Pakistan Defends its Soccer Industry:
By TOM WRIGHT
SIALKOT, PakistanThis is the city the soccer ball built, a global manufacturing hub in a nation starved for foreign capital and mired in terrorist violence.
Nike Inc., the official soccer-ball supplier to Britain's Premier League, gets soccer balls here. So does Denmark's Select Sport A/S, which sells to the Danish national league and clubs across Europe. The city exports 30 million balls a year, or about 70% of the global output of hand-stitched soccer balls, and an estimated 40% of the total market.
This summer's World Cup is Sialkot's latest win. Germany's Adidas Group, licensed by soccer's governing body to sell the official World Cup ball, has contracted with a company here to produce the entire supply of mass-market hand-stitched replicas of the "Jabulani" World Cup ball.
Sewing Soccer Balls, Building Sialkot
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Massimo Berruti/AgenceVU for The Wall Street Journal
A woman sewed a soccer ball this weekend at a stitching facility run by Forward Group.
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But Sialkot's hand-stitched balls face competition from machine-made and machine-glued balls produced in China. Indeed, the balls used in actual World Cup matches this summer, made by hand in Sialkot in previous years, are being produced in China by machine.
A Sialkot-produced soccer ball has 32 panels that are stitched together, while the Jabulani World Cup ball made in China for the matches has eight thermally bonded pieces. The Jabulani match ball retails for about $150; the hand-stitched replica can sell for as little as $25.
Sialkot became a stitching center for soccer balls during the British colonial era. In the 1970s, European soccer ball makers, including Adidas, moved their production to the city to avoid rising labor costs at home. The city's workers, stitching balls by hand in dusty villages surrounded by wheat fields, made their first World Cup balls for the 1982 tournament in Spain.
Adidas contracted with Sialkot's Forward Group to make the replica World Cup balls. Forward Group expects to ship six million balls this year, up 40% from 2009.
But even with its Adidas contract, Forward Group faces big challenges. It has to run its own electric generators because of daily nationwide power shortages. The roads to Sialkot, in eastern Pakistan near the border with India, are rutted. And foreign sports executives remain reluctant to visit because of the terrorist threat.
German's Adidas Group has given one company in Sialkot, Pakistan, the contract to produce the entire range of mass-market-hand-stitched replicas of the "Jabulani" soccer ball that will be used at this summer's World Cup. The city, once the soccer ball capital of the world, is facing stiff competition from China. WSJ's Tom Wright reports.
Adidas made the decision to switch to thermally bonded balls for the matches at the 2006 World Cup. The goal was to make the balls perform more consistently when players kicked them. With a hand-stitched ball the seams inevitably produce dead spots. Initially, Adidas made those balls in Thailand before switching production to China ahead of the 2010 competition.
In recent years, China has also taken over most of the production of World Cup promotional balls, a lucrative market of about 40 million little balls emblazoned with sponsors' logos, says Khurram Anwar Khawaja, a soccer-ball producer and former president of the Sialkot Chamber of Commerce and Industry.
Sialkot has also lost a big share of midpriced mass-market soccer balls to China, which began producing cheaper machine-stitched balls a decade ago.
Forward Group and the other soccer-ball makers here are determined to defend their turf. They have cut costs by automating many parts of ball production. Local businessmen joined together to build an international airport in 2008 after the government failed to do so.
Now, the soccer-ball makers are planning to set up a research center to develop their own version of the latest thermal-bonding technology that Adidas is using for World Cup match balls, a process that involves fusing together patches of synthetic "leather" by machine.
Two years ago, Adidas transferred its proprietary technology to Forward Group, which has been making small amounts of thermal-bonded balls. Recently, the company successfully lobbied Adidas for permission to use the technology to produce balls for the UEFA Champions League final next month in Madrid, one of the biggest events on the global soccer calendar.
"It was hard to persuade Adidas to let us make this ball here," says Khawaja Masood Akhtar, Forward Group's chairman, who is trying to bring back the production of World Cup match balls to Sialkot. "We're 100% sure we can do it. Don't cry. Stand up and do the job."
Mr. Khawaja, the former chamber president, plans to start using machines to help his family's company lower the cost of competing with China, and he says he expects Sialkot will win back the World Cup promotional-ball market in 2014.
"Right now, Sialkot is in a very delicate balance, looking for new technology and trying to maintain its position as the top manufacturer of high-quality, hand-stitched balls," Mr. Khawaja says.
Most producers here believe that for now, the hand-stitched market will continue to attract soccer clubs and other consumers seeking high-quality match and practice balls, especially because thermally bonded balls remain so expensive.
And there's no question that despite the challenge from China and the preference of most of Sialkot's three million inhabitants for cricket, the area's economy is still dominated by soccer.
A huge statue of a soccer ball graces the city's main traffic circle. The industry directly employs 70,000 people and accounts for about a fifth of Sialkot's $1.25 billion in exports, with medical instruments and agricultural commodities accounting for some of the rest.
But hand-stitched balls are increasingly unable to compete in the cheaper market segment. A machine in China can produce 36 balls a day, while a Sialkot worker makes an average of six balls by hand in the same period, Sialkot's exporters say.
In a village stitching center run by Mr. Khawaja's company just outside Sialkot, Maqbool Hussain, who has been making soccer balls for two decades, brings in about $4 a day, much more than Pakistan's average wage.
He sews octagonal pieces together using a strong thread before inserting the rubber bladder and closing up the ball.
In a separate room, women stitchers, who account for more than half of the employees in Sialkot's soccer industry, sit on the ground under a ceiling fan.
In the late 1990s, companies like Mr. Khawaja's moved production to stitching centers after pressure from international labor groups because of the widespread use of child labor in Sialkot.
The U.N.'s International Labor Organization says the centers are more easily monitored, and Sialkot has combatted the problem.
At the Forward Group factory, machines cut thousands of octagonal ball segments stamped with the World Cup logo before workers sort them into boxes. They are then taken by truck to village stitching centers.
By the end of the year, Mr. Akhtar says, he'll start making machine-stitched balls to compete with China for sales of cheaper balls.
Write to Tom Wright at
tom.wright@wsj.com
Pakistan Defends Its Soccer Industry - WSJ.com
