A glimpse of a struggling light engineering sector
Light engineering may have been awarded best product of the year in 2020 but none of the policies implemented have boosted the industry and its hardworking people have been left out in the dust
The sound of hammers banging and metal clanking keeps the narrow passages of impoverished tin-shed workshops – amidst the popular Dholaikhal and the under-construction Sadeq Hosen Khoka playground – busy all day and evening.
The workshops are mostly decorated with a congested setup of old-fashioned lathe machines and light engineering kits. Some of those are used as storage for ready-made light machines including concrete mixtures, diesel vibrators, cylinder cones and more.
Md Motiur Rahman, the proprietor of Naeem Engineering Works, operates a workshop in this very location. During a recent visit there, the five workers in Motiur's workshop were found busy, either giving iron plates a particular shape, welding metal parts or assembling light machines. Their outfits were smudged with rust and dust.
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Among the five men, two were novices – aged about 14-15 – only entitled to two meals a day as their daily wages. Naeem Engineering owner said he had to furlough two-third of his employees and workers during the Covid-19 pandemic. Workers previously received monthly salaries ranging between Tk15,000-Tk10,000 in the pre-pandemic period.
But those days were long gone.
Amid a pandemic-induced setback, the light engineering industry owner still has the capacity to produce more. "For example, I can assemble 10 concrete mixtures per day. But I could sell only two or four machines in a month.
I can cover up for the depreciation if there is a wide avenue for exporting the product. The demand for the machines is growing, but I cannot secure buyers," Motiur told The Business Standard.
After several discussions with business owners and entrepreneurs in the industry, the reason behind Motiur's disappointment was discovered. While the light engineering sector (LES) is about to explore export opportunities, seasoned entrepreneurs in this sector are struggling a lot to compete with the businesses that are popularising imported items and selling low quality products only to cash in on the growing demand.
The demand for construction kits like a brick breaker, concrete mixture, hopper mixture, roof hoist, tower winch, tower move crane bucket, concrete cube mould, construction shuttering equipment, hollow block machine and more is high in Bangladesh due to a vibrant infrastructural development scene.
The rapid industrialisation in the country also requires a supply of modern machines along with spare parts.
The general perception is that Bangladesh imports most of these critical machines and spare parts but it is actually people in the light engineering sector, without an academic background, who have been manufacturing and assembling the items in their lathes. They mould iron ores and turn pre-fabricated goods into saleable products at cheaper prices.
"An imported cargo lift machine and a rotary-scissor lift cost Tk55 lakh and Tk35 lakh respectively. But I can make the machines at almost half of the imported prices," said Motiur.
There are several light engineering ventures around the Dholaikhal-Narinda area. Among them, Naeem Engineering holds some special features with the distinctive capacity to manufacture products like tower crane moving buckets, food mixtures, electric vibrating tables, centring jacks, scissor lifts and cargo lifts. They can also manufacture spare parts including shatter clips, adjustable U head base jacks and P cons.
Born in 1968, Motiur started to learn light engineering at the age of 15. He developed his skills in the particular sector while working at Goalghat Marine Engineering Hub, Japan-Bangladesh Residential Complex project and did various light engineering activities at Bhaluka, Mymensingh.
The seasoned mechanic launched his own venture in 2013.
Motiur had even repaired concrete mixtures, tower lifts and cranes imported from Japan, Germany and India. Now he has the practical knowledge and skills to manufacture the machines. However, despite having a 40-year career, he feels disappointed to see the lack of strong backward linkage in the light engineering industry.
"For example, we have to assemble a machine with parts like motor, wire, rubber band and electrical switch imported from China and India. Bangladesh can produce such items of excellent quality. But there is no support from the government side," lamented Motiur.
He has observed that buyers also lack confidence in Bangladeshi products. In a face-to-face conversation, Motiur told this correspondent that one of his business colleagues used to manufacture wheel hubs at local lathes. Before retiring his business, that colleague, as a last attempt, tried to create a market for the item with a false trademark of an Indian company because he had witnessed buyers' indifference to locally-made products.
Seasoned entrepreneurs in the light engineering sector also see buyers compromising quality due to price.
While the light engineering sector (LES) is about to explore export opportunities, seasoned entrepreneurs in this sector are struggling a lot to compete with the businesses that are popularising imported items and selling low quality products only to cash in on the growing demand.
A full-fledged light engineering industry consists of skilled craftsmen, a proper supply network, a workshop and a sales centre. However, some businessmen who only operate a sales centre are not serious about quality control. They supply manufactured machines at unauthorised workshops.
"Businesses without practical experience are now selling low-quality machines at a cheaper rate. For example, a quality drum of concrete mixture should have a minimum 15mm thickness. But drums with 6mm or less thickness (made of drum plates imported from China) have flooded the market," said Motiur, adding that when a locally-made quality concrete mixture costs Tk 80,000 minimum, the sub-standard products are sold at Tk 65,000.
"Unfortunately, the cheapest products remain popular in the market. But the products are short-lived. A locally-made machine can sustain two years minimum while a bad product turns dysfunctional within six months," he said.
Operating a full-fledged industry is costly. Entrepreneurs like Motiur usually spend more than Tk3 lakh every month as monthly operational costs.
"The businessmen who lost financial capacity due to various reasons including the pandemic are compelled to continue sales," said Ohidur Rahman, manager at Dholaikhal Machineries – a neighbouring venture of Naeem Engineering.
Several statistics show that around 40,000 light engineering entrepreneurs are operating in Bangladesh and about 10 lakh people are employed in the sector. Investment in Bangladesh's light engineering sector is about $14.8 billion and export growth is approximately 30 percent. The government is providing a 10 percent cash incentive on the export of light engineering products.
As the local LES market turns volatile due to unequal competence, businessmen see the exploitation of export opportunities as a way out for survival. However, important things like policy support need to be addressed.
Abdur Razzaque, president of Bangladesh Engineering Industry Owners' Association (BEIOA), said, "We need a significant amount of low-cost funds as the industry requires state-of-the-art technology and modern lathe machines. We need industrial plots and necessary support so that we can maintain compliance.
Unfortunately, we are not meeting the requirements."
The Bangladesh Small and Cottage Industries Corporation (BSCIC) has prepared a special zone in Munshiganj for electric products and light engineering industries. But the business owners and entrepreneurs in the light engineering sector find the price of the plot too costly. In Munshiganj, each 1.65 decimal of land costs Tk3-4 lakh while the price of BSCIC plots are around Tk20 lakh.
When enquired, Kazi Sakhawat Hossain, additional secretary (BSCIC, SME, BITAC) at the Ministry of Industry, replied, "According to the amended land policy, BSCIC has acquired land at three times higher than the local land price rate. Moreover, land development costs also are added to the offered price (to entrepreneurs in the light engineering sector).
Prime Minister Sheikh Hasina announced light engineering as the product of the year in 2020.
The industry people are offered a conditional 10-year tax holiday. Besides Munshiganj, the Dhaka, Narayanganj, Jashore, Bogura and Narsingdi districts are also dedicated to establish light engineering parks. The government has also initiated policy formulation for this particular sector. But none of the initiatives properly boost up the industry related people.
"Because, there is no regulatory control over the volatile market. The policy formulation has been stalled for more than six months. I see no hope at this moment," BEIOA president Razzaque said, bitterly.
