US firm sets up $60m textile venture
By Sabihuddin Ghausi
KARACHI, Feb 17: A well-known US textile company - West Point - has set up a giant integrated textile mill on a 100 acres plot in Lahore in equal partnership with a local businessman to manufacture and export top-quality towels that has potential to fetch about $80 to $90 million a year.
“We signed the joint venture agreement in October 2006 for an investment of $60 million with equal equity shareholding,” Irfan Ahmad, the chief executive of the project informed Dawn by telephone from Lahore.
This is the first textile joint venture set up with an American investor in Pakistan by a local business group. None of any government agency played any role in this joint venture as according to Irfan Ahmad, the West Point was their trade partner for long.
The American textile companies had started moving out of South and North Carolina — two traditional textile centres in USA — more than a decade ago. West Point, too, explored to outsource its business in Pakistan. For towels, the choice of American investors is Indus Dyeing. The Pakistani business group, too, was looking for an American partner, who may help them to get them an access to the US market.
— “The project is in production and is operating at about one-third of the installed capacity,” the project chief executive said, who disclosed that the optimum level of production capacity will be reached by next September when more than 100 looms will be in operation to produce 850,000 pounds a week.
Pakistani partners are confident of making good money from towels export to USA in face of the high rate of import duty in USA for home textiles that ranges between 8 to 16 per cent.
But for circumventing duty on home textiles in local market, the American company has acquired a textile mill — Panama — in Bahrain from where the textile products are imported at zero rates. “So American textile groups are planning to come in a big way into Pakistan,” a local textile businessman said.
Market reports suggest that quite a few Pakistani textile operators have acquired well-known American brand names of textile products and plan to set up delivery infrastructure in the USA in collaboration with American partners.
The West Point is reported to be in negotiation with Pakistan’s top textile houses in Lahore, Karachi and Faisalabad to outsource is bed sheet business in partnership.
Another American textile company — Springs, which has been taken over and shifted to Brazil is also reported to be making investigations in Pakistan.
“None of Pakistan’s official agencies — Board of Investment — and others ever made any effort to market Pakistan as an investment place for textiles, which is the fourth largest producer of cotton in the world,” a local leader of All Pakistan Textile Mills Association (Aptma) said.
Pakistan, he asserted, offers investment opportunities from cotton plantation to ginning, spinning fine count yarns, weaving good quality fabrics, towels and bed sheets and other products of home textiles and garments.
There is a tradition of textiles in Pakistan dating back to Moenjo Daro times 5,000 years ago and a cheap labour that can acquire skill with training. The government needs to develop infrastructure facilities, ensure good governance that is found most wanting at present, particularly in respect of law and order situation and curtailing of corruption from top to bottom level.
Pakistani business groups need to develop management skills and an enlightened view that should take care of consumers and employees.
http://www.dawn.com/2007/02/18/ebr1.htm