The Current Market Scenario and the Future Prospect of Leather Chemical Industry of Bangladesh (ACI) Limited

1.0 Introduction

1.1 Company Profile at a Glance:

1.2 Strategic Business Units:
Pharmaceuticals
Consumer Brands

1.3 Subsidiaries:
ACI Trading Limited
ACI Formulation Limited
Apex Leather crafts Limited
ACI Salt Limited1.4 Executive Management:Mr. M Anis-Us-Dowla                                    Chairman
Dr. Arif-Dowla                                               Managing Director
Mr. M Mohibuz Zaman                                  Chief Operating Officer,                                                                                             Pharmaceuticals.
Dr. F H Ansarey                                             Executive Director,                                                                             Agribusiness.
Mr. Azmal Hossain                                       Executive Director,                                                                           Trade.
Mr. Syed Alamgir                                           Executive Director,                                                                             Consumer Brands.
Mr. Muallem A Choudhury                            Executive Director,                                                                             Finance & Planning.
Mr. Towfiqur Rahman                                    General Manager,                                                                               Operation.
Mr. Priyatosh Datta                                         General Manager,                                                                               Quality Assurance.
Ms. Sheema Abed Rahman                            General Manager,                                                                               Corporate Service.
Mr. Pradip Kar. Chowdhury                           Financial Controller1.5 Financials (Year Ending December 2004):

2.1 Background:

ACI was established as the subsidiary of Imperial Chemical Industries (ICI) in the East Pakistan in 1968. After independence the company has been incorporated in Bangladesh on the 24^th of January, 1973 as ICI Bangladesh Manufactures Limited and also as Public Limited Company. This Company also obtained listing with Dhaka Stock Exchange on 28.12.1976 and its first trading of share took place on 09.03.1994. Later on May 05, 1992, ICI Plc divested 70% of its shareholders to local management. Subsequently the company was registered in the name of Advanced Chemical Industries Limited. Listing with Chittagong Stock Exchange was making on 22 October, 1995.

Advanced Chemicals Industries (ACI) Limited is one of the leading conglomerates in Bangladesh, with a multinational image. ACI is a Public Limited Company with a total number of 19,653 shareholders. Among these, there are three foreign and fifty local institutional shareholders. The company has diversified into five major businesses. Beside these, the company has a large list of international associates and partners with various trade and business agreements.

2.2 Company Mission:

ACI’s mission is to enrich the quality of life of people through responsible application of knowledge, skills and technology. ACI is committed to the pursuit of excellence through world-class products, innovative processes and empowered employees to provide the highest level of satisfaction to its customers.

2.3 Company Vision:

To realize the mission ACI will:

2.4 Values:
Quality
Customer Focus

      Continuous Improvement

2.5 Distribution Network:

The company maintains strategically located sales centers in 198 different locations across the country. It has developed an advanced distribution system through its more than 300 skilled and trained manpower and a large fleet over 80 vehicles. The distribution system is capable of handling continuing volume of diverse range of products from the various businesses.
The company’s distribution centers are highly streamlined, computerized and automated. We are capable of maintaining a cold chain for some specialized range of products such as vaccines and insulin. The combination of this advanced function and multi dimensional capabilities make it possible to handle hundreds of products efficiently.

2.6 Business Units:

2.6.1 ACI Pharmaceuticals: In 2004, ACI Pharmaceuticals ranked 11^th in the Bangladesh pharmaceuticals industry. It provides  the market with a wide selection of drugs across all major therapeutic classes, and also offers some specially medicines. ACI Pharmaceutical represents AstraZeneca, Eli Lily and UCB in Bangladesh.

2.6.2 ACI Crop Care and Public Heath Division: This Division is holding the leadership position in the industries; Animal Health has experienced one of the highest growth rates in this sector. ACI Agribusiness has partnerships with several international conglomerates including Ceva Santhe Animale, Invesa, UCB, Isago Asia and Boreegaad Taicang Chemical Co. Ltd.sdx.

