Our Leather Industry
By Bipul K Debnath
There is great potential for the leather industry in Bangladesh to become one of the countrys major foreign exchange earners, experts say. After readymade garments (RMG), this sector is playing a vital role in our national economy, earning us huge amounts of export earnings. Most leather goods and footwear manufactured here are export oriented. According to the Export Promotion Bureau (EPB), leather exports totalled USD 116.73 million in the last fiscal year (July 1, 2016-June 30, 2017); the amount was USD 92.50 million the previous year.
To modernise this sector and make it a good alternative to the RMG sector, the authorities adopted a plan to move age-old leather factories from the capitals Hazaribagh area to Savar in 2003, and started allocating plots to factory owners in 2009. Another piece of good news is that green factory concept in the footwear industry has also been initiated in Bangladesh. This week, the Weekend Independent talked to officials of leather factories, trade bodies and training institutes to find out more about the state of our leather industry.
According to Bangladesh Tanners Association, the country produces 220 million square feet (about 20 million square metres) of hide every year, 64.82 percent of which is cowhide, 2.25 percent buffalo hide and 1.2 percent sheepskin. More than half of it is procured from animals sacrificed during the Eid-ul-Azha festival. Another survey says about 16.5 million pieces of hides are collected each year in this country.
Though Bangladesh was exporting only wet blue leather and crust leather till 1990, it has now started exporting finished leathers. Besides tanneries, there are 207 factories for processing leather.
About the history of our leather industry, Mohiuddin Ahmed, Chairman, Bangladesh Finished Leather, Leather Goods and Footwear Exporters Association, said: The leather industry was started in Narayanganj by famous entrepreneur Ranada Prasad Shaha before the Second World War. After 20 years, it was moved to Hazaribagh from Narayanganj in 1960. By the order of the High Court, and with help of Bangladesh Small and Cottage Industries Corporation (BSCIC), it was relocated from Hazaribagh to Hemayetpur in Savar on about 200 acres of land. Our local investors invested about Tk 250 crore (Tk 2.5 billion) to shift their tanneries. It caused a short term gap. In that time, our foreign buyers went away from our country to our neighbouring countries. Now, it is our main duty to get them back as soon as possible.
Our present target is to ensure USD 5 billion exports by 2021 for our 50th year of independence. If we are successful, about 2 million people will be employed in this sector. For this, the government has to attract new entrepreneurs and investors in this sector. Of course, there are some limitations as people are choosing plastic or artificial leather products now. But the demand of leather goods in our country is increasing day by day. One survey says that about 20 percent of our population is buying shoes worth Tk 4,000 every year. So, there is also great possibility in the local market. The biggest markets of Bangladeshi leather and leather goods are Italy, England, Spain, France, Germany, Poland, China, Japan, USA, and Canada. We export mainly mens shoe to these countries, Ahmed shared about exports in this sector.
Skill development is important to increase productivity and growth in this sector. To ensure that, some training and academic institutions have been set up to create a skilled working force for this sector. Among those, the Centre of Excellence for Leather Skill Bangladesh Limited (COEL) is an initiative of Industry Skills Council (ISC) of leather, leather goods and footwear sector.
About its activities and training courses, Imran Nazmul, manager (operation) of COEL, said: COEL was set up on December 22, 2009 to meet the skill needs and technical support of the leather sector. Since then, COEL has strived to become a centre of excellence to provide one-stop solution for the leather industry, in terms of training, operational excellence, productivity improvement, and ancillary services. At present, COEL, in collaboration with the industry, imparts technical and soft skills training to create skilled manpower. It operates in a manner which reflects the needs of its industry partners, meets development goals, and at the same time, contributes towards national agenda. By providing skill solutions and training, COEL assists the leather sector to achieve sustainability. It also promotes decent working environment through social compliance and occupational health and safety (OHS) in the work place. In the past few years of its operation, COEL trained approximately 15,000 machine operators in sewing, cutting and lasting operations, and placed almost 98 percent of them in jobs with various factories. COEL also provided training to approximately 4,500 mid-level managers on various topics.
About the training modules of COEL, Nazmul said: COEL has its own training centre at Gazipur with a space equivalent to 12,000 square feet (1,115 sq m). It has a training floor which contains flatbed sewing machines, post-bed sewing machines and skiving machines. It has six well-equipped training rooms, which have the capacity of accommodating 150 persons at a time. It also has machine maintenance facility, infrastructure for designing manual and CAD-CAM (computer-aided design and computer-aided manufacturing) for footwear size grading, as well as training.
COEL has an expertise pool of trainers, BTEB (Bangladesh Technical Education Board) certified assessors, certified lead auditors, and six fully equipped training rooms with full set-up of classroom training, sewing machine operation training, pattern making and CAD (computer aided designing) training, machine maintenance training and programmable logic control (PLC) machine for training. COEL also has trained in-house firefighting, rescue and disaster management team with firefighting equipment, Nazmul concluded.
Institute of Leather Engineering and Technology (ILET) of University of Dhaka is the only technical educational institution in Bangladesh exclusively dedicated to the leather industry. It offers four-year undergraduate courses in leather engineering, footwear engineering, and leather products engineering.
