Plastic Products Cluster - Lahore: Diagnostic Study

PLASTIC PRODUCTS CLUSTER - LAHORE
DIAGNOSTIC STUDY
Prepared by Hamid Minhas (Regional Business Coordinator)
Turn Potential into Profit

Small & Medium Enterprise Development Authority Ministry of Industries, Production & Special Initiatives Government of Pakistan http://www.smeda.org.pk 8th Floor, LDA Plaza, Edgerton Road Lahore Tel: +92-42-111-111-456 Fax: +92-42-6304926-27 Email: hamidm@smeda.org.pk
Diagnostic Study on Plastic Products, Lahore
The views expressed in the Diagnostic Studies are those of the authors and should not be attributed to UNIDO or to the institutions they may represent.
SMEDA_UNIDO Cluster Development Programme Pakistan
TABLE OF CONTENTS
Introduction What Is Plastic Characteristic Of Plastic Possible Uses Of Plastics The Growing Market Plastic Industry Global Perspective International Trade Statistics The National Scenario Market Overview Market Players Consumption & Imports Benchmarked Cluster Lahore Cluster Analysis Of Business Operations Business Status Social & Regulatory environment Finance Human Resource Raw material Procurement Product Sale Process Flow Extrusion Molding Injection Molding Blow Molding Core Cluster Actors Manufacturers Recycling Of Plastic Raw Material & Chemical Suppliers Machinery Suppliers Mold & Die Makers Traders / Wholesalers / Distributors Component Industries Interest Groups Pakistan Plastic Manufacturers Association Lahore Chamber Of Commerce & Industry
Support Service Institutions Financial Institutes Pakistan Standards Quality Control Authority Technical Education & Vocational Training Authority Injection Molding Technology Development Project BDS Providers Engineering Development Board Small & Medium Enterprise Development Authority Export Promotion Bureau Large Organizations Environment Protection Agency Lahore Development Authority Punjab Small Industries Corporation Export Processing Zones Authority SWOT Analysis Strengths Weakness Opportunities Threats
Cluster Map VISION Action Plans Annexure 10 Things about Plastics everyone should Know PET Bottles Manufacturing Process Flow
INTRODUCTION
What Is Plastic? A plastic is a type of synthetic or man-made polymer; similar in many ways to natural resins found in trees and other plants. Webster's Dictionary defines polymers as: any of various complex organic compounds produced by polymerization, capable of being molded, extruded, cast into various shapes and films, or drawn into filaments and then used as textile fibers. Plastics are used because they are: Attractive Hard Soft & Rubbery Easy to Clean Flexible Good insulators of heat or electricity Light weight Hygienic Easy to Shape & Color Economical
Apart from some of the properties of plastics mentioned above, one important feature of plastic is that it is a non-rusting material, which makes it a very usable commodity especially in coastal areas where there is a lot of humidity. As stated earlier, the use of plastics is increasing all the time as they replace materials such as metal, wood, paper, ceramics and glass in a wide variety of uses. More over the overall demand and local supply gap that prevails in the market remains largely unmet which also provides opportunities for entering in to this business
Possible Uses of Plastics: The end-users of various categories of plastic material & processed goods are given below:
The Growing Market for Plastics: Durable, light-weight and corrosion - resistant plastics are increasingly being used in place of wood, steel and other traditional materials. An array of new uses and new resin technologies will continue to expand the market for plastics during the 2000s.
PLASTICS INDUSTRY - A GLOBAL PERSPECTIVE

