Automobile Industry Can Develop Export-Oriented Engineering Sector
Ashraf, Mian Mohammad, Economic Review
The engineering industry accounts for about 2 per cent of GNP, and 10 per cent of manufacturing value-added. However, the employment level is around 250,000 with investment of Rs. 100 billion. Of the above, the automotive industry and the mechanical equipment sectors contribute to 70 per cent of employment, and about 80 per cent of investment, GNP and value-added.
From a non-existing industry at the time of creation of Pakistan in 1947, our automobile industry is now producing around 50,000 cars and commercial vehicles, 12,000 tractors and over 70,000 motorcycles annually. The local content of the vehicles produced ranges from 40 per cent to 60 per cent in cars and commercial vehicles, over 80 per cent in tractors and around 55 per cent in motorcycles.
Rapid industrialisation mainly aims at achieving self-reliance and self-sufficiency. For attaining this goal, we should not restrict ourselves to converting agricultural produce into saleable goods, but must establish the facilities to manufacture capital goods and consumer durables, requiring acquisition of modern technology.
The automobile is one single product the manufacture of which encompasses a wide spectrum of manufacturing facilities and technologies. At the upstream level, these include manufacture of high grade alloy steels, aluminium and non-ferrous alloys, plactice raw materials, glass, chemicals, including paints and lubricants and capital goods such as machine tools. On the ancillary industry side, these include modern foundries and forge shops, pressure die-casting, precision machinery sheet-metal presses, plastic moulding, rubber products, electrical and electronics, hydraulics and pneumatics and miscellaneous other facilities required for the production of fitments and accessories.
Thus, the automobile with its 10,000 parts and ever increasing complexity remains one of the most challenging products to manufacture and a telling measure of an industrial society's capabilities. It requires: (1) a sizeable investment per unit (both foreign and local currency); (2) long gestation period for attaining technological and production efficiency; (3) comparatively lower margin of return and expected losses in the initial years of operation; (4) high pace of technological development in the world creating short life cycles of products/processes necessitating technical tie-ups; (5) requirements of infrastructure l (6) non-acceptable of second quality goods.
Despite these limitations, if adequate backing is provided to the automotive industry it can do wonders. Pakistan has no dearth of talent, and it can develop an export-oriented engineering industry, in a conducive atmosphere.
Pakistan has made some progress in the establishment and promotion of large, medium and small scale, automotive units in both public and private sectors. …