200 textile mills closed in US: New opening for Pakistan
By Sabihuddin Ghausi
KARACHI, May 21: About 200 textile mills have either been closed down in the US or are in the process of closure, creating a big market for textile products for countries like Pakistan, China and India.
Simultaneously, the US is emerging as a big source of supply of the re-conditioned textile machinery and equipment, and local business sources confirm of a few consignments of such parts and machinery has trickled down in Pakistan during the last few weeks.
Three top Punjab based textile groups are vying each other to enter into joint collaboration with a giant US bedwear group, and at least one of them is reported to have set up a modern textile processing plant in Lahore for this purpose.
The market reports suggest that a few Karachi based garment groups are exploring some sort of production and marketing arrangements with known American groups and departmental stores.
The US market for textiles that include clothing and other products is estimated at around $65 to $70 billion a year. The US is also exporting textiles worth about $20 to $22 billion a year.
The market analysts estimate about $100 billion export opportunity for countries like Pakistan, India and China in the US and the countries that buy US textile products once Americans quit textile business in next few years.
“For a variety of reasons, the US is now getting out of textiles,” Textile Commissioner Idrees Ahmad told Dawn. He said that textiles was a pretty capital intensive business activity that required constant periodical investment. “Perhaps Americans find the return on these investments too meagre and unattractive,” he said.
The other reason for getting out of textiles is environmental and the US authorities want textile units to be shifted to nearby South and Central American countries where they believe human beings of lesser grade species live.
“It is part of post-2005 period preparations, when all trade barriers will be dismantled and Americans will get cheaper textiles from their neighbouring countries,” a local textile dealer said.
Export performance figures of textile export quota utilization for January to May 18 this year reveal that Pakistan has pushed up textile exports by 32.43 per cent in volume but has declined by more than 14 per cent in value.
The average export unit price from the US market during the last more than four months dropped to 1.10 dollar this year as against 1.70 dollar in same period last year.
Against an adjusted level of 1,087.67 million square meters export ceiling available for the year 2002, Pakistani exporters have so far utilized 26.22 per cent. Shipment totals 285.17 million square meter, which has fetched $313.18 million.
Last year in 2001, the available quota ceiling was 932.73 million square meters. During January to May 18, 2001 Pakistani exporters utilized 23.09 of the quota ceilings and shipped 215.34 million square meters of textile products that fetched $365.61 million.
The market watchers say that it is a qualitative deterioration in quota utilization in the US this year. Low value products — fabrics and cheaper garments — have taken over relatively high value added textile products that dominated quota trade last year.
But one explanation is that there is a global oversupply of all textile products which has pushed down average unit prices virtually across the board. Pakistan’s annual textile export quota trade is about $1.2 to $1.3 bn. There are few other insignificant items exported to the US.
The Export Promotion Bureau has reported a slight fall in Pakistan’s export to the US in nine months of the current fiscal 2001-02. During July 2001 to March 2002 Pakistan’s exports to the US were $1.59 billion as against $1.63 billion in the same period last fiscal.
In imports, the US has come down on the fourth position as the first three positions are occupied by the three main oil suppliers — Saudi Arabia, Dubai and Kuwait.
Pakistan’s imports from the US is worth about Rs28 billion (about $465m) during eight months of the current fiscal. For many years the US and Japan were the number one or number two suppliers of goods, mainly machines and equipments, automobiles and capital goods.
An all pervading recession in Pakistan has pushed down the US and Japan positions as supplier of goods, which have now been taken over by the oil exporting countries.
