Faisalabad woes: From textile hub to haven for scrap dealers

Weaving mill sold to scrap traders due to crippling energy shortage.

FAISALABAD:

Persistent energy crisis and increasing cost of doing business have brought down yet another textile mill as the management of Chairman Weaving Mills has sold the concern to scrap dealers after it lost competitiveness.

“Electricity tariff had become unaffordable, most of the time there was no electricity at all to operate the machines, so I sold the machines to scrap dealers,” said Amanullah Saleem, the Chief Executive Officer of the weaving mill in Faisalabad.

Once known as the textile hub, Faisalabad has now become a haven for scrap dealers. The dealers are enjoying a good business and buying power looms from closing factories at the price of steel scrap.

Chairman Weaving Mills was going quite well a few years ago. Saleem earned a handsome amount, but the energy shortage and high energy tariff made things worse.

Now, Saleem works as a labourer during the day and as a broker in the evening in the Faisalabad yarn market to earn a living. “In my good times, I distributed salaries among my workers, but now I have to wait for my salary to take care of my children and meet other expenses,” he said.

Last year, the energy situation turned from bad to worse because energy shortages caused more than 12 hours of electricity outages and five-days-a-week gas suspension. Demand from dying mills for grey cloth dropped to almost nothing as the mills, which relied on gas-powered machinery, mostly closed down and the rest ran on half capacity.

Overall, the demand for grey cloth has weakened significantly, which has pushed prices down to Rs50-55 per meter compared to Rs80 earlier. “Our production was 30,000 meters per day, but I suffered an unbearable loss and sold inventory at throwaway prices,” Saleem said.

He closed the mill to prevent further losses, clear debts and pay salaries to employees. He had installed 64 weaving machines, each costing Rs150,000. But the mounting debt forced him to sell the machines to scrap dealers at Rs35,000 per machine.

Faisalabad is home to thousands of weaving factories that provide jobs to thousands of workers. In recent times, a lot of cases have emerged where owners have sold their units.

Industrialists were passing through a very tough time because the government failed to provide uninterrupted power supply, Saleem said. “We earlier survived on hope that the situation will get better or come under control, but nothing happened.”

He cautioned that thousands of workers had lost their jobs and were unable to feed their families and if the government did not take serious action to resolve the energy crisis, then the situation could get worse.

The government should address the energy problem and control the rising tariff, but if it failed the remaining industry could also turn into a scrap yard, he said.

Published in The Express Tribune, October 17^th, 2012.