Secondary Industries(processing and manufacturing)

Definition of industry

•Economic activity concerned with the processing of raw materials and manufacture of goods in factories.

Types of Industry• Industry can be divided into three main categories. Recently Tertiary industry

has been sub-divided into a fourth type.

• Primary IndustriesExtract raw materials (which are natural products) from the land or sea e.g. oil, iron ore, timber, fish. Mining, quarrying, fishing, forestry, and farming are all example of primary industries.

Secondary Industries (sometimes referred to as Manufacturing industry)Involve the manufacture of raw materials, into another product by manual labor or machines.Secondary industries often use assembly lines e.g. a car factory. i

Iron steel industry

Tertiary Industries (sometime referred to as Services industry)Neither produce a raw material nor make a product.Instead they provide services to other people and industries.Tertiary industries can include doctors, dentists, refuse collection and banks.

Quaternary Industries•Involve the use of high tech industries.People who work for these companies are often highly qualified within their field of work.Research and development companies are the most common types of businesses in this sector.•Goods• All of the companies are linked in one way or another. For example:• The raw material cotton is extracted by primary industries• The cotton may then be turned into an item of clothing in the secondary industry.• Tertiary industries may advertise the goods in magazines and newspapers.• The quaternary industry may involve the product being advertised or researched to check that the item of clothing meets the

standards that it claims

Other types• Agro based industries : These type of industries use

plant and animal based products as their raw materials. Food processing, vegetable oil, cotton textile, dairy products and leather industries are examples of agro-based industries.• Mineral based industries : These are primary industries

that use mineral ores as their raw materials. The products of these industries feed other industries. Iron made from iron ore is the product of mineral based industry. This is used as raw material for the manufacture of a number of other products, such as heavy machinery, building materials and railway coaches.

•Marine based industries : They use products from the sea and oceans as raw materials. Industries processing sea food or manufacturing fish oil are some examples.•Forest based industries : They utilize forest produce as raw materials. The industries associated with forests are pulp and paper, pharmaceuticals, furniture and buildings.

• Size: It refers to the amount of capital invested, number of people employed and the volume of production. Based on size, industries can be classified into small scale and large scale industries. • Cottage or household industries are a type of small scale industry where the products are manufactured by hand, by the artisans. In Pakistan cottage or household industries hold an important position in rural set-up. Most villages are self-sufficient in the basic necessities of life. They have their own carpenters, blacksmiths, potters, craftsmen and cotton weavers. Many families depend on cottage industries for income.

Cottage industries have also gained immense importance in cities and towns. There is great demand for hand-woven carpets, embroidered work, brassware, rugs and traditional bangles. These are also considered important export items and are in good demand in international markets.

Basket making

Pottery making

• Small scale industries use lesser amount of capital and technology as compared to large scale industries that produce large volumes of products. Investment of capital is higher and the technology used is superior in large scale industries.

Examples:Silk weaving and food processing industries

• .There is a web of cottage and small industries. In almost every village, there are a number of such industries depending upon the size of the village and the demand for the products. The establishment of such industry is closely related to the availability of raw material, traditional skills, climatic conditions and, in several cases, the local specialization in the organized factory sector.There is a large variety of handicrafts available in Pakistan. They are not only aesthetically pleasing items, but they are also serve the needs of local people.

Examples of small-scale and cottage industries• CarpetsCarpets are by far the most in economic terms and they make a significant contribution to export earnings. They are generally hand-woven and hand knotted and made of wool, silk or a mixture of the two.

• Textiles• Textiles are found throughout the country with a variety of design

and techniques. The most famous among them are Khaddar, Susi, Khes, Chunri, Boski, Karandi, Shaal, and Ajrak. (Sindh) The designs are invariably brightly colored with traditional emphasis on blue and red.

• Embroidery: Embroidery has developed to a fine art with distinctive regional designs and patterns.

• Jewelry: Gold and silversmiths are one of the largest communities of craftsmen. Much of the jewelry made and sold in the cities is intricately fashioned and delicate.

• Ceramics: Clay and terracotta pottery and utensils continue to be of great practical importance. Many of the designs of urns, pitchers, bowls, jugs, plates, and pots seen today are almost identical to those un covered at archaeological sites around the country. Distinctive glazed blue tiles are used to decorate many of the great mosques in Pakistan.

• Cutlery: Wazirabad is the city of cutlery industry in Pakistan . This industry is growing day by day and has share of 65 million US dollars in Export for 2010. High Quality Damascus Steel ( Pattern Welded Steel ) is manufactured in this city and 95% of world needs are produced here.

