Value Chain for Fan Industry: Illustrated Product is Deluxe Model Ceiling Fan
Backward
Linkage in VC
Value Added
21%
1. Aluminium – 12.4%
2. Aluminium Rod 3.2
3. Blades - 13.2%
4. Electric Sheet – 24%
5. Winding Wire - 18.9&
6. Bearing - 2.4%
7. Paint- 4.9%
8. Other Parts – 21.8%
ISSUES
1. 50% of the materials are
imported including electric
sheet, winding wire, bearing
and paint and some other
small parts. Value Addition is
not possible.
2. Where local materials are
used (aluminum and steel
sheet) quality is not
consistent. Fans are not
energy efficient when
compared with competition.
TRTA Pakistan Copyright
Casting and aluminium die-casting
process is not energy efficient.
95% of the costs are electricity
consumption.
Uncompetitive electricity pricing
policy
1. Pakistan: $0.14/Kwh
2. S. Africa: $0.06/Kwh
3. China: $0.09/Kwh
4. Taiwan: $0.09/Kwh
Electricity unreliable and
generators are needed to run the
operation – cost of running the
generator is even more expensive
– around $0.28/Kwh.
On average 40 electricity
outages/month is experienced
affecting performance
Forward Linkage in
Total Cost: Rs 1,776 VC
1. Body Turning – 0.5%
2. Body Drilling – 0.3% Value Added Value Added
3. Axle Turner & Winding – 1.2% 23% Rs 485 27% Rs 575
4. Fitter – 0.3% Major cost in
5. Painting – 1.1% this
6. Testing & Packaging – 0.3% component
ISSUES
is electricity
1. The Body turning is currently Value addition is low due to lack
which is
done using simple Lathe Machine of designing, product innovation,
– If technology is upgraded to non-
competitive high input costs, and compliance
CNC Machines productivity will
and issues restricting entry into high
increase by a minimum of 4X.
This will reduce the costs inconsistent income markets.
significantly. The quality will also
improve and a reduction in
wastage of 5-10% wastage will be
possible. The current marketing costs include wall International importers are
writing, newspaper and internet. The adding more value than the
2. Body drilling is currently done
by single drill – multi drills will
sector does not have a clear marketing manufacturers. The inability of
improve the productivity 4X. strategy for export. Branding local manufacturers to develop
internationally is nonexistent. sale points abroad means the
3. Painting is predominantly done foreign agents are taking bigger
in the industry using wet paint chunk of the value added. In
and spray gun. This results in
comparison India and China
around 40% wastage – shift to
have much more on ground
powder coating will reduce loses
significantly. presence in their export target
countries.
4. Shortage of skilled workers