials for their finished goods.availability of raw materials for their finished goods.

Good quality leather is mostly exported and is not availableGood quality leather is mostly exported and is not available

for high value-added Leather Garmentsfor high value-added Leather Garments


61/65

SOLUTIONSOLUTION

We have to reduce our cost of production and also maintainingWe have to reduce our cost of production and also maintainingthe improvements in Productivity Tanning to finishingthe improvements in Productivity Tanning to finishingchemicals should be provided at cheaper rates.chemicals should be provided at cheaper rates.

Modernization of live stock farming on scientific pattern isModernization of live stock farming on scientific pattern isneeded for better growth of live stock.needed for better growth of live stock.

Ban should be imposed on the export of hides and semi tannedBan should be imposed on the export of hides and semi tannedleather or imposition of export duty on export of semileather or imposition of export duty on export of semi

finished and finished leather.finished and finished leather.

Duties on tannery machines spare parts and raw materialsDuties on tannery machines spare parts and raw materialsshould be reduced or should be made duty free.should be reduced or should be made duty free.


62/65

SOME INITATIVESSOME INITATIVES

TAKEN BYTAKEN BY

GOVERNMENTGOVERNMENT

ActionAction CostCost TimeTime ImpactImpact


63/65

StrengthenStrengthenthe tanningthe tanninginstituteinstitute

Rs.100 millionRs.100 million Short-TermShort-Term Improved productImproved productqualityquality

Adoption of Environmentdoption of EnvironmentFriendly TechnologiesFriendly Technologies

Rs.450 millionRs.450 million Medium-TermMedium-Term Complying with theComplying with theinternational normsinternational normswould increase thewould increase theleather exports.leather exports.

Establish LeatherEstablish LeatherGarmentsGarmentsCentre in Sialkot andCentre in Sialkot andKarachiKarachi

Rs.500 millionRs.500 million Short-TermShort-Term Increased exportIncreased exportmarket sharemarket share

Establish FootwearEstablish FootwearDesignDesignCentre in Sialkot andCentre in Sialkot andKarachiKarachi

Rs.250 millionRs.250 million Short-TermShort-Term Improved quality andImproved quality andvariety wouldvariety wouldenhance the exportsenhance the exportsof footwear.of footwear.


64/65


65/65

Documents

Leather Ind 5