Money Matters

Deeper problems

Money Matters
By Engr. Hussain Ahmad Siddiqui
Mon, 11, 20

Machine tools industry, termed as mother industry, is fundamental for the industrial growth in any country as it provides principal industrial equipment base for the manufacturing sector. Machine tools are a wide range of machinery employed for cutting, removing or forming the metal to produce components for assembly into a single machine. Machine tools are used in capital goods, automobile consumer-durables, defence, electronics, railways, shipbuilding, aviation, aerospace, atomic energy, and IT-related industries. A well-developed machine tool subsector is therefore essential for reproducing various technologies and adoption of advanced state-of-the-art manufacturing processes.

Machine tools industry, termed as mother industry, is fundamental for the industrial growth in any country as it provides principal industrial equipment base for the manufacturing sector. Machine tools are a wide range of machinery employed for cutting, removing or forming the metal to produce components for assembly into a single machine. Machine tools are used in capital goods, automobile consumer-durables, defence, electronics, railways, shipbuilding, aviation, aerospace, atomic energy, and IT-related industries. A well-developed machine tool subsector is therefore essential for reproducing various technologies and adoption of advanced state-of-the-art manufacturing processes.

The industry therefore serves as precursor to the process of industrialisation and self-reliance. Its significance is reflected in the fact that machine tools sector continues to grow globally despite economic recession due to COVID-19 pandemic. Global market of machine tools is estimated to reach a size of $65.6 billion by the end of 2020, and projected to $68.9 billion in 2021, according to a report of May this year. Alas, Pakistan has no share whatsoever in machine tools market as we do not produce any more the machine tools of standard.

The domestic machine tools industry, predominantly in public sector, has been declining over years, and the subsequent governments remained indifferent to the situation. Currently, there is hardly any machine tool produced indigenously that is based on international advanced technology. The pioneering machine tool producer Pakistan Engineering Co Ltd (PECO) at Lahore discontinued production of its popular range of standard machine tools way back in the 1990s when process of its divestment was initiated by the government. PECO machine tools such as lathe, shaper, drilling machine and hacksaw were manufactured in accordance with international standards. A significant number of these products were exported.

The other manufacturer of machine tools in public sector namely Pakistan Machine Tool Factory (PMTF) at Karachi had closed down its operations in recent years due to financial and administrative issues in the wake of on-going privatisation since long. There is no other machine tools manufacturer in the organised sector, whereas the SME (Small and Medium Enterprises) sector could not develop a single manufacturer of quality tools. It is recognised that production of machine tools being capital intensive is feasible only in the public sector. Given the conditions, the country depends largely on imports to meet its demand of sophisticated, high precision, high speed and CNC machine tools.

PMTF was established in 1968 in collaboration with the world-known Oerlikon Buhrle of Switzerland who provided design, engineering, and manufacturing of general-purpose machine tools under technology transfer agreements. The list of products included precision lathe, milling machine, engraving and special-purpose machines etc. The regular production at PMTF commenced in 1971 but without undertaking production of any machine tool products. It was decided to give up manufacturing of machine tools temporarily and to start production of defence products, in the wake of 1971 Indo-Pak war.

This was a wrong decision lacking foresight that resulted in weakening the company’s capacity and capability for developing machine tools and slowing down the growth of market for domestic machine tools. Sadly, the chief executive and other senior officials at PMTF were appointed from the army, on a regular basis, who practically transformed it into a defence organisation. The defence-related products included RPG-7, Recoilless Rifles and Heavy Mortars that were introduced in export market as well. It was only in the late 1980s that Dr Ahmad Qidwai, the then chairman of State Engineering Corporation, played an important role to revive commercial production activities at PMTF.

Engineering, design and manufacturing facilities at PMTF were upgraded and modernised through UNIDO technical and economic assistance. The agreements with the Swiss company were renewed, and, subsequently, a number of conventional machine tools were manufactured and marketed, and new products including CNC milling machines, CNC lathe and CNC turning centres were developed. In fact, PMTF could built-up, over a period of decades, technology of precision machine tools, having capabilities to design and manufacture of conventional and CNC machine tools.

The company had been on active privatisation list for many years but efforts to divest it, under one mode of divestment or the other, failed as the prospective buyers were interested in grabbing its vast land (226 acres) located in an area that has become commercial over years. The long and unsuccessful privatisation adversely affected the company’s performance, having turned it into a sick unit finally. PMTF has recently been handed over to the Strategic Plans Division, without liabilities, to revive the strategic industrial unit. It is not planned to produce machine tools any more at the PMTF facilities for commercial purposes.

If so, this will be a myopic attitude on the part of authorities. Pakistan needs a strong machine tools subsector for rapid industrialisation. Currently, there are 29 countries manufacturing machine tools. India has about one-thousand units, including 25 large-scale, engaged in manufacturing of conventional and CNC machine tools. Iran produces a wide range of machine tools and exports to Austria, Germany, Turkey and others. Malaysia also produces CNC lathes and CNC machining centres.


The writer is retired chairman State Engineering Corporation