2.6.3 ACI Consumer Brands: This Division is a leading Fast Moving Consumer Goods (FMCG) company in Bangladesh. In the liquid antiseptic and mosquito repellant categories, this division is a very strong market leader. Foreign partners represented in by this division include Godrej Consumer Products (for hair care and skin care ), Parle Group (for Parle G biscuits), Beiersdorf, Germany (for Nivea range of Products) and Colgate Palmolive.

ACI has formed joint ventures with leading FMCG and agribusiness players in the region.  These are:

Many ACI products have crossed our national boundary and are being successfully exported to various countries in Asia, the Middle East and the CIS region. The responsible of foreign consumers to our products has been encouraging.2.7 Manufacturing Standards:
ACI has three separate manufacturing plants in the outskirts of Dhaka. The Pharmaceuticals plant is located at Narayanganj; ACI Formulations has been setup in Gazipur and the Tetley factory has been built at Konabari. ACI Limited is the first company in Bangladesh to have attained the ISO 9001 certification for Quality Management and ISO 14001 for Environment Management. The Trading subsidiary has also received ISO 9002 certificate. At our manufacturing facilities, we follow CGMP guidelines and standards recommended by World Health Organization (WHO) for pharmaceutical formulations.2.8 Diversification into new industries:
ACI Limited is venturing into new areas of business, as part of its diversification initiatives. Two such businesses being set up are ACI Salt Ltd. And ACI Godrej Agrovet Private Limited.

2.9 ACI Formulation Limited:

ACI Formulations Limited (ACI FL) is a subsidiary of ACI Limited, located at Gazipur, in the outskirt of Dhaka.

ACI FL manufactures majority of the products of ACI strategic Business Limited except for Pharmaceuticals division. The factory is equipped with the state-of-Art facilities for product formulations and process innovation. These include modern computerized equipment like HPLC and GLC.

The product range manufactured at ACI FL include Crop Protection Chemicals like insecticides, herbicides and fungicides in granular, powder and liquid forms, Mosquito Pesticides in the forms of aerosols, vaporizers and coils, and households chemicals like toilet cleaners and hand wash.

2.10 Quality Policy

ACI aims is to achieve business excellence through quality by understanding accepting, meeting and exceeding customer expectations.

ACI follows International Standards on Quality Management System to ensure consistent quality of products and services to achieve customer satisfaction. ACI also meets all national regulatory requirements relating to its current business and ensures that current Good Manufacturing Practices (CGMP) as recommended by World Health Organization is followed for its pharmaceutical operations.

The management of ACI commits itself to quality as the prime consideration in all its business decisions. All employees of ACI must follow documented procedures to ensure compliance with quality standards.

The pool of human resources of the company will be developed to their full potential and harnessed through regular training and their participation in seeking continuous improvement of work methods.

2.11Business Performance and Growth Scenario of ACI Limited:

2.12 ACI Trading Limited

ACI Trading Ltd is one of the leading Trading Houses in Bangladesh. Originally it was ICI Pakistan Ltd established as the subsidiary of Imperial Chemical Industries (ICI) in the then East Pakistan. After independence of Bangladesh the operation continued as ICI Bangladesh Ltd. In July 1994 ACI Ltd another divested part of ICI PLC UK for Pharmaceuticals and Agrochemicals operation purchased ICI Bangladesh Ltd from ICI PLC and renamed it to ACI Trading Ltd.

ACI Trading Ltd has been accredited with ISO 9002 certification since June 1997 for its Quality System on indenting business. The Company is mainly involved in marketing and sales of various Industrial Chemicals, Petrochemicals, Plastics, Pharmaceuticals, Leather and Shoe finishes. Textile Dyes and Auxiliaries through Indent sales. It has four business divisions such as Chemicals, Textile, Leather and Water Pumps. To render technical service ACI Trading has two separate technical application laboratories for textile and leather businesses.

We represent ‘World Class Products’ in Bangladesh from ICI and some other multi-nationals like ExxonMobile, Solvay Interox, Enichem, Huntsman Tioxide, Magadi Soda Co., Stahl UK Ltd, Onga Australia Pte Ltd etc. We also represent some reputed Principals form Asian countries mostly from India, Singapore and Malaysia.

This is a 60% owned subsidiary. ICI, Zeneca, Exxon, Stahl are leaders in their respective fields and ACI have excellent market share of their products in Bangladesh.