• WoodworkThe Swat Valley is perhaps the most famous for its intricately carved architectural woodwork and furniture, although wood-carving is common throughout the northern mountains.

• Surgical InstrumentsSialkot and Lahore are also noted for the manufacture and export of surgical instruments. The most important raw material is stainless steel which has to be imported. In this industry, also, medium scale factories contract work out to small scale and cottage concerns. Also like the sports goods industry, most of the output is exported.

• Sports Goods• Sports goods earn about 3.7% of our total exports. The

main raw material for the sports goods industry are leather and mulberry wood that are available in Punjab, but also use imported PVC. (Polyvinyl chloride, more correctly but unusually poly(vinyl chloride), commonly abbreviated PVC, is the world's third-most widely

produced synthetic plastic polymer, after polyethylene and polypropylen )Football, hockey ball, hockey sticks, cricket bats and rackets are mostly manufactured by hand. The skilled workers are available in Sialkot and Lahore.

Importance of cottage and small scale industries

Problems of cottage and small-scale industriesCottage and small-scale industries contribution to the GDP is only 5%. There are certain problems associated with these industries that are mentioned below.1.Profits are limited and they are mostly spent on the daily expenses of the owners. They do not have extra capital for expansion of these industrial units.2.Economies of scale are not available so production cost is higher. Goods produced in small-scale industries cannot compete in open market if the same goods are manufactured on a large scale.

3.There is a lack of standardization and quality control. In some cases they do not meet the standards of foreign markets. A lack of coordination between different industries also creates differences in prices.

4.Production methods and machinery are outdated because the investors in small-scale industry are illiterate and poor.

5.The wholesaler, who takes most of the profits, exploits the owners of the small-scale industry. In some cases goods are sold to wholesalers at cost price, which discourages the owners and they reduce the quality and quantity the produced.

6.In rural areas, where the electricity is not provided, small-scale industries are difficult to set up. Even the great fluctuation in voltage and power break-downs cause damage to the electric motors. The commercial rates of electricity have also increased significantly which hinders the growth.

7.The craftsman and artisans learns their skills and production methods from their elders. The provision of technical advice and further training is limited.

Government Policy towards Small-scale and cottage industriesThe government is fully aware of the potential of cottage and small-scale industries for industrial development. The following organizations have been established to develop this sector of economy.

Pakistan Small Industries Corporation (PSIC)Punjab Small Industries Corporation (PSIC)Sindh Small Industries Corporation (SSIC)The Small Industries Development Board NWFP (SIDB)The Directorate of Small Industries Baluchistan (DSIB)

The above organizations are taking the following measures:

Establishment of industrial estates. Providing marketing facilities. Setting up of technical service centers. Establishing handicraft development centers

and carpet centers. Providing pre-investment counseling and

guidance to newcomers. Providing local and foreign loans to small

industry owners on easy installments.

The informal sector, informal economy, or grey economy is the part of an economy that is neither taxed, nor monitored by any form of government. Unlike the formal economy, activities of the informal economy are not included in the gross national product (GNP) and gross domestic product (GDP) of a country. Sector which encompasses all jobs which are not recognized as normal income sources, and on which taxes are not paid. The term is sometimes used to refer to only illegal activity, such as an individual who earns wages but does not claim them on his or her income taxes, or a cruel situation where people are forced to work without pay. However, the informal sector could also be interpreted to include legal activities, such as jobs that are performed in exchange for something other than money. Opposite of formal sector. People working as small farmers, street vendors, hawkers, small traders, micro-entrepreneurs, home-based workers, cobblers, rag-pickers, porters,, artisans, etc…all belong to the Informal Sector

The formal sector(1) has an organised system of employment with clear written rules of recruitment, agreement and job responsibilities.(2) has a standardised relationship between the employer and the employee is maintained through a formal contract.(3) the employee is expected to work for fixed hours and receives fixed salaries in addition to incentives and perks. He works under a decent work environment and is entitled to benefits such as leave, savings, loans etc. He has an organised association or union where his official grievances are addressed. Besides, he is covered under social protection benefits such as life insurance, health insurance, pension, gratuity etc.People working in civil service, public sector units, government service, defence, multi-national/national/private companies, schools, colleges, research institutes, management organizations, banks etc.…all belong to the Formal Sector

Terms to remember• 1.Raw material• 2.Waste material• 3. By product• 4.Processed goods• 5.Value added goods• 6.Manufactured goods• 7.Capital goods• 8.Consumer goods• 9.Semi –processed goods• 10.Export Processing Zones(EPZ)