KARACHI, Nov 5: The economic slowdown has taken its toll on the local electronics and domestic appliances’ industry, forcing it to adopt cost cutting measures.

The lower demand has led to reduction in production in the industry leading to redundancy and job losses for several thousand workers directly involved in the industry.

The industry had to shed extra workers after a persistent fall in local production in the last four to six months in view of depressed demand of these items, officials in the industry explained.

“Production of domestic appliances fell by 25-30 per cent in the last few months after a sharp decline in demand from consumers,” Member Engineering Development Board (EDB) and Convener Refrigerator and Air Conditioner Manufacturing Group (RACMG) Shakil Ahmed told Dawn on Wednesday.

“The companies have started downsizing to overcome production losses,” he said without giving the exact number of lay-offs that have taken place in the last few months.

An estimated 8,000-10,000 workers and staffers are directly employed in three leading domestic appliances industries namely — Dawlance, PEL and Waves — while indirect workforce is estimated at over 20,000.

There are multiple reasons that have hit hard industrial production as well as consumers’ sentiments. High food prices have virtually squeezed the purchasing power thus vanishing consumers’ disposable income. The uncertain political and economic conditions in the last four to five months have created an anxiety among consumers to put on hold on the purchasing of luxury items, he said.

On industrial production side, he said in 2008 prices of raw material, like copper, aluminum, silver, plastics, etc., and steel surged sharply, followed by rising transportation costs, increasing utility charges, thus pushing up the cost of production. Now when raw material and steel prices are coming down sharply in the last few months, devaluation of rupee against the dollar has virtually offset the impact of falling input items’ prices worldwide, thus making no serious impact on the cost of production, he added.

Despite the fact that the domestic appliances industry is facing off season these days, overall sales of almost every item, including electronics, has been facing a bad time, he said.

He added that he cannot predict the future sales scenario of fridge and deep freezers on the eve of Eidul Azha.

He said share of purchasing domestic appliances by consumers through bank financing scheme has not been very significant but currently consumers have hardly been availing these kinds of schemes owing to high interest rates.

Even banks are reluctant to provide any funds to domestic industries these days in view of financial crunch that hit the banks.

Shakil said that the industry is thinking seriously as to what steps be taken to reduce prices to lure customers.

Chairman, Pakistan Electronics Manufacturers Association (PEMA), Sarfarazuddin, also confirmed to Dawn about the start of downsizing in industries, including the TV producing units. He, however, did not confirm as to how many workers had faced the axe in the last few months.

He said that some four to five TV manufacturers had suspended production in view of 45 per cent decline in sales in the last few months.

Sarfarazuddin said that the local industry had produced one million TV sets in 2006 falling to 700,000 units in 2007 and it is reeling hard to cross the production of 600,000 units this year.

Mohammad Rizwan of Rizwan Electronics at Abdullah Haroon Road said that sales of electronics and domestic appliances declined by 50-60 per cent in the last few months. Consumers, he said, are perturbed over rising cost of living, fueled by surging food prices and utility charges.