The plastics processing industry is prominent in every aspect of modern life. As new polymers and composite materials are introduced by the chemical industry, so the industry is constantly refining and adding products to those that have been made over many decades. In its early years, the plastics industry greatly benefited from the substitution of plastic for other materials including various metals, wood, paper, glass, cardboard and natural fibers, etc. However, as a mature industry, the possibilities for substitution are limited, leading to greater dependence on economic growth and the expansion of demand in plastic's existing markets. The industry is also vulnerable to volatility in the global price of oil and gas feed stocks, used by the chemical industry to produce its raw and semi-finished materials. The leading markets for plastics are in packaging, building and construction and the automotive/transport industries, all of which have generally been buoyant. However, a number of other industries which use some form of plastic, e.g. the textile, clothing, electrical, electronic, mechanical engineering and agricultural industries, have experienced a profound downturn in demand, as they struggle to adjust to changes in the market for their products and against a rising tide of imports.
Overseas competition from the advanced developing countries is having an impact on domestic demand, as cheap imports of relatively low added-value products are causing some parts of the worlds plastics industry to restructure. A number of companies have relocated their manufacturing facilities to these low-cost countries and have themselves become importers. The rising cost of the polymers used by the plastics processing industry has made many of its customers resist the inevitable price increases that follow and led them to seek alternative sources of supply, wherever possible. Plastic processors are also seeking cheaper material suppliers and this downward spiral has led to the closure or suspension of production at several plants. Acquisitions and Consolidation continues to play an important role in plastics businesses all around the World.
International Trade Statistics: For 2003, United Nations trade statistics show exports of plastics in primary form to be more than$ 72 billion. Seventy countries reported trade in plastics in 2003. The top exporting countries were the United States, Germany, Belgium, China (Hong Kong SAR), France, Canada, Italy, Singapore, Sweden, and Malaysia. The Unites States is the largest exporting country; the Peoples Republic of China is the largest importer. The value of exports in 2003 is below the levels for the previous three years due to the world-wide economic downturn. Exports for 2000-2002 averaged more than $ 90 billion. Other supplier countries are South Korea, Saudi Arabia, Thailand, Japan, Germany, Hungary, China and Belgium, which dominate the import market because of lower prices, transport costs and shipment time. However, the respective share of each country has varied. For example, the market share of Hungary has fallen from 11.4 per
cent to 3.2 per cent. Similarly, the share of Thailand has jumped from less than 1 per cent to over 7 per cent during the period of six years. THE PAKISTANI INDUSTRY SCENARIO Pakistan's economy achieved an impressive GDP growth rate of 8.4% in 2004~05, the highest in two decades and the third fastest growing economy in Asia. Powering the economy with its superb performance, the manufacturing sector accounted for 18.3% of GDP while registering a growth of 12.5%. The co-related industries of Plastic, Printing & Packaging have registered a phenomenal growth during the past few years where printing and graphic arts industries are the second largest industries in terms of work force in Pakistan. Pakistan's plastic industry is thriving at an average annual growth rate of 15% with a total estimated production capacity of 624,200 M/T per annum. The industry attracted investment amounting to more than US$ 260 billion, almost half of which was foreign direct investment (FDI), all contributing to an exceptional export growth by 35%. Automotive, cosmetics, toys, chemicals, stationery, paper & board, electronics, food, publishing and furniture are some of the major industries utilizing materials and state-ofthe-art related equipment and technology to increase output and meet increasing demands in domestic & foreign markets. Adding further strength to the industrial progress, Pakistan has established successful export markets for its plastic goods. In foreign markets including countries like Australia, South Africa, Saudi Arabia, West Indies, UAE, Kuwait, Taiwan, Nigeria and Zimbabwe; Pakistan is strategically well placed to target the all-important local and international buyers in one of the world's largest trading regions. Particular growth is being seen in exports of plastic components for the automobile industry. This growth happened, besides entrepreneurial efforts, due to simplified tax policy on local production and reduction in import tariff on plastic raw materials. The industry is contributing more than Rs7.5 billion annually to the national exchequer in shape of custom duty, sales tax and income tax. Its contribution to the gross domestic product (GDP) was 1.69 per cent. It is a high tech industry; plastic processing machinery is mostly imported from Japan, Korea, Italy, Taiwan, Hong Kong, England, China and Germany. However, locally manufactured machinery is also being used. Raw material is also imported. The capacity utilization has been in between 43 to 95 per cent. Plastics industry in the un-organized sector is totally self-financed. Export share in total exports was 0.163 per cent. The industry is presently split into organized and un-organized sectors. About 60 per cent of the units are located in and around Lahore and the remaining at Karachi, Hattar, Gadoon, Faisalabad, Multan and Quetta.
The organized sector is capable of producing quality products whereas the unorganized sector produces low quality, cheap products through excessive use of plastic scrap. During the last decade, the unorganized sector has grown much more rapidly then the organized sector. Market Overview The per capita consumption of plastic in Pakistan is 3.1 kilograms, while this is 3.3 kg in India and 7 kg in China. The highest per capita consumption of plastic is in United States and Germany, where per capita consumption is 120 kg per annum. Globally, the per capita plastic consumption works out to be around 24 kg per annum. The consumption of plastic is less in Pakistan as the local industries are not developing as rapidly as they are growing in the other parts of the world. Market Players There are some 6,000 plastic products manufacturers in the country and 600,000 people are directly and indirectly engaged with this business. The plastic industry falls in cottage industry and there are some manufacturers, who are medium-sized industries.
Consumption & Imports Pakistan imports 80-90 percent raw material for plastic making from different countries. The total consumption of raw material used in the plastic industry in the country is around 450,000 tonnes. The country imports 70 percent raw material from UAE and Far Eastern countries. The special grade raw material is imported from Germany and USA, which is 20 percent of total raw material consumption. India is also a major producer of plastics raw material. The total consumption of plastic raw material in India is two million tones annually. The prices of raw material of plastic industry depend on international scenario. During Iraq war, the prices shot up by 70 percent. The raw material of plastic industry is a by-
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product of crude oil. The prices are directly related to crude oil prices as the raw material is made from Naphtha, which is a by-product of crude oil. Moreover, the recent penetration of cheap Chinese products into Pakistan has made the competitive situation in the local plastic industry very intense. Local manufacturers have to import raw material which is a substantive cost of their total produce while Chinese products offering a large variety at affordable rates have made survival difficult for the local industry.
BENCHMARKED CLUSTER
China has the seventh-largest economy in the world in terms of gross domestic product (GDP). With more than 1.3 billion people, China also has the world's largest consumer market. The plastics processing industry has been developing at an average annual rate of 10% since 1997 in response to massive developments in the Chinese building and construction, automotive, packaging and agriculture sectors. The evolution of the use of plastic products in these sectors is forcing plastic processors to upgrade and replace current infrastructures with high-tech, high-precision, plastic production machinery and moulds that can develop new products with higher added value. Chinas domestic output of synthetic resins can only satisfy 40% of market demand. This supply imbalance continued during the 2002-2005 period, requiring China to rely heavily on imports to fill its shortfall of resins. Rapid growth in the construction and packaging sectors in China are driving demand for commodity synthetic resins like polyvinyl chloride, polyethylene and polystyrene. Engineering plastics are expected to have good market prospects for exporters as a result of the expansion of major consumers such as the automotive and telecommunications industries. According to the China Plastic Processing Industrial Association (CPPIA), the plastic processing industry will experience rapid development from 2001 to 2005. An increase in demand for plastic products from downstream manufacturing industries, such as construction, automotive, packaging and agriculture, will account for the industrys rapid growth. Chinas per-capita consumption of plastics is relatively low, despite its position as a major producer. The annual consumption of plastics per capita in China is only 10 kilograms (kg), while the world average is 45-55 kg in developed countries. Germany is one of the highest per-capita consumers at 120 kg, while per-capita usage in Canada and the United States is about 80 kg. The China Plastics Processing Industry Association replaced state control over the plastics processing industry. The Association consists of over 700 member companies nation-wide that produce plastic films, plates, sheets, pipes, rods and other plastic products.
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China is relatively self-sufficient in producing and supplying low-grade plastic products and medium-grade products to the domestic industries. However, the level of technology and equipment for the production of high-quality goods in China is quite low. To date, advanced equipment accounts for only 25% of the total machinery in use in China. The majority of plastic processors are middle- to small-scale factories lacking the sophisticated processing technology to develop high-grade plastic products. In China, plastics are progressively being used as a substitute to steel, wood and traditional building material. According to the CPPIA, material trends are favoring the use of plastics in municipal projects, rural projects and industrial construction. Chinese consumers believe that the benefits of using plastics include energy saving, ecological protection and improvement of living standard Key Factors Shaping Market Growth Self-sufficiency in producing and supplying low-grade plastic products and medium-grade products to the domestic industries. Chinese government provides national treatment to all foreign companies Tariffs for many resins have been considerably reduced in recent years. Product standards and standard-related procedures will be improved and brought in line with international practice. Very Strong and Large Association (CPPIA) replaced state control over processing units.
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PLASTIC INDUSTRY IN LAHORE REGION