The major responsibilities of ACI Trading are:

– Representing various international companies
– Procuring raw materials

2.13. Organogram – Business Management

2.13.1 Organogram – Business Support Functions

Figure No: 2.5

2.13.2 Organ gram of ACI Trading Limited (Focusing Leather Chemical Division)

2.13.3 Mission:

Want to be a leading trusted quality Trading Company to earn confidence of the customers.  To establish a long-term business relation by offering quality products & services from World Class chemical companies in alignment with our core values.
2.13.4 Strategic Objective:

 

2.13.8 SWOT Analysis of ACI Trading Limited Strength

Opportunity

2.13.9 Business StrategyTo nourish the Strength

2.13.12 Major Development through initiative in 2005

Tannery transforms raw hides and skins into leather for manufacturing articles like shoe-upper, bag, suitcase, belt, wallet and jacket. In the past, leather processing was done manually using certain indigenous chemicals.

The first tannery in Bangladesh territory was set up at Narayanganj by RP Saha  in the 1940s. It was later shifted to Hazaribag area of Dhaka, which turned into a location that now accommodates a large number of tannery units. During the period before Partition of Bengal (1947), almost all the raw hides and skins available in East Bengal were exported to west Bengal, particularly to Calcutta and processed there. In fact the tannery industry of Bangladesh originated after its relocation from Narayanganj to Hazaribagh in Dhaka in 1951. At that time there were 54 tanneries in the country and out of those 30 belonged to the Pakistani owners. Development of tannery industry in East Pakistan started after the Partition with an influx of tanners displaced from India and subsequently, with the establishment of subsidiaries of some companies of West Pakistan.

The tanning industry in East Pakistan and export of leather from the province were mainly in the hands of the non-Bengali people. A few tanning units, however, belonged to Bengali entrepreneurs but they were small and of cottage type and they used to process leather mainly for the domestic markets. Most non-Bengali tanners processed wet-blue and sent the product to West Pakistan where it was further processed and finished for producing different consumer goods. Till 1960, tanneries of East Pakistan used to process raw hides and skins applying salt and then drying them in the sun and the material thus developed was known as shaltu.

During the war of liberation in 1971 the non-Bengali tanners of Bangladesh left the country abandoning about 30 tannery units owned by them. After the war, the new government of Bangladesh vested the management of these units on a newly formed Tannery Corporation, which was expected to convert them into finished leather manufacture units. Unfortunately, the corporation did not serve the purpose because of lack of experience and other reasons including corrupt practices. Later, the government relinquished the Tannery Corporation and handed over the management of most of these tanneries to Bangladesh Chemical Industries Corporation (BCIC).

Three of them were given to Bangladesh freedom fighters welfare trust. Both the authorities had miserably failed to manage the tanneries. In 1982, the government transferred them to private entrepreneurs in pursuance of its general policy of disinvestments, which had allowed some enterprising Bengalis with little or no experience in the industry to start wet-blue production.

At present, the leather sector of Bangladesh has 220 processing units located at different parts of the country (mainly in Dhaka) as follows: -Dhaka (Hazaribag)                   –           194      units
Dhaka (Dhamrai/Savar)           –           3          ”
Gazipur (Kaliakoir)                  –           1          ”
Jessore (Noapara)                    –           1          ”
Chittagong                               –           18        ”
Jamalpur                                  –           1          ”
Rangpur                                   –           1          ”
Khulna                                     –           1          ”Total : 220 unitsOnly about 50% of the above units are well equipped for processing crust and finished leather. But only 28 tanneries are in operation, among them 20 are operating in crust section and 8 are in finishing section.
According to the records of the Bangladesh Tanners Association, about 3,000 workers are employed in the tanning industry. Besides, there are about 100 qualified technologists including foreign nationals who are working in different tanneries. Total capital invested in the tannery industry is estimated at Tk 2.5 billion, of which government/bank finance is about Tk 1.2 billion. About 1,500 persons are involved in the process of collecting raw hides and skins and making them available at tannery units. About 100 organizations import chemicals for use in tannery industry. Some reputed tanneries of Bangladesh are Dhaka Leather, Apex Tannery, Lexco, Karim Leather, Samata Tannery and Bay TanneryProduction
4.0 Leather Sector in the Economy of BangladeshThe Leather sector plays a significant role in the economy of Bangladesh in terms of its contribution to export and domestic market. Bangladesh currently produces about 20.0 million sq. meters of leather and leather goods per year. The total production of leather and leather goods shows an increasing trend over the years. Beginning with the 1993/94, the production increased from 14.60 in 1993/94 million sq. meters to 15.90 million sq. meters in 1995/96. It fell to 11.95 million sq. meters in 1996/97. Since 1996/97, there has been a steady increase in the production of leather and leather goods that reached 19.91 million sq. meters in 2000/2001. The following table shows the production of leather and leather goods in the country.
Leather sector is perceived to be one of the important economic sectors in Bangladesh. As a single sector of the economy, the sector contributes modestly to the country’s GDP. Contribution of leather sector (hide &skin, leather and leather goods, and footwear except rubber) to GDP is 0.31 (at constant price) in FY 2003.
Table 4.1: Production of Leather & Leather Goods

