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Automobile industry in Pakistan: history and prospects.

Mobility has been an important objective for mankind since the beginning of time. The invention of the whell about the year 3000 B.C. was the first great achievement. Then in the 18th century the steam engine, one of the greatest gifts of the Industrial Revolution made a major impact on the life-style of the human race. The mating of the 'wheel' with the 'engine' made it possible to transform animal driven carriages into automobile.

From the 18th century to the 20th century the history of the automobile is a tale of human ingenuity and passion for comfort, fastness, safety and a better quality of life. In Pakistan, we cannot boast of any contribution in this vital sector as its development has been chequered. Like other areas, we lacked both vision and direction. Historically, the automobile industry can be divided into two periods: 1947 to 1972 and the period after 1972.

The Post-Independece

Period (1947 to 1972)

The firstt automobile plant was set up in May 1949 by General Motor & Sales Co. this plant had started on an experimental basis, but it rapidly grew into an assembly plant for Bedford trucks and Vauxhall cars. Witnessing this progress, the other three leading auto-makers of USA collaborated with Pakistani entrepreneurs to set up Ali Automobiles tto assemble Ford products in 1955, Haroon Industries to assemble Chrysler's Dodge cars in 1956, and Kandawalla Industries to assemble American Motor products in 1962. In addition, Hyesons established the Mack Trucks plant in 1963. All these plants were restricted to semi-knocked down (SKD) assembly operations only. In 1963 the General Motors plant was sold to Ghandhara Industries Limited and in 1966 it was granted permission to undertake the progressive manufacture of Bedford trucks and buses.

The absence of organised components' manufacturing facilities, lack of technical know-how and non-existence of proper ancillary facilities for the design and development of tools, jigs and fixtures retarded the pace of localisation. Besides, only half-hearted efforts were made for technology and the training and development of personnel. Moreover, the management of most of these companies lacked professionalism.

The Post Nationalisation

Period from 1972

The nationalisation of key industries, including automobile units, through the Economic Reform Order of 1972 brought in some rationalisation in the role of the then existing automobile companies. The units were renamed and their functions redefined: A Board of Industrial Management was constituted to formulate a national policy for industrialisation and also to oversee and coordinate the functions of the newly-nationalised units. This was a gigantic task and later various corporations were established to look after each major industrial sector, such as, automobiles, cement, fertilisers and engineering.

The step to formulate a national policy on industrialisation lacked the required conviction. The objective of the corporations appeared to show that the public sector could run industries better only if it earned higher profits. The desired national approach was missing and the targets remained undefined or obscure. Strategies and future plans were not made during the whole decade of the 70s and even the early part of the 80s.

This coincided with model changes by the principals and also shifting of consumers' preference to more updated and reliable products. This also coincided with the period when European automobiles gave way to Japanese products all over the world. Finally, it was realised that the integration of the public and the private sectors was absolutely necessary to achieve national objectives and that without healthy competition consumers and the national economy would continue to suffer.

This realisation resulted in the reorganisation of several existing units along with the addition of a few new undertakings in the public and private sectors. Awami Autos was renamed to become Pak-Suzuki Motor Company Ltd. to commence the progressive manufacture of Suzuki vehicles, including 800 cc passenger cars. Progressive manufacturing of Fiat tractors was assigned to a new joint venture company, "Al-Ghazi Tractors Ltd.," under the management of the Habib Group Republic Motors Co. was renamed as Hino-Pak to become a joint venture company under private sector management. One more plant, Ghandhara-Nissan, was sanctioned in the private sector to undertake the progressive manufacture of trucks. Three new tractor plants were also set up in the private sector. Side by side, two units were established under PACO to manufacture automotive castings and wheels.

The requirement of another car manufactuing plant was also felt in the mid-eighties, but the Government was not able to take a firm decision until April 1989 when a sanction was granted to the House of Habib and the Toyota Motor Corporation of Japan to set up a modern plant to progressively manufacture Toyota's best sellers, Corolla passenger cars, and other popular vehicles.

The two-wheeler industry went through the same development phases. A close study of the history of our automobile industry reveals that:

1. We have followed a policy of ad hocism.

2. A comprehensive and integrated policy for the promotion of this industry has been missing.

3. Our deletion targets have generally been optimistic, e.g. Pak Suzuki was to achieve a local content of over 80 per cent in six years. The company could achieve only just over 30 per cent.

4. In spite of numerous technical and fiscal difficulties the vendors' industry performed reasonable satisfactorily.

5. The attitude of managements towards quality standards of their products had been below par.

6. Healthy competition has proved beneficial both for the industry as well as customers.

Prospects

The need to develop our automobile industry is no more disputed. We all appreciate its importance and contribution in the growth and stability of our economy. We all understand its role as a prime mover for our prosperity, welfare and a better tomorrow. We only have to understand its mechanism and take steps to correct our past mistakes. The working of the automobile industry is more or less similar throughout the world. It is combination of the following:

1. The original equipment manufacturer or assembler.

2. A network of component manufacturers or vendors.

3. An ancillary or supporting engineering industry to provide assistance in design and production of required equipment, tools, jigs and fixtures.

An assembler acts as a nucleus. It is constantly involved in the research, development, design and final production of vehicles. But the vehicle is a working combination of many diversified and complex technologies and at the same time it is produced in large numbers necessitating a high degree of interchangeability among its thousands of components. Thus, another vital ingredient for the process is production techniques or production engineering. This leads to a well known fact that the original equipment, manufacturer (assembler) cannot succeed without the help of a sound network of responsible vendors or components' manufacturers and a properly developed ancillary engineering industry.

In recent times the Japanese automobile industry has become a model for the whole world. A close look at their success will reveal the importance of a very useful interaction among these components.

The Toyota Motor Company has taken a leading role in the world only because their vehicles are designed and produced as a result of the best possible interaction between them, their vendors and the ancillary industry. The Toyota production system is not only conceptually unique but has also proved to be the best when put into practice. It ensures negligible or zero waste, optimum product quality and reliability and thus competitiveness together with best service to customers throughout the world.

The writer, along with Toyota expects, recently surveyed a large number of Pakistan vendors and engineering units of all sizes and classes. the performance and present state evaluated jointly using Toyota's techniques was not all that disappointing. Whilst we are not too far behind some of the rapidly developing countries like Thailand, Malaysia and Indonesia, the key areas where improvement is desired are:

1. Training and development of managerial staff to change-modify the management's attitude towards the implementation of sound production, planning and control functions.

2. The use of appropriate production techniques (not necessarily the most updated).

3. And the enforcement of discipline in maintaining facilities.
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Copyright 1991 Gale, Cengage Learning. All rights reserved.

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Publication:Economic Review
Date:Apr 1, 1991
Words:1339
Previous Article:Automotive industry: path to self-reliance.
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