Plastics industry in Pakistan is one of the oldest in the country and its existence can be traced out even in the year 1947 when Pakistan came into being. Obviously, at that time, the industry was ill-organized and progressed in a haphazard manner producing low quality toys and household utensils on hand molding machines. Whatever the quantity of those machines was, they were small in number and all set in Lahore, an important commercial centre of Punjab till date. The period from 1965-1975 was notably the turning point, where the use of plastics was seen rising to a leading force in the country, with a sizeable base About 60% of the plastic industry is located in and around Lahore region. The scarcity of available industry data restricts the analysis of current position in Lahore to some extent.
ANALYSIS OF BUSINESS OPERATIONS

Business Status Almost all of enterprises are working as sole proprietorship but in recent times some have advanced to more organized status and converted their enterprises to Pvt. Ltd. companies. Social & Regulatory environment As far as domestic laws of the country are concerned, firms dont face much difficulty in complying with them. But at the international scenario, new rules and regulations keep on coming every now and then. Very few examples of a firm being ISO certified can be seen in the cluster and those also engaged in export or a medium/large unit. Finance All of the businesses are being mostly finance by equity. No banking institute has yet recognized the potential of the cluster and hasnt come up with any type of scheme for the enterprises. But those who have obtained financing for either machinery or working capital needs have been enjoying good pay-back history with banks. Human Resource Upper Management tasks are performed mostly by the owners of the companies, who in most cases are not appropriately educated and trained because of limited vision and local supply. Other hierarchy levels are very limited. Production floor labor is easily available in the market. Raw material Procurement Raw material is purchased locally, from Karachi and imported from abroad. Medium to large manufacturers do have the capacity to purchase in advance and in bulk quantity making them in an advantageous position to produce at a lesser cost. Local
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suppliers of raw material are keep stock of different types according to seasonal requirements. Product Sale Enterprises located in this region are selling their products directly to the local markets and one recent example of a Factory-owned Retail shop has been started for direct selling to the customers. Almost 70% of the products are consumed within the same region. Export figures for this region cannot be measured as estimates do vary significantly. Businesses engaged in international trade have separate sales and marketing department looking after the international sales. Some major firms do participate in International exhibition for buyer-seller meet but small and medium firms cant afford and hence seldom participate in Intl fairs and exhibition.
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PROCESS FLOW
There are several different processing methods used to make plastic products. Below are the main methods in which plastics are processed to form the products that end consumers use,. No. 1 2 3 4 5 6 Molding process Extrusion molding Injection molding Blow molding Vacuum forming Pressure forming Rotation molding Product Pipe, fiber , film, sheet and thermoforming, profile, pipe, wire & cable etc. Bucket, housing of office automation equipment Container, bottle Packcase for egg (thin film product) Suitcase (thick sheet product) Bottle, doll
Extrusion Molding -- the main process used to form plastics. A heated plastic compound is forced continuously through a forming die made in the desired shape (like squeezing toothpaste from a tube, it produces a long, usually narrow, continuous product). The formed plastic cools under blown air or in a water bath and hardens on a moving belt. Rods, tubes, pipes and sheet and thin film (such as food wraps) are extruded then coiled or cut to desired lengths. Plastic fibers also are made by an extrusion process. Liquid resin is squeezed through thousands of tiny holes called spinnerets to produce the fine threads from which plastic fabrics are woven. Injection Molding -- is the second most widely used process to form plastics. The plastic compound, heated to a semi fluid state, is squirted into a mold under great pressure and hardens quickly. The mold then opens and the part is released. This process can be repeated as many times as necessary and is particularly suited to mass production methods. Injection molding is used for a wide variety of plastic products, from small cups and toys to large objects weighing 30 pounds or more. Blow Molding -- pressure is used to form hollow objects, such as the soda pop bottle or two-gallon milk bottle, in a direct or indirect method. In the direct blow-molding method, a partially shaped, heated plastic form is inserted into a mold. Air is blown into the form, forcing it to expand to the shape of the mold. In the indirect method, a plastic sheet or special shape is heated then clamped between a die and a cover. Air is forced between the plastic and the cover and presses the material into the shape of the die.
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CORE CLUSTER ACTORS