Source:         Bangladesh Economic Survey, Ministry of Finance, 2002

*Leather Sector Census Study, LSBPC, 2005
**Approximate Data from LSBPC
The quantum index of leather and leather goods production increased to 131 in 1998/99 compared to the base year (1988/89=100) and that of leather footwear production rose to 193 for the same period. It is therefore evident that leather is increasingly being used in the production of footwear. The following table shows the trend of production of leather and leather footwear during the 1990/91 through 1998/99 period.

Source: Leather Sector Census Study, LSBPC, 2005

Table 4.4: Leather Production of the renowned Tanneries of Bangladesh:

Source: Shajedul Alam,  Internship Report, June 19, 2004, Institute of Business Administration, University of Dhaka;

Source: Magazine, Dhaka International Leather Fair 2005

5.01 Leather Export Performance of Bangladesh: The ever highest export performance was achieved in 2000-2001 due to the mad cow disease in EU but after 11^th September incident, the declining trend cannot be prevented due to the less value addition capability and non-sustainable nature of the leather sector industry of Bangladesh. The export performance of Bangladesh after 1999 is shown in table4.1. The Leather export is almost 2.5 percent to the total export of Bangladesh. Table 4.2 shows how the percentage of leather export to the total export is decreasing year after year.Table 5.1: Export performance:  From July 1999

Source: Export Promotion Bureau of Bangladesh.

Table 5.2: Percentage of the Leather Export to the Total export of Bangladesh:

 (Value in million dollar)

Source: Export Promotion Bureau of Bangladesh (EPB)   *Export Target

Hong Kong, Korea Rep., Italy, Japan are the main export destinations of the leather goods of Bangladesh. Though the Leather export performance of Bangladesh is decreasing day by day but still some countries like China, Taiwan, Vietnam are showing their interest to import more leather goods from Bangladesh. In comparison to India and Pakistan the export performance of Bangladesh shows a very uncomfortable figure. The main reason for that is the infrastructure of the sector. Although the RMG sector of Bangladesh is booming even after the post MFA era, foreign investors are not showing interests to invest in the leather sector of Bangladesh. Even the local investors are not interested to invest in leather sector, though there are lots of places Bangladeshi investors can invest easily.

Table 5.3: Country Wise Export of leather and Leather Goods during the period of July2004 – March 2005:

Value in ‘000’ US$

    Bangladesh Export Promotion Bureau

5.02 Sales and Exports of Leather sector Enterprises/Firms

Table show that during January-December 2003, the collective sales of the leather sector firms stood at Tk.23045 million. Of the total sales of the firms, over 75 percent are sold outside the country. Leather processing units exported most of their products that accounted for about 85 percent of their total sales revenue during 2003. Footwear manufacturing firms’ sales revenue from exports accounted for about 40 percent of their total revenue. Leather goods manufacturing firms exported its entire volume of production during 2003.

