Pest analysis for textile industry

PEST Analysis Of Textile Sector In Pakistan macro-environment that affects all PEST Analysis: A PEST analysis is an analysis of the external macro-environment firms. P.E.S.T. is an abbreviation for the Political, Economic, Social, and Technological factors of the external macro-environment. Such external factors usually are beyond the firm's control and sometimes present themselves as threats. For this reason, some say that "PEST" is an appropriate term for these factors. Many macro-environmental factors are country-specific and a PEST analysis will need to be performed for all countries of interest. The following are examples of some of the factors that might be considered in a PEST analysis. Political Economic Social Technological

1. Political Analysis:When a new government comes it make its own policies related to export and import i mport of textile goods .Overnight changes in government effect investors a lot and they don’t want to invest in

Pakistan . Only speculators invest if they think that they can be benefited . Long time investors are not willing to invest in Pakistan. Pakistani Textile Industry is confronted with problems of  different nature. The political situation of Pakistan is not satisfactory. satisfactory. Due to the rapid change in the Government . every government sets its own new trade policies. Govt. should apply sustainable policies for the beneficial of the exporters as well as the investors . Marshal law is always being threat to our industry. Poor law and order situation is a serious threat for Pakistan textile industry. Changing tax rates are also effecting our textile sector. Import and export restrictions is barrier for the development of textile sector. Ministry of textile industry in collaboration with Department of Textile Engineering & Technology and University of the Punjab & Textile Testing International (TTI) is offering short course on THE ROLE OF TEXTILE TESTING IN ACHIEVING QUALITY AND CONFORMANCE to comply with the global import regulations. Hike in the tariff of electricity & gas cause an increase in production cost which cuts down the demand for Pakistani textile goods in international market due to high cost of inputs. In order to survive the industry government should make electricity & gas cost cheaper. Government these days cannot coop up with the energy crisis in Pakistan. Government should try to remove the energy crisis in order to save the industry. As the crisis in energy sector cut down the production. By the reduction of production exports are also decreased .

Energy crisis:

Electricity crisis:As a consequence of load shedding the textile production capacity of various sub-sectors has been reduced by up to 30 per cent. The representatives of the all textile associations presented their serious concerns on the huge losses being incurred due to electricity load shedding and the instant rise in the Electricity tariff. They said that the industry has already been crippled due to record load shedding during winter months. Gas Shortage:-

Gas load-shedding continues in Punjab and NWFP despite a significant increase In temperature. A spokesman for the All Pakistan Textile Mills Association claimed that 60 to 70 per cent of the industry had been affected and was unable to accept export orders coming in from around the globe. He said the textile industry had already endured over 45 days of gas disconnection over a period of four months, causing extraordinary production losses and badly affecting capability of  the industry. In Punjab, he said, the textile industry's share was over 60 per cent, according to APTMA's study energy supply disruption only was causing an estimated loss of Rs1 billion per day. He regretted that at a time when the export-oriented industry had ready demand in terms of meeting export orders, the policy-makers failed to take prudent steps to help ensure timely execution of orders. In the larger interest of the economy and exports, he suggested, the government should “ensure utility companies provide smooth electricity and gas supply to the

textile industry and accord the industry top priority at this critica l time.”

2. Economic Analysis:Any development in the country does not restrict its effects to one or two sectors rather, the implications of any such development can be felt across multi-sector pathways. Same has been the case with Textile sector. Here, the discussion is limited to the contributions and effects of development in Textile industry to the Economic and Social spheres of the country. a. Increase in National Income

Any development in the industrial sectors greatly contributes to the Gross Domestic Product of country. Currently, Textile sector alone contributes 9.5% to the GDP. Development of industrial sector means more investment, employment and production and hence, higher contribution towards GDP. b. Contribution to taxes

The textile industry's overall contribution of taxes in 2011-12 is expected to reach Rs. 23.5 billion, including payments of withholding taxes and applicability of 