1- Manufacturers There are 700 800 manufacturers of plastic products in Lahore of which 3% are relatively bigger in size (over 50 employees). 400 organized units are either affiliated with Lahore Chamber or PPMA (Pakistan Plastic manufacturers Association). The industry is occupied with 55% unorganized manufacturers. Some of the prominent manufacturers have longer supply contracts from major customers. Some companies have also started to export in recent years. The Bottle and Container manufacturers are around 50-60 in Lahore Cluster. The types of products that are produced are as follows: Plastic Raw Material PET bottles, Jars, Cups Molded Furniture Buckets, Mugs, Storage Bins & similar products HDPE Sacks & Woven Sacks Commode covers, Flushing mechanisms, Household Kitchenware Water Filter Automotive parts Electronics parts Plastic Sheet Forged, Machined & Heat Treated parts, Crockery items (Forks, Crankshafts) Telecommunication Parts Fan parts Medical Instruments (Syringes. etc.) Stationary Items (ball pen, fiber tip pens, etc.) Plastic Processing machinery & equipment. Resin & Allied Products. Pipes and fittings Plastic Films Waste Processed Products Misc. Recycling/ scrap of plastic: Plastic scrap recycling has developed into an industry in Pakistan. About 400 units are engaged in recycling of plastic scrap in Punjab. The sources for collection of scrap are house hold waste of broken unusable plastic items, Industrial plastic waste, plastic cans, container, etc., hospital waste such as disposables syringes, canolas, etc.
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The recycled material is used for manufacture of low cost and inferior quality products such as, house holds utensils, Sandals / Chappals, Washers and seals for water supply fittings, some units mix the re-cycled material with pure material to reduce their cost of production, and some other plastic goods. 2- Raw Material & Chemical Suppliers GE Plastics is a leading supplier of Engineering Plastics, Silicones, Specialty Chemicals and Sheets. It has 66% and 33% of total market share of Pakistan for engineering Plastics and Silicones market respectively. Raw material production in Pakistan is extremely low and does not meet the required demand. Almost all plastics raw material consumed in Pakistan is being imported. In neighboring India, Raw material producers are not only catering to the local industry, but also exporting the surplus. Engro Asahi Chemicals Pakistan, who took the lead and set up a PVC Plant in Karachi- the first of its kind in Pakistan. It was a joint venture with Japanese companies that took the initiative and established this mega project in the country. Similarly 3 more plants producing PET, High Impact Polystyrene, Melamine Formaldehyde and Expandable Polystyrene were also set in Karachi. No statistics are available on the exact consumption of plastics raw materials in the country, but a modest estimation indicates that more than 1.5 million M/T of different plastics are required every year. This local production barely meets 30% of the estimated demand, leaving a shortfall of more one million M/T. This gives room for imports and constitutes a burden on the national economy. 3- Machinery Suppliers Plastic processing machinery is mostly imported from Japan, Korea, China and Germany. However, locally manufactured machinery is also being used. A list of major suppliers of imported plastic processing machinery is given in the table below: Asian Plastic Machinery Co. Limited, Karachi Nissai ASB Pvt. Limited, supplier of Japanese Blow Molding Machines. Hongkong CAD-CAM Services Limited, Karachi Plastipack Machine (Pvt) Limited, Karachi Jakkey Traders, Karachi
4- Mold & Die Makers Other than plastic products or components makers, there are also some Mold & Die makers, contributing to the local demands of plastic processing industry. Approx numbers of players in this field are around 70. 5- Traders, Wholesalers Distributors
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These are the largest units in terms of number present in the Lahore plastic products cluster and are located in almost all major industrial location ( Shal Alam Market, Bund Road, Circular Road, Kot-Lakh Pat, Gulberg, etc.) They purchase the products directly from factories and distribute locally. Some Manufacturing units also have their own distribution system and they have established their own retail stores as well. Their main problems identified were that of infrastructure. The local markets have their own trade bodies and they work to protect their own market interests. These Trade bodies are not recognized anywhere in the Government agencies. 5- Component Industries As discussed earlier, the plastics are used in many a component industries e.g. Automotive Industry, Electrical, Packaging and Construction. These industries itself represent their own clusters and have their own association for highlighting the problems. INTEREST GROUPS Pakistan Plastic Manufacturers Association The PPMA was established to safeguard the interests of Plastic Manufacturers in Pakistan in 1980s. The main objectives were to protect, promote, encourage and develop plastic processing industry in Pakistan and raise the production standards of its member enterprises. The association has a zonal office located in an industrial zone (Kot Lakhpat) and operates from the premises of a manufacturer. The zonal association doesnt have any paid staff. The elections are held almost every year to elect five Executive committee members, which then nominates the President and Vice President for a year. The association charges Rs. 1000 for a year as membership fee and that is the sole fund raising point. Currently Association is looking forward to selecting a separate place for its zonal office in Lahore and then a full time Secretary and other support staff will also be recruited. The Association often holds certain seminars, trainings and Annual Exhibitions. They exchange budget proposals with local Chamber of Commerce. Financial institutions also dont have any interaction with association. The association representatives are linked with a BDS provider (SMEDA) and often meetings are held for the purpose of sharing information. Technical Experts from International countries like Japan who visit SMEDA does have interactions with association representatives as well. 2- Lahore Chamber Of Commerce & Industry Lahore Chamber is a premium institution providing different kinds of services to its regions members. These activities range from providing membership of the institution to holding different International Exhibitions. The LCCI Membership department serves
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as a gateway to the Chamber. As soon as membership is obtained members are eligible to avail several valuable services of the Chamber. Membership Record, Membership Card, Certificate of Origin, Issuance of Visa Recommendation letters, Issuance of Foreign Exchange Letter, Compilation of classified directory and Members List, Issuance of Status and Reference Reports, Attestation of Commercial Documents.) Other services by Chamber include Information Dissemination, Research & Development, Fortnightly Newsletter, Internet facilities, Business Center ( Emails, Faxes, Phones), Cell for Rehabilitation of Special people , Comprehensive Library, Visitor Gallery , Women Entrepreneurs help. Standing committee on Petro-Chemicals & Plastic meet once in a month to discuss issues and problems of the sector and then formulate proposals to be sent to the government or raised through the chamber platform. The committee consists of units registered with chamber.
SUPPORT SERVICE INSTITUTION
Financial Institutes Commercial banks and specialized Financial Institutes (SME Bank, PICIC, etc.) are individually linked to the industry. Banks have not been associated with any cluster stakeholder for any activity other than providing financial services. The demand of the cluster has been on the increase for expansion and the finances are mostly required for working capital needs, longer term supply contracts and machinery leasing. The Loan Repayment history of the cluster on the whole has been remarked as excellent. TECHNICAL INSTITUTES 1- Pakistan Standards & Quality Control Authority The development of Metrology, Standards, Testing and Quality (MSTQ) infrastructure provides an essential building for industrial development in a country. Feeling this need, government of Pakistan established Pakistan Standards and Quality Control Authority (PSQCA) in 2000. The three organizations namely, Pakistan Standards Institution (now SDC), Central Testing Laboratories (now QCC) and Metal Industries Research and Development centre (now TSC) have already been merged in PSQCA to provide one window standardization, quality control and other technical services Main Activities of PSQCA: Establishment of National Standards.