5.2.1 Sales and Exports: Leather Processing

Leather processing firms’ sales value stood at about Tk.18470 million during January-December, 2003 (Table 4.7). Exports revenue accounted for about 88 percent from the crust leather and over 97 percent from the finished leather produced by the leather processing enterprises. Except for an insignificant volume, most wet-blue leather is locally used for the production of crust/finished leather. The survey data show that as a whole about 85 percent products of the leather processing firms are exported and total export value stood at Tk. 15622 million (during January-December 2003).

Source: Leather Sector Census Study, LSBPC, 2005

5.2.2 Sales and Exports: Footwear

Still over 50 percent of the footwear manufacturing enterprises’ production is locally consumed. Total local sales stood at Tk.2456 million for the period January-December 2003. Export sales of the footwear firms for the period were Tk.1682 million.

5.2.3 Sales and Exports: Leather GoodsAll leather goods manufacturing firms (covered under census) are export oriented. Their total sales volume, which is same as their exports, stood at Tk.437 million during the period January-December 2003.

Table 4.3 showed the country wise export figure of Bangladesh and the Table 4.13 shows how country wise export figure changed during 2000-2003 to 2003-2004.

Table 5.13: Country wise changes in Export of Leather:
(Value in `000’ US$)

Source: EPB Export Statistics

Table 5.14: Company wise Export of Leather Goods & Footwear from Bangladesh
(Export Period: 01/01/2005 ~ 24/11/2005)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Source: Leather goods & Manufacturers & Exporters Association of Bangladesh.

Raw Materials

6.1 Raw Materials used by the Leather Firms

From the survey data it is transpires that raw materials used by the leather sector firms are procured mainly from local market. Except for an insignificant proportion, almost all raw materials of wet blue i.e. raw hides are collected from the local sources.  Raw materials for crust leather and finished leather are wet-blue and crust respectively. About 99 percent of the raw materials of wet blue, crust and finished leather are sourced locally. Of the broad categories of leather firms, footwear sector used highest proportion of raw materials (includes finished leather, lining leather sole, etc.) from external sources, which is 3.13 percent of the total used by the sector.

Source: Leather Sector Census Study, LSBPC, 2005

Source: Leather Sector Census Study, LSBPC, 2005

6.2 Raw Materials:  Leather Processing
Leather processing units or tanneries produce wet-blue, crust, and finished leather. In producing wet-blue and crust, the firms use raw hides and wet-blue as raw materials respectively. Crust leather is used as raw materials for producing finished leather.

6.2.1 Raw Materials for Wet Blue
Raw hides used for producing wet-blue are mainly procured from local sources. Locally, raw hides are collected mainly from leather depot located at Dhaka, Chittagong, Comilla, Kustia, Natore and Rangpur.  Only an insignificant volume of camel hide is imported from external sources. South Africa was the only source of camel hide imports in 2003.

Source: Leather Sector Census Study, LSBPC, 2005

Source: Leather Sector Census Study, LSBPC, 2005

6.2.2 Raw Materials for Crust

Wet blue, raw materials for producing crust is mainly collected from local sources particularly from Dhaka. A small quantity of wet-blue to prepare crust leather is collected from Chttagong and Jessor. Very insignificant volume of raw materials is imported. In 2003, only about 1.5 percent of total raw materials (wet blue cow and camel) was imported from South Africa, Australia, and Brazil .

Source: Leather Sector Census Study, LSBPC, 2005

6.2.3 Raw Materials for Finished LeatherCrust leather used for producing finished leather is also collected mainly from local sources. Only a very insignificant volume of cow crust is imported to produce finished leather. In 2003, cow crust was imported from Australia valued Tk.34 million.

Source: Leather Sector Census Study, LSBPC, 2005

6.2.4 Raw Materials: Footwear

Other than finished leather, some other raw materials as lining leather, artificial sole, insole-leather etc. are used in producing footwear by the footwear-manufacturing firms.  Footwear manufacturing units imports comparatively greater volume of raw materials (as compared to leather processing and leather footwear sector) from external sources. Footwear manufacturing units imported over 3 percent of their total raw materials amounted to about Tk. 38 million during January to December 2003. Sources for local raw materials are mainly Dhaka and Chittagong. Of the external sources, finished leather is mainly collected from Pakistan and China. Artificial sole is imported mainly from India, Indonesia, China and Taiwan, and lining leather is collected mainly from China, Taiwan and Pakistan. China, India and Italy are the major sources of in-sole leather.  Some footwear raw materials are also imported from Canada, France and Germany.