Aftab Ali Shaikh, director of ILET, told this correspondent: ILET admits 150 students every year who are equally divided into three streams. The future status of the students of this institute is classified into three categories _ 10 percent of the students will go abroad for higher degrees, 60 percent will be employed at different local and multinational leather, footwear and leather product factories, like Youngone, Picard, Timberland, Pauma, Decathlon, Nike, ABC Mart, Bata, Apex and others, as quality control officer, technical officer, research officer, product development officer, production manager, merchandiser, factory manager and so on, while the rest (30 percent) may go for government and other jobs, like working at leather research institutes, international testing laboratories (SGS, Bureau Varitus, ITS), and local and international NGOs.
The government has declared the leather industry as a thrust sector, with considerable growth, investment and export-earning potential. Prime Minister Sheikh Hasina announced leather and leather products as products of the year in January 2017. Currently, Bangladesh produces and exports quality bovine (buffalo and cow), ovine (sheep) and caprine (goat) leathers, which have international reputation as fine-textured hides and skins. The seventh five-year plan (2016-20) of the Government of Bangladesh is specially focused on leather, leather goods and footwear as a highly potential export sector after readymade garments. It is now growing at a healthy pace and the growth rate is expected to accelerate with new factories coming into operation, and growing interest of foreign investors in the footwear sector. In addition, Bangladesh Bureau of Statistics figures (2016) show that the domestic footwear market is approximately USD 2 billion. There are more than 3,500 domestic and more than 110 export market oriented shoemaking units supported by more than 250 tanneries, according to Bangladesh Investment Development Authority _ the apex national body facilitating investments, Shaikh said regarding the contribution and impact of the leather sector on our national economy.
About employment opportunities in this sector, the ILET director said: The leather industry occupies a place of prominence in the economy in view of its excellent potential for employment and growth of exports. Adequate number of appropriately skilled people is pivotal to tap the potential of the entire leather value chain, in addition to increased investment in technology and marketing. Actually, the leather sector is one of the few sectors that plays an important role in the export diversification initiative of Bangladesh and offers high employment opportunity.
Until recently, there was absence of modern technology in tanneries, since they were established long time ago. But the newly established footwear and leather goods factories use some latest technologies, like CAD (computer aided design) and CAM (computer aided manufacture), CIM (computer integrated manufacture). Therefore, immediate intervention is required to introduce modern tannery processing technology, particularly in respect to cleaner and resource efficient production, chemical and solid waste management, ETP (effluent treatment plants) operation, and overall operational management to meet the global demand. Advanced leather processing techniques like CIM, lean manufacturing, social and environmental regulations, both local and international, occupational health and safety, improvement of productivity and eco-friendly leather processing must be ensured, the director added.
Meanwhile, approximately 200 to 250 million pairs of shoes are produced in Bangladesh every year, which meet about 50 percent of the local demand.
M Samir Sakir, director of Venus Footwear Industry Limited, said: After the garments sector, one of the largest developing sectors of Bangladesh is the leather goods and footwear industry. Bangladesh is set to emerge as the next manufacturing hub for the global leather industry. Cheap labour costs and local raw materials are prompting top manufacturers to relocate their factories to the country. The good news is that a number of foreign investors, as well as buyers, have already shown interest in Bangladeshs leather and footwear sector. Recently, a new opportunity has opened up to further diversify the range of Bangladeshs export base by including footwear and other leather goods in the list of exports, particularly to the European Union (EU) market.
Talking about future prospects of our leather industry, Sakir said: The country has already been exporting finished leathers and different kinds of leather products to overseas markets. These products also enjoy considerable demand because of their high quality. The main reason for this is the nature of the leather that Bangladesh produces. Despite the high quality of local animal hides, both in raw and finished forms, Bangladesh was still trailing behind Vietnam and China in the export of footwear and other leather products in the European and other markets. Japan and Germany are now the biggest markets for Bangladeshi leather goods, but US buyers are increasingly showing interest in sourcing from Bangladesh. Alongside most of the large exporting countries, Bangladesh is now taking a great part in exporting finished leather to the world market. But if we can manage to supply finished leather goods and footwear, we can build a huge industry.
Regarding investment in this sector, he said: There is a lot of problem here. There are many SME (small and medium-sized enterprise) factories in Dhaka, they have manpower and the ability, but because of financial constraints, they are not able to grow. Our banks are more focused on SME loans for women. For others, its really hard to get a loan. And even if one gets a loan, the process and the procedure are very complicated for the owners. The big factories can get loans from banks, but what we actually need is to help the SMEs expand, and the government should step in to provide the loans.
The government should go ahead to assist this sector in collaboration with leather-related organisations like Bangladesh Paduka Prostutkarok Samity (Bangladesh Footwear Manufacturers Association) and Bangladesh Tanners Association. The buying houses should organise fairs where international buyers can show up and talk with the suppliers and hold buyer-seller meetings. The thing is if we let big companies dominate the industry, we wont grow and this sector wont grow; only the big companies will grow. But to sustain the industry, the small factories should get first priority, Sakir concluded.
Photos: Nabiulla Nabi
