Pak Suzuki extends plant shutdown

Decision came as a result of a persistent shortage of raw materials

By
Shahid Shah
A man walks past a Suzuki outlet, displaying cars in Karachi, Pakistan, July 27, 2022. — Reuters
A man walks past a Suzuki outlet, displaying cars in Karachi, Pakistan, July 27, 2022. — Reuters

  • Auto manufacturer has suspended production several times this year.
  • Latest decision came due to a persistent shortage of raw materials.
  • Suzuki's automobile and motorcycle plant will remain shut till July 15.


KARACHI: Pak Suzuki Motor Co Ltd (PSMC) has extended the closure of its automobile and bike plant by another week on a "continued shortage of inventory level", The News reported.

In an earlier notification on June 19, the company had announced production cuts from June 22 to July 08, 2023, which it has now extended till July 15.

The decision came as a result of a persistent shortage of raw materials, which was communicated in a statement released to the Pakistan Stock Exchange (PSX) on Tuesday.

"Due to continued shortage of inventory level, the management of the company has decided to extend the shutdown of automobile and motorcycle plant till July 15, 2023," the PSMC company secretary informed in the notice.

The company kept its motorcycle plant closed for five days at the start of June, and the automobile plant also remained closed in May for eight days along with the bike plant.

Since July of the previous year, the company has been afflicted by a persistent lack of raw materials, principally due to difficulties importing these crucial components due to a reduction in the nation's foreign exchange reserves.

There are other automakers suffering similar interruptions besides Pak Suzuki. Due to the shortage of essential raw materials, both Honda Atlas Cars and Indus Motor Company have had several shutdowns recently.

Even makers of vehicle parts have been impacted by the scarcity, which has forced them to temporarily halt their own production lines.

The closures have an effect that goes well beyond the affected businesses. Due to the interruption in raw material imports brought on by postponed letters of credit (LCs) openings, the whole automotive industry has been struggling with unproductive days.

The situation has led to reduced operational capacities and an overall decrease in productivity across multiple sectors of the economy.

The news of Pak Suzuki's latest shutdown has sparked concerns among employees, stakeholders, and the general public alike. The closure will undoubtedly have a considerable impact on both the company's workforce and the overall economy.

According to one analyst, Suzuki's plant closure serves as a sharp reminder of the bigger problems the Pakistani automotive industry is now dealing with.

In order to address the underlying causes of the raw material scarcity and put permanent solutions into place to avert further disruptions, he said stakeholders and governments must collaborate.

Bannu Woollen Mills halts production Bannu Woollen Mills Limited also announced a production break till July-mid, blaming inventory shortages.

"Due to shortage of raw materials, the management of the company has decided to temporarily shut down /close of its production activities from July 02 2023 to July 15 2023," it said in a notice to the PSX.

The company will resume production activities on July 16, 2023.

Bannu Woollen Mills is principally engaged in the manufacture and sale of woolen yarn, cloth, and blankets.

It manufactures various woolen products, including tweed, blazers, velour, blankets, shawls, services dress cloth and upholstery. The company announced a six-week plant shut down in March 2023 on import restrictions.

The government recently lifted restrictions on imports in an attempt to win the stalled IMF deal. With the foreign exchange reserves of the State Bank of Pakistan as low as $3.5 billion, it would be difficult for the central bank to meet import demand in the country.