The Impact of Globalisation and Regional Conflict on the Loom Units in Dibba Colony, Karachi

6. The Existing System of Production and Marketing

In the existing system, which evolved after the seths sold their looms, the broker or commission agent is the king pin. He sits in the wholesale market in the business district of Karachi and also has an agent in Dibba Colony. An exporter or a local trader contacts him when there is a demand from a “party”. The broker then contacts the loom unit and arranges for the supply of yarn to the loom unit. Warping is carried out at the loom unit if facilities are available there. If not, the broker arranges for the warping to be done. After the cloth has been produced, it is taken to a finishing factory (if required by the party) by the broker where it is washed, coloured and/or pressed. The party pays for the finishing directly to the finishing factory and picks up the product from them and delivers it to their client or stores it for future sale in its warehouse in the market. The broker has a commission in all these transactions.

As the crisis emerged in 2004-05, a number of things changed slowly in the financial relationship between the broker and the loom unit owners. Previously, along with the order, advance payment used to be made to them. Now only yarn is given and payments are made on completion of the order. There are complaints that sometimes payments are made after considerable delay (two months in one case)¹.

The other problem is related to a lack of demand due to the reasons explained in Section 2 of the study. Due to this, there is a lot of competition between the loom unit owners to get an order. This reduces their profits considerably. It also leads to periods of inactivity which apart from lowering profits has other implications as well. For instance, 70 per cent of the loom unit premises are rented. Even if there is no work, rent has to be paid. If there is no work for six months, the loom unit owner is heavily in debt².

Imported silk related yarn is expensive. Local yarn is produced only by one company. When they see that there is a larger demand in the market, they increase their prices which affect the profits of the brokers and the loom unit owners adversely. Also, the imported yarn is of a heavy quality whereas Chinese and Indian yarn is of a lighter quality and as such produces cheaper produce which sells better in the local market. Another factor is that market operators make higher profits by wholesale sale of imported textiles than by wholesaling local material. The retailers also make a higher profit. The solution offered by the brokers and loom unit owners is that the government should patronise its own product and put a ban on imported silk textiles. However, there is an understanding that this is not possible given the global economic regime. The respondents also feel that if such a ban was imposed, foreign textile would keep coming to Pakistan through smuggling which it is claimed happens even today³.

Loom unit owners have other complaints as well. One is that labour is no longer willing to work for “reasonable” rates. They agree that rates that they can offer have fallen due to a reduction in demand and an increase in costs of electricity. If labour cannot get Rs 15,000 (US$ 150) to Rs 20,000 (US$ 200) they start looking for other alternatives. Some have gone into the scrap business and others into tailoring. Many have migrated to Faisalabad or are trying to find work on shuttle less machines⁴. The crisis is so severe that looms that were sold for Rs 100,000 in the open market now sell for no more than Rs 30,000 to 40,000⁵.

It is also claimed by the respondents that the loom units still functioning in Dibba Colony is because they are small units and their rent and overheads are relatively low. They point out that the larger units having 20 or more looms which operated in the Shershah area of Karachi, have all closed down and have converted into warehousing⁶. This was facilitated by the Lyari gang wars because of which the Lyari warehouses could not operate normally. Rent from warehousing, it is claimed, is more profitable than running a large loom unit.

There seems to be a general consensus that if the power outages were controlled, there would be a 30 per cent increase in production and as such in profits. However, even then the crisis would continue because the issue is of the non-availability of orders for production⁷. This is also borne out of conversations held with the wholesale and retail merchants in the main textile market in the city centre. Apart from textiles that are silk or partly silk, all the other products that they purchase are made in Pakistan. They claim that the Pakistani silk quality is better though more expensive. Also, the majority of the shopkeepers buy Pakistani products directly from the finishing factories and Indian and Chinese from wholesale dealers in Boulton Market, the main textile retail and wholesale market. In addition, all the shopkeepers are of the opinion that the sale has dropped to an extent that many would like to close down their businesses. This they attribute to inflation, recession and the Karachi law and order situation⁸.

The other aspect that surfaced in the discussions in the market and from Prof. Noman Ahmed’s interview⁹ was that brokers can disappear with an advance but a retailer cannot since he has a shop. In addition, he cannot fight for recovery of money, as a broker can, since he has to remain in business. As such, many exporters, local traders and retailers are reluctant to advance loans to brokers as they used to before. This is because of the anarchic situation in Karachi¹⁰.

The power loom owners of Saeedabad (which includes Dibba Colony) have an association that presents their claims and guards their gains in dealing with officialdom and with other players in the power loom business. They have approximately 600 members and they employ around 4,000 persons. They have not been able to influence government policies but they did succeed in coming to an understanding with the Karachi Electric Supply Company (KESC) whereby outages were limited to two hours a day. For this facility and for upgrading the electricity transmission and distribution system, they collected and officially paid the KESC Rs 20 million (US$ 200,000). However, after a few months the system reverted back to what it was before and has remained the same ever since in spite of several attempts by the association to revive it. With recession in the business and little hope of improvement, the union members are losing interest¹¹.

The possibility of solar energy was also discussed with the brokers and the loom unit owners. The costs are prohibitive because the looms operate 24 hours a day and so storage of energy becomes a problem.

7. Labour related Issues

All the power loom units in Dibba Colony consist of shuttle looms and produce silk textiles. Though exact figures are not available, it is estimated that there are 4,500 looms in Saeedabad of which 1,000 looms are in Dibba Colony. This means that at the rate of 8 looms per unit there are 562 units in Saeedabad of which 125 units are in Dibba Colony¹².

Each unit employs one master technician, who maintains the looms; one munshi (accountant); two karigars (loom operators) and two helpers who wind and unwind the thread. Helpers, who have initiative, learn on the job and often become karigars and karigars with initiatives also become master technicians. As such, there are about 3,500 persons directly involved in production. Transporters, persons working in finishing factories outside of Dibba Colony, and loaders are in addition to this. Salary of a helper varies and at an average is Rs 1,500 (US$ 15) per month. Current rates for a karigar are Rs 4.25 per metre that he produces. If he has work he can earn about Rs 13,000 (US$ 130) per month¹³.

Loom unit staff works 12 hours a day and on alternative days 12 hours a night. They have no holidays but are given a break of three to four hours on Friday. Looms operate 24 hours a day. Workers are paid every 15 days on the basis of how much they produce. There is no contract with them and if they do not produce according to a target (which also varies from loom unit to loom unit or on the rates of the order they are working on) they can be sacked. There is no guarantee that employment can be renewed for the next 15 days. Often they are sacked for no apparent reason. Through this process, the loom unit owners can control any expression of discontent from their workers and can also prevent the development of any trade unionism¹⁴.

Facilities for the workers vary from factory to factory. There is no system or regulations in place that are followed by the loom unit owners. If facilities are provided, it is only through “philanthropy”. Most loom units have no drinking water or toilet facilities. Many have no fans, although those visited by the author do have exhaust fans. The absence of fans and adequate ventilation often makes the heat from the machines difficult to bear. In addition, floors are often unpaved and as such unhygienic. The regulations of the Sindh Building Control Authority (SBCA) and Labour Department are not followed and as a result there are no fire exits or fire fighting equipment available in any of the factories visited.