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Enforcement of National Standards under compulsory/voluntary Certification Marks Scheme. Registration of Inspection Agencies. Testing and assessment of industrial raw materials and finished products to establish their quality, grade and composition with reference to national or international specifications in the fields like textile, chemical and mechanical engineering, electrical and electronic goods and appliances, and building materials etc.` Assistance to metal industry in product improvement, technological advancement and increased productivity. Promotion of development of metallurgical techniques and kills in the country through the transfer of technology and expertise in the metallurgical fields. Research and Development (R&D) work on standardization, on analytical/testing techniques in chemical and other fields and on metallurgical techniques. Dissemination of technical information about standardization, quality control and metrology through seminars, workshops, symposia, press, print and electronic media to increase awareness about quality and to create a quality conscious culture in the country. 2- Technical Education & Vocational Training Authority The Technical Education and Vocational Training Authority is a significant endeavor of the Government of Punjab, which focuses on the development of human resource in terms of skill up gradation for men and women. They also acquire skills whereby they can also set up their own small industrial or service establishments. The technical institutes, commerce institutes & colleges and vocational institutes are established by TEVTA in every city. The importance of technical education compared to general education is easily understandable because there is an immediate value addition and even a matriculate with a technical diploma is immediately employed by the industry. TEVTA has also ensured liaison with industry at all levels in terms of the technical training as well ensuring relevant curriculum to suit industrial needs. It is the only authority in Pakistan, which is focusing on skill development and improving employability levels. International Collaborations for providing training in specific fields are am important part of TEVTA activities. The whole emphasis is on improving the quality so as to ensure larger employment opportunities for the girls and boys who are trained by TEVTA. This is a strong tool for reducing poverty. Presently TEVTA and plastic Industry are not properly associated and the courses offered by the institute are outdated and requires updating the curriculum. 3- Plastic Injection Mold Technology Development Project
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Government of Japan and Government of Pakistan joined hands to support Local Plastic industry and started this project. The Center has been located as PITAC premises, centrally located in Lahore. In the first phase the staff members were trained by Japanese experts in the injection molding technology and in the second phase the market demands were collected to formulate the services of the center. Three kinds of services are planned to be provided to the Plastic Products Industry; 1. Training Courses & Seminars 2. Backup Support Services 3. Advisory services In the coming years this center will be highly productive and helpful with the available resources. This center received a lot of demand for technical trainings and mold designing from the Lahore plastic products manufacturers. The activities will be on the increase in the coming years. BDS PROVIDERS 1-Engineering Development Board EDB is a Government Organization for promotion of Engineering Industry in Pakistan with following Terms of Reference:1- Develop a long term vision for the development of the Engineering sector. 2- Formulate and co ordinate Government policies relating to the Engineering sector. 3- Develop an overall strategic Engineering development plan. 4- Promotion of export. 5- Enhancement of technical training. 6- Formulate policies and guidelines for utilization of technical development and Engineering funds. 7- Appeal for grievances. 8- Management of deletion policy. At present Industry is not yet clear of their activities and proper linkages are not present. 2- Small & Medium Enterprise Development Authority This Federal Level Agency was created to take on the challenge of developing SMEs in Pakistan. SMEDA is working as the provider and facilitator of support services to SMEs. It is key resource base for SMEs and it also acts as the voice of SMEs SMEDA Ordinance clearly specifies its main objectives: The creation of a conducive and enabling regulatory environment; Development of industrial clusters;
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And the provision of Business Development Services to SMEs in all areas of business management.
SMEDA started Sectoral approach for Plastics sectors some two years back and consultations with association and stakeholders were held. Due to lack of interest by Stakeholders/Association, nothing happened and work was halted. Various Seminars have been conducted for the Plastic industry in Lahore and participation from the industry has been excellent. Demands for more market driven trainings was placed by the participants. 3- Export Promotion Bureau: EPB is also a Government institution that has a mandate to promote products with MADE IN PAKSITAN label. There are various kinds of services like organizing international Exhibitions, arranging international delegations, Seminars, Export subsidies, developing export markets, providing support services to local industry capable of earning foreign exchange. The Vision of EPB is stated below; Providing Leadership, Direction, Pro and Re-active Facilitation, to an aggressive national drive for maximization of sustainable growth of Pakistan's Foreign Trade As this cluster has just started to do exports, demand for International Trainings, Exhibitions are on the rise and industry is in demand of new technology to compete in the international market. 4- Large Enterprises: Some of the Large Industrial organizations in the cluster also provide business consultancy and support services (technical & Mechanical) for the small cluster members. 5- Environment Protection Agency: The Environmental Protection Agency Punjab functions under the provisions of Pakistan Environmental Protection Act, 1997. Its main functions and duties are to promote environment friendly policies and programmes. EPA existence in the cluster is hardly noticeable. 6- Lahore Development Authority
The LDA is divided into three main Wings for the performance of its functions. Infrastructural facilities are the responsibility of this organization for the city.
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1. Urban Development wing is responsible for the planning, designing and development of various projects in accordance with the functions of the Development Authority. 2. Water and Sanitation Agency was created as subsidiary Agency of Lahore Development Authority for the Planning, Designing, Development, Maintenance, Water Supply, Sewerage and Drainage System in Lahore. 3. Traffic Engineering Planning Agency was created as subsidiary agency for the Planning, Designing and Development of Traffic and Transport System Roads & Projects in Lahore. 7- Punjab Small Industries Corporation Punjab Small Industries Corporation (PSIC) was established in July 1972 under PSIC Act to promote sustained development through provision of market driven credit, infrastructure and technological support, contributing to employment generation, poverty alleviation and socio-economic uplift of the province. The main functions of the agency are;

