FOUNDRY CLUSTER LAHORE

Transcription

1 CLUSTER PROFILE FOUNDRY CLUSTER LAHORE Turn Potential into Profit Small & Medium Enterprise Development Authority Ministry of Industries, Production & Special Initiatives Government of Pakistan 8 th Floor, LDA Plaza, Egerton Road Lahore Tel: Fax: esma@smeda.org.pk 0

2 SMEDA-Punjab Table of Contents TABLE OF CONTENTS DESCRIPTION OF CLUSTER CLUSTER BRIEF DEFINING THE PRODUCTS GEOGRAPHICAL LOCATION CORE CLUSTER ACTORS OTHER CLUSTER ACTORS (SUPPLIERS OF RAW MATERIAL) ANALYSIS OF BUSINESS OPERATION PRODUCTION OPERATION/PROCESS LIST OF RAW MATERIAL TECHNOLOGY STATUS MARKETING FINANCING INSTITUTIONAL SETUP SWOT STRENGTHS WEAKNESS OPPORTUNITIES THREATS INVESTMENT OPPORTUNITIES...7 Cluster Profile Foundry Cluster, Lahore

3 1. Description of cluster 1.1. Cluster brief Cast metal products are found in 90 percent of manufactured goods and equipment. From critical components for aircraft and automobiles to home appliances and surgical equipment, cast metal products are integral to our economy and our way of life. Foundry sector is the back bone of the light engineering sector, auto parts and other industries. There are approximately over 1,800 foundries in Pakistan with an annual capacity of 300 thousand tons 1. This industry is scattered in various large cities of Pakistan; Lahore, Karachi, Faisalabad, Gujranwala, Peshawar, Multan & Sargodha. Majority of the foundries are located near the light engineering and auto-parts clusters providing services to these industries. Over the past five years this industry has grown around 25 30%. The main reason of this industry s growth has been the growth of automotive industry in Pakistan. Another factor of this growth is the shift of this subcontracting trend for castings due to emerging environmental and high labour costs issues in western and developed countries Defining the products Foundry products encompass all cast products that are formed by pouring molten metal into molds or dies and allowing the metal to solidify. The terms castings and foundry products are used interchangeably. The products manufactured by foundries are typically divided into several categories, based on the type of metal that is cast (i.e., iron, steel, aluminum, copper, and other non-ferrous metals). The main products of these foundries are as follows: Automotive Parts Machine Parts Tractors Agriculture Implements Sugar Industry Pumps/Valves Electric Motors Textile Machinery Processing Industry Etc, 1.3. Geographical location Majority of the foundries are located in Lahore region. Within Lahore there are two large clusters of foundries, in Badami Bagh, Band Road, Daroghanwala - the main reason being closer to railway line, auto industry and steel and re-rolling mills. Growth of this industry has been mainly spurred by automobile industry and a continuous struggle of these foundries to become Original Equipment Manufacturers (OEM) or vendors of Millat Tractor Limited or Al-Ghazi Tractor Limited for their Massey Ferguson and Fiat tractors respectively, which are a more profitable venture. 1 Source: Pakistan Foundry Association Cluster Profile Foundry Cluster, Lahore 1

4 1.4. Core cluster actors No. of manufacturing units There are approximately 600 units located in the Lahore region. The breakup of the units is as follows: - Large Units: 25 Units - Medium Units: Around 150 Units - Small Units: Around 425 Units Majority of the small size units are undocumented and are present in the unorganized sector Employment figure Around 10,000 people are directly employed by the cluster Total production Total production of the foundries Capacity utilization The average annual installed capacity of large unit is 5,000 metric tons, and metric tons for small and medium units. Approximately 60% of the installed capacity is being utilized by the sector Other cluster actors (suppliers of raw material) Since majority of the foundries in Pakistan are ferrous foundries, the raw materials used by the industry are mostly pig iron, sand and hard coke. Currently this demand of the industry is being met by the help of importers/traders, from Lahore and Karachi. Majority of the large foundries prefer to directly procure/import the raw material rather than buy from the market. 2. Analysis of business operation 2.1. Production operation/process Casting is a process by which a fluid melt is introduced into a mould, allowed to cool in the shape of the form, and then ejected to make a casing. The major production operations in ferrous foundries are raw material handling and preparation, metal melting, sand preparation, mould and core production, casting, surface finishing and machining. Manufacturing process of the foundries can be divided into several sections: pattern making section, melting section mould-making section, casting section, paint shop and machining section as given in figure below. Cluster Profile Foundry Cluster, Lahore 2

5 Pattern making shop: Making/collecting patterns & core box Store room: Storage of material Scrap room: Storage of charge material Core shop: Prepare cores Sand floor: Prepare sand for core making & molding Fix metals: Charge as per specifications Moulding floor: Arranging mould boxes from patterns & cores Melting shop: Melt the charge & test bar Pour metal to Mould Knot out: Casting from mould boxes Preliminary cleaning & casting Heat treatment of casted products as per the requirement Shot blasting of felted batch Visible checking of cast Felting of heat treatment batch Dispatch 2.2. List of raw material Ferrous foundries produce iron and steel castings and Non-ferrous foundries produce castings of copper-based alloys (brass, bronze), aluminum-based alloys (lead, zinc, nickel, magnesium) and other alloys. The raw material for these foundries include: pig iron, silica sand, hard coke, aluminum, copper, brass, steel, scrap, zinc, nickel, magnesium, carbon, sulphur, wood (for patterns) and non-ferrous metals etc. Cluster Profile Foundry Cluster, Lahore 3

