ECONOMY: HOW TO KICKSTART SMALL-SCALE MANUFACTURING

March 24, 2019

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Portable Workshop Shed | https://www.scottcupit.com

Small-scale manufacturing is widely regarded by experts as the solution to many economic problems confronting developing countries. A vibrant small-scale manufacturing sector could particularly solve a variety of problems, including unemployment, low growth and poverty. Planners now realise that, since modern production methods are generally more flexible, manufacturing can be undertaken anywhere, and at any level through inter-firm linkages.

Pakistan faces severe economic problems, such as high expenses and low growth rate, and it is not easy to get out of this situation. Certain proactive steps have been taken by the government, including low mark-up loans, industrial parks, industrial excellence board, etc. But some fundamental modifications are required to make those solutions workable, more accessible and adoptable for us.

It is evident that the government’s job is to provide a suitable atmosphere for industry and the investor automatically does the rest. “Suitable atmosphere” means that the ideal solution must be easy for an average Pakistani to use and, through it, raise per capita income. The steps required at this stage to facilitate a rapid entry of Pakistan into the rank of manufacturing countries are as follows:

Rapid industrialisation through small-scale manufacturing could solve a variety of economic issues

ON-LEASE WORKSHOPS

The government has started “industrial parks” but some modifications are required to improve them. The parks should be evenly distributed around the country so that the majority of the population should be able to reap benefits. The parks are normally away from the city centre hub. Therefore, dedicated “shuttle” transportation service, working round the clock, should be provided to encourage people to relocate their businesses over there. Instead of giving away loans at low mark-ups, the government should allocate park areas on lease to the prospective investor and to further make this scheme workable, portable sheds are also required to be included along with the offered package.

There would be several benefits of the above scheme, which include more encouragement for people to engage in the manufacturing business, low financial burden on the investor, and more cushion to spend the capital on machinery as well as raw material.

MACHINERY MALLS

Pakistan has limited machine tool factories, thus, a general trend is to import either new or refurbished machinery. The used imported machinery is a cheaper option, but poses the following problems:

  • The size of machinery is large and requires more installation space and would accordingly requires larger infrastructure per unit.

  • Machines used are mostly old with obsolete technology, requiring more manpower, increasing the operating and, indirectly, the manufacturing cost.

  • Machinery is refurbished, and therefore requires more maintenance, even after overhauling and routine maintenance.

In the short term, it is difficult for Pakistan to start producing customised machine tools or manufacturing machinery but, at this stage, it is better to import and source cheap manufacturing machinery from China or any other suitable country. Since the import process is complicated, the government should import a range of machinery for people through government-controlled duty-free malls. This would generate interest not only for new entrants into the manufacturing business, but would also attract existing manufacturers to improve their manufacturing practices.

Importing machinery for an individual is difficult because a number of formalities, including letter of credit, clearing and forwarding are required. Therefore, at this stage, the government should import specific machinery and make it available at purpose-built utility shops and stores, thus making it easy for anybody to buy the machinery.

The machinery malls should be made in a way that the customer can walk-in, do shopping with ease of machinery selection and pick up his merchandise the same way as grocery purchase. The focus should be on compact and numerical-controlled machinery so that the customer can easily install and commission the machinery in small sheds.

TECHNOLOGY GUIDANCE

Every new manufacturing project starts with an idea and the new manufacturer targets a product based on his/her specialty as well as market survey. But in order to penetrate the existing market, the new entrant has to lower the cost, reduce the weight, and improve quality or increase functionality. In Pakistan, the youth has a lot of potential to improve and think about optimisation ideas. In this area, there are many Pakistani experts within the country and abroad who are ready to extend support to the government by playing an advisory role for any new applicant.

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Machinery Shopping Mall | https://szbaoma.en.made-in-china.com

TYPES OF INDUSTRIES

The areas where we can focus on small-scale manufacturing which can not only be installed on smaller carbon footprint but are also easier in terms of financial commitment and running the production are:

Furniture manufacturing — For furniture manufacturing, the target market should cut across both the rich and the poor, and the furniture should be modular for ease of manufacturing and installation. It is indeed a profitable business, especially if the produced furniture is modular or has some innovation in design or material and is of high quality. Every entrant can launch his unique brand to attract customers, from local consumers to the international market.

Agricultural equipment manufacturing — Since there is a big margin of improvement in the agricultural sector, small-scale agricultural tools can be designed and manufactured with ease in the small units. The focus should be to make the equipment lighter in weight, higher in strength and more corrosion-resistant. Agricultural equipment is a highly thriving and profitable business.

Before starting this type of business, it is advisable, however, to conduct a thorough market survey and feasibility studies to identify agricultural products that can potentially be improved and sold readily.

Automobile spare parts manufacturing — Automobiles are subjected to wear and tear, hence the need for replacement of worn-out parts. It is not a must to manufacture all parts of a car; for instance, the investor can choose to specialise only in the manufacturing of brake pads for different vehicle brands and models and still enjoy a huge patronage. The bottom line is to conduct a thorough market survey and feasibility studies which would help to identify the parts in a vehicle that usually wear out and are in high demand in the market.

Hand tools manufacturing — There is a large market for tools such as hammers, tin cutters, pliers, screwdrivers, shaping tools, scissors, punchers, chisels, manual/hand saw, string trimmer, edging shears, half-moon cutters, etc., and, if small improvements are done with design, then it is indeed a profitable business venture.

Nails, nuts and bolts manufacturing — Nails, nuts and bolts are items that are used in the construction industry, carpentry and, of course, in the engineering industry (automotive et al). Started on a small scale, it can be supplied to the cottage industry within ones location and, at the same time, it can be done on a large scale, i.e., mass-producing nails, nuts and bolts. Operating a large-scale nails, nuts and bolts manufacturing business offers the privilege of exploring international markets.

The writer is assistant professor in Mechanical Engineering Department of NFC Institute of Engineering and Technology, Multan, and works as consultant for new products and concepts development.
Email: adilkhawaja@nfciet.edu.pk

Published in Dawn, EOS, March 24th, 2019