Advisory services & consultancy Establishment of infrastructure for Small Industries Skilled Manpower Development Establishment of service centers to provide advisory services and common facilities. Handicrafts Development Credit assistance for the establishment of new industries Development of small industrial estates for new industries Development of small industrial estates with complete infrastructure and credit facilities
9- Export Processing Zones:
Pakistans export processing zones have much to offer to investors and are making a positive contribution to the countrys economy. The Export Processing Zones Authority of Pakistan (EPZA) has contributed significantly in the governments drive to attract foreign direct investment by offering a state-of-the-art package of incentives and facilities. During the last three years, the success of export processing zones (EPZs) in Pakistan has generated new faith in business circles, demonstrated by the inflow of the large number of investment proposals being received by EPZA. In Lahore, recently a SUNDER INDUSTRIAL ESTATE was established last year, for which the EPZA received overwhelming response from the industry and all plots were allocated to potential Businessmen to establish Industries. People from Plastic Industry also showed interest in that and obtained certain space for their relocation or new setups. 24
SWOT ANALYSIS Strengths

Easy availability of cheap labor Increasing domestic market having demands from both low-end and high-end segments. Several Large Units are also present. Industrial Zones facilities are available. Location is a competitive strength. Acceptable as international Avenue for Exhibitions / Seminar / Foreign Buyers visit Sound Cash flows
Opportunities
Pakistan is emerging as a major consumer market and international demand is also on the rise for plastics. Globalization and free trade. Strong National Economic indicators working for benefit of Industry. Linkages with BDS & Support service providers Product Marketing New and innovative products.
Weaknesses
The industry is largely unorganized and scattered. Professional management is not perceptible in the cluster. The manufacturers are dependent on imported raw material from outside. Lack of Research & Development efforts Lack of vision / Planning. Traditional designs and no innovations. Not getting benefits from support institutions. Nominal Export. Weak Association.
Threats
Globalization and free trade. High custom duties on Raw Material Local Market Penetration by regional competitors. High Quality Standards.
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CLUSTER MAP
Large Firms Technical Support
PITAC JICA
Financial Institutes
NPO
TEVTA Chemical Suppliers Raw material Suppliers
Wholesalers Traders Distributors End Consumers Plastic Products Manufacturers
Machinery Suppliers Component Industries Direct Export PPMA Mold & Dies makers
EDB
EPA & EPZ
PSQCA
LCCI
LDA
UNIDO
EPB
SMEDA
Educational Institutes
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CURRENT INSTITUTIONAL MATRIX
PPMA LCCI EDB EPB SMEDA FIs PSQCA PITAC LDA EDU NPO PPMA LCCI EDB EPB SMEDA FIs PSQCA PITAC LDA EDU NPO EPA/EPZ LF UNIDO
Not Applicable Not Explored Negative Dont Know each other x ** -1 0 Know but never interacted Just interacted Formal Correspondence Few Joint Projects 1 2 3 4 Formal Relationship Enthusiasm
EPA/EPZ LF UNIDO
X 3 1 2 4 1 2 3 4 X X X X X X X X X X X X X
5 6
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VISION
To Create Strong Linkages Among Cluster Actors And Improve Production Standards And Productivity To Compete With International Quality Benchmarks. Increase Exports Of Cluster To US $ 100 Million In Five Years By Focusing On New Geographic Markets And Marketing / Distribution Channels.
ACTION PLAN (THEME WISE)