6 2.3. Technology status Majority of the foundries are using conventional techniques/processes of pattern making, mould making and casting, which lead to high wastages and increase in production time. These foundries are still using the traditional process of silica sand casting. New patterns usually do not have to be made as majority foundries are vendors of Millat, Al-Ghazi, Honda, Toyota, Suzuki etc and manufacture only conventional products. Due to high investment cost involved to procure new machinery, majority of the units are using either obsolete or second hand machinery. Machinery used by these processors is mainly of European origin (Refurbished), Chinese or Korean. However, for pattern making locally manufactured machinery is being used Marketing Majority of these foundries operate as vendors for Millat, Al-Ghazi, Honda, Toyota, Suzuki etc, hence do not have to market their products on regular basis. Only the jobbing foundries need to market their products and majority of them have their contact person stationed in various countries Financing Almost all of enterprises are working as sole proprietorship but some large manufacturers have advanced to more organized status and converted their enterprises to Pvt. Ltd. companies. All of the businesses are being mostly financed by equity. 3. Institutional setup Trade Association Chamber of Commerce & Industry Technical Support Institutions Pakistan Foundry Association (PFA) Office No. 210, 2 nd Floor, Eden Tower, 82-E-I, Main Boulevard, Gulberg III, Lahore. Ph. No: (042) , Fax No: (042) info@pfa.org.pk URL: Lahore Chamber of Commerce & Industry (LCCI) 11 Shahrah-e-Aiwan-e-Tijarat, Lahore Ph. No: (042) Fax No: (042) URL: Pakistan Industrial Technical Assistance Centre (PITAC) Moulana Jalal-ud-Din Roomi Road (Ferozpur Road) Near Canal Bridge, Lahore Ph. No: (042) , Cluster Profile Foundry Cluster, Lahore 4

7 Fax No: (042) URL: Pakistan Standard Quality Control Authority (PSQCA) - Technical Services Centre (TSC) 125 A Industrial Estate, Kot Lakhpat, Lahore Ph. No: (042) Fax No: (042) Pakistan Council for Scientific and Industrial Research (PCSIR) PCSIR Laboratory Complex, Ferozepur Road Lahore Ph. No: (042) Fax No: (042) URL: Technical Training Institution Auto Parts Support Centre (APSC) 207 S, Industrial Area, Kot Lakhpat, Lahore Ph. No: (042) Technical Education and Vocational Training Authority (TEVTA) TEVTA Secretariat, 96-H, Gulberg Road, Lahore. Ph. No: (042) info@tevta.org.pk URL: Punjab Vocational Training Council (PVTC) 43-T Al-Khair House, Gulberg II, Guru Mangat Road, Lahore Ph. No: (042) Fax No: (042) info@pvtc.org.pk URL: Cluster Profile Foundry Cluster, Lahore 5

8 TUSDEC SMEDA Technical Up-gradation and Skill Development Company (TUSDEC) State Cement Corporation Building, Kot Lakhpat, Lahore Ph. No: (042) Fax No: (042) URL: Small & Medium Enterprise Development Authority (SMEDA) 6 th Floor LDA Plaza, Egerton Road, Lahore Ph. No: (042) Fax No: (042) URL: 4. SWOT 4.1. Strengths Capability to produce low volumes competitively and capture niche markets Availability of low cost human resource compared to developed countries OEMs quality standards are largely achievable High growth and demand in the market Good entrepreneurial skills 4.2. Weakness Use of traditional manufacturing practices & absence of automation High wastage rate Non-availability of quality raw materials Non-availability of technical consultants & skilled workforce No quality control systems Limited product range Majority vendors to local assemblers Information gap High custom duty on raw materials Safety issues for workers High cost of utilities High cost of financing and leasing 4.3. Opportunities Relocation of foundries from developed countries to this region. Potential for high market growth Export potential in niche markets Global spare parts market of discontinued vehicles Cluster Profile Foundry Cluster, Lahore 6

9 Emerging Afghanistan, Nepal, Bangladesh, Iraq, Sri Lanka markets Great potential all over the world for tractors and trailer parts market 4.4. Threats Growing market for Indian products Poor image of the country Smuggling, under-invoicing and dumping of auto parts Phasing out of administrative control under WTO regime Continuous depreciation of rupee against top world currencies 5. Investment opportunities Keeping in view the current potential and high market growth due to the growing automobile and other allied industries, there is an ample opportunity for invest in Foundry Products Cluster, Lahore. Some potential project for invest are as follows: Foundry Casting Units Computer Aided Pattern and Die Making Center Sand Processing and Reclamation Plant Furnace and Foundry Machinery Manufacturing Unit Trading (Machinery and Iron Imports) Cluster Profile Foundry Cluster, Lahore 7