lower rate of sales tax of 4%-6% on local supplies. Textile exports stood at $12.5 billion from July 2010 to May 2011. During the current fiscal year, the tax department collected Rs. 10.5 billion as 1.0% withholding tax. Similarly, textile industry contributed Rs. 2.5 billion at the rate of 0.25% as Export Development Fund (EDF). Break-up shows that the applicability of lower rate of 4%-6% sales tax on local supplies would contribute an additional amount of Rs. 11billion, annually, to the national exchequer. Moreover, the collection of withholding tax amounted to Rs. 10.5 billion during ongoing fiscal year. c. Economic Stability Growth in Textile sector has immensely contributed towards economic stability of the country. This sector alone employs 15 million work force of the country. Moreover, when the finished goods are domestically available, it helps keep prices down and fluctuations due to international market influences are less likely to strike populace. d. Improvement in Balance of Payments Textile industry has brought structural changes in the pattern of foreign trade of the country. Today, the Textile sector account for about US$ 10.2 billion export of the country. On one hand, this sector helps reduce import bills of textile products and on the other hand, it contributes in earning foreign exchange thereby helping towards keeping balance of payment in control. Following table presents a comparison of years 2008-09 and 2009-10 with respect to exports of  different textile products. e. Agricultural Development Development in Textile sector greatly affected the agricultural development in turn. It i s evident from the fact that if number of textile mills increased from 3 to 600 and spindles from about 177,000 to 805 million respectively in 1947 to 2010 then cotton  – bales increased from 1.1 million bales in 1947 to 10 million bales by 2010. Increased demand of  cotton contributed towards better life of farmer by offering greater market for the raw material. f. Greater Employment As already mentioned, this sector employs about 15 million or 38 percent of total workforce of  the country. If the employment rate is added with the upstream and downstream employment, like in agriculture or export related work opportunities due to this sector then the economic effect of this sector increased manifold. g. Collateral Industrial Development

Development of one industry leads to the development and expansion of other industries. A number of industries and work opportunities are directly or

indirectly related with Textile Sector. For example, colours and dies, plastics, printing, machinery etc are equally affected by booms or busts in Textile sector. h. Enhanced Government Revenues Any industrial development is bound to increase government revenues. Though textile sector is still zero rated for the purposes of sales tax on exports yet the tax on domestic supply and income tax contribute greatly to government revenues. i. Diversification of Economy Development in textile sector has helped in diversifying economy by reducing dependence on mere production and export of raw material. It also instilled diversification by stimulating collateral industrial development.

3. Social Analysis: Social Factors Affecting Pakistan Textile Industry: Globalisation. Textile industry products sold in the

Pakistan originate from all around the world,

often from developing countries. This global trade can lead to improved economies, and creates employment for many people - often women - providing them with financial stability and a chance to escape poverty. But the process is not perfect, with low wages, poor worker’s

rights (inadequate health and safety, long hours, no contracts) and child labour apparent in some countries. Workers rights/Education. Falling prices of textile products of Pakistan have put cheap production in demand all along

the supply chain, from pickers and labourers on farms to f actory workers. There is added pressure on producers to cut corners, and workshops with poor standards are seen as a ‘hidden’ way to do this . Much of the manufacture of 

garments employs unskilled - or low skilled  – workers who lack of knowledge of rights, or are prevented from joining together in trade unions. Health and Safety. Workshops in developing countries can have less stringent restrictions through regulations than

those apparent in the UK or more developed nations. Wheras in Pakistan Textile industry Where working conditions are poor, workers’ health can suffer (with the likes of backache, eyestrain, burns and other injuries. There ar e even reports

of restricted allowance of toilet breaks, leaving workers with severe kidney problems ). And when long hours - up to 16 hour days in some countries - are factored in, fatigue can compound the likelihood of accidents. Animal Welfare. With materials such as wool, leather and fur, f arming and handling of animals is an integral part of the

production process. Poor farming practice can lead to neglect or mistreatment of animals, with malnutrition, infections and illness potential symptoms. Some countries have much less restrictive regulations to protect animal welfare, particularly in respect of transportation, slaughter and processes such as ‘tooth -grinding’ and ‘mulesing’

4. Technological Analysis:Textiles consist of fibers, yarns, fabrics and finishes. Each of these stages has a variety of  processes involved to reach the next stage .Technical textiles offer an excellent opportunity to contribute in economy and also a new direction, new ways and means to sustain in the near future. An average of 4% growth in technical textiles was expected during the period from 1995-2005 and almost it is gained. Some of the machineries includes in various departments of Textile Industry such as: • Blow room • Carding • Combing • Weaving • Bleaching • Testing • Finishing

now a days textile industry totally become computerized because of time and preferences changing of customer. All designs designed on computerized system first then using heavy machines product came into existence In 1990 to 2000 era when Chinese revolution not came then mostly Japanese and expensive machines used in Pakistan. There are many drawbacks and one is that the maintenance cost is much higher then its production. If there was any fault in machine then a foreign engineer is hired and calls him to come in that country and repair it. So cost increased rapidly. To maintain the quality some of the following machines introduced and used to reduce cost, time, labor and quick finishing: 1. TRASH ANALYZER 2. FIBER FINENESS TESTER 3. FIBER BUNDLE STRENGTH TESTER 4. ELECTRIC LEA STRENGTH TESTER 5. MULTI COUNT BALANCE 6. MULTI STRENGTH MEASUREMENT