1-Sensitization: No. Action / Activities 1 2 Awareness Workshops Agency/Institution SMEDA / UNIDO / PPMA / LCCI Finish Date July 2006
2-Capacity Building of Cluster No. Action / Activities Agency/Institution 1 2 Training need assessment of cluster 3 Mold Designing and Process Training courses Plastic Export Potential (Workshop) Strengthening of Association Establishment of Plastic Website SMEDA PITAC / PPMA / UNIDO / LCCI / SMEDA SMEDA / UNIDO / PPMA / LCCI PPMA / UNIDO / SMEDA / BDS PPMA/SMEDA
Finish Date Mar 2006 Dec 2006
3 4 5
Dec 2006 Dec 2006 Dec 2006
3-Creation of Strong Linkages / Networking No. Action / Activities Agency/Institution 1 2 Creation of 2 networks Joint activities of networks (catalogues, brochures) Hiring marketing BDS by networks Participation in Int'l Trade Fair by 2 networks
Appointments of NDAs in mature networks
Finish Date Aug 2006 Dec 2006
SMEDA SMEDA / Networks
3 4
Networks. UNIDO / EPB / SMEDA / BDS PPMA / LCCI / SMEDA / EPB
Mar 2007 July 2007
Networks / UNIDO
Dec 2007
28
Annexure
29
Annexure 1
10 FACTS ABOUT PLASTICS EVERYONE SHOULD KNOW 1. Plastics are one of the most resource efficient and versatile materials available to society. 2. Plastics make a significant contribution to the vital goals of sustainable development: Social progress: plastics provide affordable products giving more people access to higher standards of living, healthcare and information. Economic development: the plastics industry chain in Europe adds value to society. It employs well over 1.5 million people and generates sales in excess of 159 billion euro. Environment protection: plastics help save resources fossil fuels and energy. Plastics products save water and food. 3. Plastics consume only a tiny fraction just 4 % of the worlds oil, as feedstock. 4. Plastics products in use save oil: 100 kg of plastics parts in cars reduces oil consumption by about 12 million tones each year in Europe, reducing CO2 emissions by 30 million tones a year. Plastics help reduce fuel consumption and CO2 emissions from our homes: the innovative use of plastics can reduce domestic fuel consumption to 3 liters per square meter, compared to an average of 20 liters. 5. Plastics are too valuable to waste even at end-of-life. After serving a useful purpose, plastics can either be recycled or used as an alternative fuel. Plastic waste has a calorific value at least equal to coal and with lower CO2 emissions. 6. Renewable energies rely on plastics: solar panels, wind turbines. 7. Over 1 billion people in the world lack access to safe water. Plastics can preserve and distribute water economically, reliably and safely. 8. No other material can compete with plastics when it comes to meeting technological demands while preserving resources. 9. Plastics are the champions of prevention: Plastics packaging represents 17 % all European packaging and yet packages over 50% of the consumer goods. Over a ten-year period it is estimated that plastics packaging per unit has been reduced by around 28% thanks to technology Without plastics packaging, the weight of packaging would increase four-fold, production costs and energy consumption would be doubled and waste volume increased by 150%
30
10. Plastics make our lives safer: airbags, seatbelts, baby seats, bike helmets, medical devices are just some examples.
Annexure 2
BOTTLE / CONTAINER MANUFACTURING PROCESS STEP BY STEP Creation of the Preform A preform is the first stage of bottle production and is the result of the Injection Moulding process. Each preform is shaped like a test tube with the upper end in the shape of the bottle mouth (the finish). This preform is thick, round and comes in many sizes depending on the required final bottle size. 1 A vacuum draws mixed virgin and reformed pellets into the drier. The resin is dried to below a moisture content of 50ppm (particulates per million). Step 2
After several hours, the blended resin is injected into the preform mould and clamped, resulting in the production of the embryonic bottle.
Blowing the Bottle The next and final manufacturing stage is called Blow Molding. The blow molding machine creates the final shape of the bottle. Step 3 The preform is heated by heater boxes with several variable lamps. The settings of these lamps are called the profile. Step 4
The preform is transported into the mould. A hot preform is clamped in a blow Step 5
31
A stretch rod enters the preform and stretches it lengthwise. Step 6
Low pressure air is blown into the preform to form the main part of the bottle. Step 7
High pressure air is blown into the bottle to fill out the details like the feet and any markings (e.g. logos) Step 8
The air is allowed to escape from the bottle and this time in contact with the chilled mould allows the bottle to crystallize. Time is allotted in the cycle to depressurize the mould before opening it and removing the bottle.
32

