The cutlery and the hunting equipment industry is mainly clustered around the skirts of Wazirabad. Over 96% of the countries production is cantered at Wazirabad. The sector comprises over 400 SMEs, of which 250 are cutlery manufacturers and the remainder 150 is involved in the manufacturing of hunting equipment and swords. The industry produces on average 1.3 million sword & daggers and around 3.0 million cutlery pieces a year with an estimated value of Rs 6-7 billion. Out of the total production, approximately 95% of swords and hunting equipment is exported, whereas, only 25% of the tableware cutlery is exported1. The industry belongs to the light engineering industry category, and is one of the industries that have existed prior to independence.
Besides small and medium units, a few units are large and have a 90% integrated system. Most of the larger and medium sized firms are exporting, however, the smaller units usually supply to commercial exporters or local wholesalers. The main raw material used in the production is ‘steel’. Around 80% of this steel is manufactured locally and the remaining 20% is imported from Germany and Japan. A recent innovation in the cluster is the development of Damascus steel – which is used for the manufacturing of hunting knives.
Contribution of Cutlery & Hunting Equipment Industry to National Economy
|To Direct Employment (Numbers)||10-15,000|
|To Indirect Employment (Numbers)||30-45,000|
|To Exports (%)||0.25%|
Source: Pakistan Cutlery & Stainless Utensils Manufacturers & Exporters Association, Pakistan Economic Survey 2008-09 and UN Commodity Trade Data Base
For the purpose of trade; kitchenware cutlery (HS Code: 8215, 821591, 821510, 821520) and non-kitchenware cutlery (HS Code: 8208, 8211, 8212 and 8214) are defined differently.
The sector employs around 10-15,000 thousand workers. However, employment is volatile as most factories operate in the informal sector with high degree of temporary and contractual employment. Over the last four years the exports from the sector has stayed stagnant at the level of US$50 million. Currently only 20-25% of the industry cutlery manufacturers are exporting, whereas, over 90% of the knives, blades and hunting equipment manufacturers are exporting.
Exports make up only a small fraction of world trade in cutlery, swords and hunting equipment, which amounts to over $11 billion. This is one sector where Pakistan has developed capabilities to penetrate high value / high income markets such as Germany, USA, France, Belgium etc. The average export price of goods made in Wazirabad is around $25-27/Kg (Steel), which is much higher than what Chinese products fetch (US$3-5 (Composite material)). However, the price is lower than some of the more sophisticated producers such as Germany and Switzerland.
The sector, whereas, has achieved reasonable export performance growth in the recent years has suffered from intense competition from China. The major impediments of the sector are low levels of productivity, inadequate technology upgrade and shortage of skilled staff. Moreover, most of the companies operate without any brands with only a couple moving to branding of their products. Furthermore, the industry in the years to come will face higher compliance requirements, especially the cutlery manufacturers, who would be required to meet standards on use of ‘food grade materials’. Currently not much compliance or testing requirement exists and only a few companies adhere to ISO standards. As a result of the UNIDO’s benchmarking exercise we have also identified that firms have indigenously developed products for the export markets. Additionally, the surveys conducted also suggest that current export is much below potential due to low levels of education and lack of understanding to export. The scale of operations is also a problem and firms find it harder to compete with competitors especially China.