LEATHER SECTOR

PRESENTED BY: M.Shahid Iqbal

INTRODUCTION
 Pakistan leather industry is one of the major
foreign exchange earners for the country.
 About 90% of its products are exported in
finished form
 Animal skins which are the basis of the leather
industry are largely obtained from the provinces
of the Punjab and Sindh.
 The season of peak activity begins around Eid-
ul-Azha and extends for between two to three
months
OVERVIEW OF THE INDUSTRY
 Leather industry, including leather products, is the
second largest export-earning sector of Pakistan after
textiles.
 Leather industry’s major areas include leather garments,
leather gloves and leather footwear.
 this sector is contributing around $800 million a year but
has the potential to multiply volume of exports.
 Currently, Leather sector is operating at 20% below
capacity, if it is made to run to the full capacity; the
leather sector has the potential to fetch one billion dollar
a year.
TANNERIES

 Tannery is a place where the basic raw materials for the whole industry i.e. raw hides
of animals are processed and tanned Leather is produced. The term ‘tanned’ is used
because the raw hide is chemically transformed into different colors.

PROCESSING

 The tanned leather is then processed into the various product forms.

RETAIL
 Retail is the area where the transformed goods are sold. This is a very important area
for the industry as the focus is on marketing and service. Here, nearness to the
competitor and determination of the market segment is very necessary.
THE VALUE CHAIN CONCEPT

The value chain, also called the commodity

chain and production-consumption chain, is
described as a comprehensive set of
activities that are required to bring a produc
from a concept stage to marketing and
consumption of end products (Gereffi1999)
VALUE CHAIN OF LEATHER INDUSTRY
 Spot Analysis

Number of Industrial Units Operating in (approx)

the Sector

Tanneries 800

Leather Garments/Apparels 355

Leather Gloves 347

Leather Footwear 523

Leather Goods 142

Leather Sports Goods 160

 Industry Structure

The types of leather manufactures are depicted in table below.

Commodities No. Of Industrial Units Total Capacities

Commodities No. Of Industrial Units Total Capacities

Tanneries 800 Major Units 150 Million Sq. Meter

Leather Garments/Apparel 355 Major Units 15.39 Million Pieces

Footwear 523 Major Units 205 Million Pairs

Leather Gloves 347 Major Units 89.12 Million Pairs

Commodities No. Of Industrial Units Total Capacities
 CONTRIBUTION OF LEATHER INDUSTRY TO
ECONOMY OF PAKISTAN
Share of leather sector in exports earnings 5.4%

Share of leather sector in manufacturing GDP 5%

Leather Tanning Production in Pakistan

Cities Units Cities Employment

Kasur 223 Gujrat 2

Sialkot 210 Hyderabad 2

Karachi 174 Dadu 2

Gujranwala 51 Sakkur 2

Multan 43 Bahawalpur 1

Shekhupura 28 Charsadda 1

Lahore 15 Jehlum 1

Sahiwal 8 Khushab 1

Faisalabad 7 Mirpur 1

Peshawar 6 Sawabi 1

Sargodha 5 Total 770

GLOBAL IMPORTS
COUNTRY ( $ Million)

USA 1449

Germany 687

France 240

UK 224

Italy 237

Japan 171

Hong Kong 165

 SWOT ANALYSIS OF THE PAKISTAN LEATHER INDUSTRY
STRENGTHS
Large raw material base.
Local availability of hides and skin.
High growth potential
Dynamic manpower
Self financed industry
OPPORTUNITIES
•Rising potential in the domestic market
•Use of information technology and decision support software to help
eliminate the length of the production cycle for different products
•Shift of production centers from developed to developing countries.
•Potential to move into high end market unexploited USA market.
WEAKNESSES
Lack of warehousing support from the government
International price fluctuation
Unawareness of international standards by many players
Unorganized footwear and goods industry.
Lack of skilled and efficient labor.
Lack of marketing skills
THREATS
•Major part of the industry is unorganized
•Difficulty in obtaining bank loans resulting in high cost of private borrowing
•High competition from East European countries and other Asian
countries(china and India)
ISSUES / PROBLEMS

 The industry is unorganized.

 Lack of communication skills and facilities.
 Lack of warehousing support from the government.
 Smuggling of live animals to Iran and Afghanistan.
 Electricity and gas shortage.
 High labor costs resulting in high costs.
 Lack of small presence in global international markets.
 Most local players are not aware of international standards.
RECOMMENATIONS

 Training of the labor force to the need of the worlds

markets.
 A percentage of profit invested on training of labor
should be made mandatory.
 Leather exhibitions should be organized both in country
and abroad
 Improve image in USA Europe to bring our customers
back.
 Waste discharge should be used as byproduct to
manufacturer chemicals.
 More incentive should be offered to organized sector.