The fan industry is mainly clustered in four major cities namely, Gujrat, Gujranwala, Lahore and Karachi. However, 98% of the countries production is centered at Gujrat and Gujranwala. The sector comprises over 450 SMEs, of which 300 are based in Gujrat and the rest in Gujranwala. The industry produces on average 8 million fans a year with an estimated value of Rs 17 billion. Out of the total production, approximately 30% fans consist of pedestals, 7% brackets and the remaining 63% are ceiling fans1. The industry belongs to the light engineering industry category, and is one of the industries that existed at the time of independence.
Besides small and medium units, a few units are quite large and have integrated system i.e. from motor winding to high-pressure dies casting. Sales are also fairly concentrated with five large firms in Gujrat and three in Gujranwala, accounting for 40% of total industry sales. Most of the raw materials used by the fan industry are directly or indirectly imported from different countries. Some of the raw materials used in the manufacturing of a fan are: electric steel sheets, aluminum, enameled copper wire, ball bearing, steel rod and PVC.
Global fan trade is classified on the basis of energy consumption. The fans that consume less than 125 watts of energy (SITC 74341; HS 8414.51) are generally referred to as domestic fans and the fans that consume over 125 watts (SITC 74343; HS 8414.59) are classified as industrial fans. Pakistan’s industry mainly dominates in production of fans which consume less than 125 watts of energy.
|To GDP %||0.27%|
|To Direct Employment (Numbers)||30,000|
|To Indirect Employment (Numbers)||90.000|
|To Exports (%)||0.2%|
Source: PEFMA, Pakistan Economic Survey 2008-09 and UN Commodity Trade Data Base
The sector employs around 30,000 thousand workers. However, employment is seasonal as most factories operate for only five to six months during the year. Over the last four years the exports from the sector has increased by about 120% to around US$30 million. Currently only 10-15% of the industry is exporting whilst the remainder is only supplying in the local market.
Exports make up only a small fraction of world trade in fans, which amounts to around $3 billion. Pakistan’s exports are mainly concentrated in low-income markets, such as Africa, Bangladesh and some Middle East countries. The average export price of Fans made in Gujrat and Gujranwala is around $23-25, which is much lower than some of the more sophisticated fans which sell for around US$400-500. The retail price of Pakistani fans in its export markets on the other hand varies between US$32-35.
The sector, whereas, has shown high levels of growth in the recent years suffer from low levels of productivity, inadequate technology upgrade and shortage of skilled staff. Moreover, most of the companies operate under locally created brands with only a couple moving to international branding of their products. The industry also requires testing and certifications of their products mainly conducted or required for electrical safety. Certifications are normally required for export markets, whereas, general performance and safety testing are conducted regardless. As a result of the UNIDO’s benchmarking exercise we have also identified that those firms which have large local market demand are better at innovation and new designs as compared to those firms which are solely focused on export markets. The reason for this could be that, the local consumer is demanding better quality and design products as compared to consumers of the current export markets. Additionally, the surveys conducted also suggest that current export markets usually offer lower margins as compared to local markets.