Source: Leather Sector Census Study, LSBPC, 2005

6.2.5 Raw Materials: Leather Goods

The leather goods producing firms that are very few in number use basically finished leather and lining leather as raw materials. The value of the raw materials used by the leather goods manufacturing units constitute less than 8 percent of the raw materials used by the footwear manufacturing units. All of the raw materials of the leather goods manufacturing firms are collected from local sources.

Source: Leather Sector Census Study, LSBPC, 2005

6.3 Availability of raw material in Bangladesh

Table 6.12

Source: 1. Bureau of Statistics 2. Livestock Census 3. ITC 4. FAOTable6.13  Availability of raw material (Division wise) (Piece)

Source: 1. Bureau of Statistics 2. Livestock Census 3. ITC 4. FAO
Chapter-SevenSWOT Analysis7.1 Strengths
7.1.1 Strengths of the Firms: Leather Processing
The SWOT analysis is based on the opinions of the leather sector firms. The survey reveals that ‘higher productive capacity’ is the main strength of the maximum number of firms of the leather processing industry. Main strengths of the leather processing industry as identified by the leather processing firms in the survey are as follows:

Figure: 7.1 Strengths of the Leather Processing Firms

With high installed capacity and better utilization of that capacity, firms can economize on the costs and offer competitive price. It is recognized that the element of competitive price is related to productivity and cost of production. Hence firms with better productive capacity can offer better price to their clients. Generally, productivity of the big firms is expected to be higher than that of smaller firms with low productive capacity. Availability of cheap labour is another common advantage in the leather processing. This sector is relatively more labour-intensive than other two sectors (footwear and leather goods).

7.1.2 Strengths of the Firms: Leather Footwear
As is leather-processing industry, ‘higher productive capacity’ is the main strength of the maximum number of firms operating in the footwear industry. The major strengths of the firms as identified in the survey (as opined by the firms) are as follows:

Figure: 7.2 Strengths of the Leather Footwear Manufacturers

Footwear firms appear to have emphasis on the quality of management of the firms. Adequate supply of processed leather (from the leather processing firms) is the third most important factors that determine the strength of the footwear firms. Quality control appears to have provided competitive advantages to a good number of firms.

7.1.3 Strengths of the Firms: Leather Goods
Better management quality, and quality control came up as the main strengths of the leather goods producing firms. A list of major strengths of the footwear manufacturing firms as identified in the survey (as opined by the firms) are presented in table 7.3.

Figure: 7.3 Strengths of the Leather Goods ManufacturersAs in case of footwear, leather goods manufacturing firms also appear to put considerable emphasis on better management quality and quality control. Environmental management and market information have also been identified by considerable percentages of firms as may be expected from a hundred percent export oriented industry.
7.2 Weaknesses
7.2.1 Weaknesses of the Firms: Leather Processing
Size of the firms and financial crisis are found to be the main weaknesses of the firms operating in the leather processing industry. The major weaknesses of the firms as identified in the survey (as opined by the firms) are as follows:

Figure: 7.4 Weaknesses of the Leather Processing Firms

In global context the smaller leather processing firms produce lower quantity that precludes them in attaining economies of scale. Generally, leather-processing firms face financial difficulty and have no marketing strategy. Of the leather processing firms, 46 percent identified inefficient management as one of their main weaknesses.

7.2.2 Weaknesses of the Firms: Leather Footwear

‘Financial Crisis’ is found to be the main weakness of the leather footwear industry. The major weaknesses of the footwear firms as identified in the survey (as opined by the firms) are as follows:

  Figure: 7.5 Weaknesses of the Leather Footwear Manufacturers

Generally, footwear firms face financial difficulty and lack effective marketing strategy. Size of the firms in global context is smaller which is a notable obstacle in achieving economies of scale and offering competitive price.

