Pakistan's Textile Industry Is Dangerously Fragile
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 didn’t work. About six months ago, Elahi, whose Dilkhush Hosiery Mills produced T-shirts for European mega-retailers Carrefour and Metro, 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. “I kept running the factory despite losses in the hope of finding a way out, but the financial burden kept growing,” says Elahi.
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 Pakistan’s exports, and mills employ 20 percent of the nation’s 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 pressure in China and the appreciation of the yuan. But according to the Pakistan central bank’s latest annual economic report, the local industry hasn’t been able to seize the advantage. 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 powers the looms, can go on for six days at a time. Demand for gas exceeds supply by as much as 15 percent in the city. Half of the city’s 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. “We’re shipping only half the quantity we used to from this city,” Sultan says.
Faisalabad, a city of 5 million people surrounded by Pakistan’s 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 crisis ever, workers have begun leaving the city for the first time. “I’ve already moved my family back to Peshawar, and if I can’t 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 poured out onto 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 [large and medium] 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 can’t imagine what would happen if half of all mills stop working.”
Omer Nazar Shah, who heads the Industrial Police Liaison Committee, a nonprofit group working with law enforcement authorities in Faisalabad, calls the layoffs “a very big threat” to security. “Since October, 2,500 people are losing jobs every week from various industries in Faisalabad. They’re 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 Gilani’s term. Elahi isn’t among those waiting for this to happen. “No matter what happens now,” he says, “I lost everything that I built.”