Plastic Products Cluster - Lahore: Diagnostic Study

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PLASTIC PRODUCTS CLUSTER - LAHORE

Turn Potential into Profit

Diagnostic Study on Plastic Products, Lahore

SMEDA_UNIDO Cluster Development Programme Pakistan

Diagnostic Study on Plastic Products, Lahore

SMEDA_UNIDO Cluster Development Programme Pakistan

Diagnostic Study on Plastic Products, Lahore

SMEDA_UNIDO Cluster Development Programme Pakistan

Diagnostic Study on Plastic Products, Lahore

SMEDA_UNIDO Cluster Development Programme Pakistan

Diagnostic Study on Plastic Products, Lahore

SMEDA_UNIDO Cluster Development Programme Pakistan

Diagnostic Study on Plastic Products, Lahore

SMEDA_UNIDO Cluster Development Programme Pakistan

Diagnostic Study on Plastic Products, Lahore

PLASTICS INDUSTRY - A GLOBAL PERSPECTIVE

SMEDA_UNIDO Cluster Development Programme Pakistan

Diagnostic Study on Plastic Products, Lahore

SMEDA_UNIDO Cluster Development Programme Pakistan

Diagnostic Study on Plastic Products, Lahore

SMEDA_UNIDO Cluster Development Programme Pakistan

Diagnostic Study on Plastic Products, Lahore

SMEDA_UNIDO Cluster Development Programme Pakistan

Diagnostic Study on Plastic Products, Lahore

SMEDA_UNIDO Cluster Development Programme Pakistan

Diagnostic Study on Plastic Products, Lahore

PLASTIC INDUSTRY IN LAHORE REGION

ANALYSIS OF BUSINESS OPERATIONS

SMEDA_UNIDO Cluster Development Programme Pakistan

Diagnostic Study on Plastic Products, Lahore

SMEDA_UNIDO Cluster Development Programme Pakistan

Diagnostic Study on Plastic Products, Lahore

SMEDA_UNIDO Cluster Development Programme Pakistan

Diagnostic Study on Plastic Products, Lahore

SMEDA_UNIDO Cluster Development Programme Pakistan

Diagnostic Study on Plastic Products, Lahore

CORE CLUSTER ACTORS

SMEDA_UNIDO Cluster Development Programme Pakistan

Diagnostic Study on Plastic Products, Lahore

SMEDA_UNIDO Cluster Development Programme Pakistan

Diagnostic Study on Plastic Products, Lahore

Diagnostic Study on Plastic Products, Lahore

SUPPORT SERVICE INSTITUTION

SMEDA_UNIDO Cluster Development Programme Pakistan

Diagnostic Study on Plastic Products, Lahore

SMEDA_UNIDO Cluster Development Programme Pakistan

Diagnostic Study on Plastic Products, Lahore

SMEDA_UNIDO Cluster Development Programme Pakistan

Diagnostic Study on Plastic Products, Lahore

SMEDA_UNIDO Cluster Development Programme Pakistan

Diagnostic Study on Plastic Products, Lahore

9- Export Processing Zones:

SMEDA_UNIDO Cluster Development Programme Pakistan

Diagnostic Study on Plastic Products, Lahore

SWOT ANALYSIS Strengths

SMEDA_UNIDO Cluster Development Programme Pakistan

Diagnostic Study on Plastic Products, Lahore

Large Firms Technical Support

TEVTA Chemical Suppliers Raw material Suppliers

Wholesalers Traders Distributors End Consumers Plastic Products Manufacturers

EPA & EPZ

SMEDA_UNIDO Cluster Development Programme Pakistan