KARACHI, Sept 3: In a bid to reduce trade deficit, the Engineering Development Board (EDB) of Ministry of Industries has initiated the possibilities of local manufacturing of vital components of China-made motorcycles in the country in collaboration with the units under State Engineering Corporation Private Limited (SEC).

A meeting to discuss this option was held in the third week of August between All Pakistan Motorcycle Assemblers (APMA), a group of Chinese bike makers, EDB CEO Asad Elahi, SEC Chairman Maj Gen (Retd) Zaheer Ahmed Khan and managing directors of Pakistan Machine Tool Factory (PMTF) and Pakistan Engineering Company (PECO).

On August 28 and August 30, two more meetings were held between APMA members -- one with PECO management in Lahore and other with PMTF senior executives in Karachi to review the facilities available at PECO and PMTF for the manufacturing of vital components of motorcycles besides discussing business modalities.

According to APMA Chairman Sabir Shaikh, it had been agreed that body parts and chrome plated parts would be manufactured at PECO in Lahore to cater the assemblers based in Lahore and Gujranwala, while at PMTF in Karachi engine parts would be manufactured.

Motorcycle industry has accomplished unprecedented high volume of annual production of over one million units in 2007-2008 out of which 48 per cent is of Chinese origin. However, due to low level of indigenisation and that too of low technology items, it has resulted in drain of large foreign exchange. Currently all the body/frame parts have been localized but the assemblers of Chinese bike are importing engines.

In the August 22 meeting, SEC Chairman Zaheer Ahmed Khan said there was a need to increase the level of indigenisation. He added that PMTF and PECO were well equipped to meet the parts/components demand of the local industry. He suggested that a working relationship with local assemblers be formed for seeking parts components from the PECO and PMTF.

Managing Director of PMTF Dr M Ashraf Butt said all the facilities were available in the factory for machining, forging, die-casting and entire support facilities of product design, tool and die design/manufacture, heat treatment, meteorology and quality high technology parts at a much lesser investment than any other vendor venturing for making such components.

However, he emphasised to have a firm commitment from the assemblers with fair prices to produce assemblies, components and parts. He urged the assemblers to share the import price with them so that realistic price can be determined.

PECO Managing Director Imtiazur Raheem informed that PECO has a bicycle unit which can be used for motorcycle components manufacturing as it is equipped with rim making plant, nickel plant, tube mill, print plant, polishing mill etc. PECO can also manufacture body parts and modernise its facilities if firm commitment is available from the assemblers.

EDB CEO Asad Elahi said that the government could not rely on textile sector alone to assist it in reducing trade deficit and it was high time that auto sector to move towards international market. He said time has come to double the effort in increasing local manufacturing of parts and target foreign markets for export in African and other countries.

Mr Sabir Shaikh said assemblers had only three models in the country whereas more than 100 models were being produced in the world. In India, more than 50 models were being produced.

He said our present models were outdated especially Honda CDI-70cc. The assemblers import three months requirement from China which involved hefty amount of cash which adversely affected cash flow. He said there was a need for realistic pricing from local parts makers before committing any volume.

Mohammad Imtiaz of Metro Group said that due to devaluation of the rupee imports were not feasible and localisation was the ultimate solution for industry’s survival.