7.2.3 Weaknesses of the Firms: Leather Goods
In line with leather footwear, ‘financial Crisis’ is found to be the main weakness of the leather goods manufacturing industry. The major weaknesses of the leather goods firms as identified in the survey (as opined by the firms) are as follows:

 Figure: 7.6 Weaknesses of the Leather Goods Manufacturers

About 90 percent leather-goods manufacturing firms have identified ‘financial difficulty’ as their one of the major weakness. The firms also lack effective marketing strategy. Size of the leather goods firms in global context is smaller which is a notable obstacle in achieving economies of scale and offering competitive price.
7.3 Opportunities
7.3.1 Opportunities of the Firms: Leather Processing
‘Cheap Supply of Labour’ is found to be the main aspect the opportunities the leather processing firms enjoy. The major aspects of opportunities of the leather processing firms as identified in the survey (as opined by the firms) are as follows:

Figure: 7.7 Opportunities of the Leather Processing Firms
It is obvious that availability of cheap labour can provide considerable cost advantage to the firms of a particular area/location. Leather Processing firms located in Bangladesh have been availing the opportunity. Supply of raw materials, global demand of the footwear, and business environment are also found to be positive from the firms’ point of view.7.3.2 Opportunities of the Firms: Leather Footwear
‘Stable glocal demand’ is found to be the main aspect of the opportunities the footwear firms currently have. The major aspects of opportunities of the footwear firms as identified in the survey (as opined by the firms) are as follows:

 Figure: 7.8 Opportunities of the Leather Footwear Manufacturers
The footwear firms found the current stable global demand condition for the Bangladeshi footwear is a major aspect of opportunity on the way towards expanding export markets for footwear. The industrial policy and business environment are found to be positive for them and availability of cheap labour is an added advantage.
7.3.3 Opportunities of the Firms: Leather GoodsThe  ‘Industrial Policy’ is found to be positive for the leather goods manufacturing firms. The major aspects of opportunities of the leather-goods firms as identified in the survey (as opined by the firms) are as follows:

Figure: 7.9 Opportunities of the Leather Goods Manufacturers
The industrial policy and business environment, and cheap supply of labour are found to be advantageous for the leather goods manufacturing industry, as opined by most firms of the industry.   Current global demand condition appeared to be favourable for these firms.
7.4 Threats

7.4.1 Threats to the Firms: Leather Processing

‘Disruption of electricity’ is found to be the main aspect of threat to the leather processing firms of Bangladesh. The major aspects of threats of the leather processing firms as identified in the survey (as opined by the firms) are as follows:

 Figure: 7.10 Threats of the Leather Processing Firms

Practically, ‘disruption of electricity’ and ‘hartal strike etc.’ are very common aspects of threats facing by the industry sector of the country in general.  Inadequate infrastructural facilities like insufficient supply of electricity and shortage of water supply affect optimum capacity utilization, volume of production, and destroy cost advantage. Such problem is particularly threatening in an atmosphere of growing global competition. Moreover, environment consciousness in importing countries mainly in the developed world is the cause of concern for the exporting countries like Bangladesh where environmental issues are not strongly addressed both in firm and policy level.   Moreover, Firms also do not get sufficient trained people.
7.4.2 Threats to the Firms: Leather Footwear

As in leather processing sector, ‘disruption of electricity’ is found to be the main aspect of threat to the footwear firms of Bangladesh. The major aspects of threats of the footwear firms as identified in the survey (as opined by the firms) are as follows:

Figure: 7.11 Threats of the Leather Footwear Manufacturers

Inadequate infrastructure facilities like insufficient supply of electricity and shortage of water supply are among the major causes of concern for the footwear firms. Growing external competition and environment consciousness in the importing countries may affect the export market of the footwear firms in coming days.
7.4.3 Threats to the Firms: Leather Goods
In line with the leather processing and footwear sectors, ‘disruption of electricity’ is found to be the main aspect of threat to the leather goods manufacturing firms of Bangladesh. The major aspects of threats of the leather goods manufacturing firms as identified in the survey (as opined by the firms) are as follows:

Figure: 7.12 Threats of the Leather Goods Manufacturers

Other than inadequate supply of electricity, leather goods manufacturing firms face lack of trained labour force to be employed. Growing external competition and environment consciousness in the importing countries may affect the hundred percent export-oriented leather goods sector of the country in near future.

Production Stages

8.1 Production Stages in Leather Processing Industry