Pakistan Producers Prep for 'The Test' in 2006

Country's Mills to Increase Capacity in 2006 and Expand Business Further into United States

By Staff -- Home Textiles Today, 3/27/2006 12:00:00 AM

Business boomed for Pakistan in the first year of quota-free trading, and the country's mills have continued to expand their placements in early 2006.

But unit volume and sales volume don't always grow in tandem in this industry — in fact, often the contrary. As prices and margins plummet while customer demands escalate — especially from retailers — many manufacturers see 2006 as a critical year for cementing business relationships.

“2006 is going to be the test,” said Iqbal Ebrahim, director of Al-Karam Textile Mills. “The retailers are going to you give more business than 2005, teach you how to service them, then decide who their partners are going to be. This is the year they're going to have patience with your mistakes.”

Al-Karam had two employees in the United States earlier this month participating in a two-week training program staged by one of its key retail clients, he added.

To handle the growth of its U.S. business, Al-Karam doubled its capacity in 2004 and is doubling it again this year. Nearly 80% of the new capacity has already come on line, Ebrahim said. At present, the company's goal is to reach about $125 million in sales.

Gulistan is also expanding this year, with 66 new wide-width airjet looms expected to come on line in the second half of 2006. The added equipment will bring capacity to four million yards per month, according to Kashif Shakoor, director.

The mill is also broadening its range by getting into the towel business and has already started exporting some institutional and specialty towels. When completed, the new Gulistan toweling facility will have 24 dobby airjet looms, dyeing and finishing, with a capacity to produce four million kilograms of towels per year, he said.

But looms alone won't win the business, Shakoor noted.

“Customization of design, exclusivity, private brands, the coordination of diverse qualities and fabric types, and the ability to manage to logistics involved in a fashion business are all key areas to be focused on,” he said.

Al-Abid Silk Mills also doubled its capacity in printing and dyeing, and is now going after major retailers, according to Azim Sattar, director.

“We will be closing this year with our group sales close to $100 million and are targeting $150 million in 2007 with the new capacities we have created,” he added.

Al-Karam's Ebrahim noted that, although sheet qualities and thread counts are improving, retailers show no signs of shifting up their price grids. In addition, he said, there is enormous pressure on manufacturers in Pakistan, China and India to reduce turnaround times.

“We used to look at 90 days — now 60 days is not considered good,” he said.

Retailers are also stepping up their expectations in terms of holding inventory, according to Al-Abid's Sattar. “We are setting up a distribution center now in the United States for this,” he said.

Although the primary manufacturing competition is coming from China and India, recent U.S. government treaties to release duties on textiles from Egypt, Jordan, Bahrain, Oman and Qatar step up the pressure on countries like Pakistan that still carry duties.

“The U.S. is cutting deals with every Tom, Dick and Harry,” said Ebrahim. “My concern is the impact it will have on sales of high-value items.”