How to Achieve High Labour Productivity in Spinning
1. Introduction
Today there is a challenge that confronts every mill, large and small; how to make profits at all, more so, to make sustainable profits. In the quota free trade regime, in view of tough competition, mills will have to make determined efforts to improve their productivity, operational efficiency and cost effective manufacturing of quality products. Only those mills, which forge ahead in this direction, will emerge as the stronger ones in the long run, utilising the opportunities that come their way.
Over a short period a mill may manage to earn high profits due to favourable trading conditions, or because management happens to procure raw material at low prices just by chance. But, in the ultimate analysis and in the long run, what decides the profitability of a mill is the ability of the management to bring down the real cost of production. This can be realised by maintaining high levels of productivity of both labour and machine, lower cost and production of high value yarns. However, as the latter has only limited markets, the more sustainable course for a mill to gain competitive edge in the WTO environment is only through high levels of productivity and cost reduction.
Apart from high productivity and cost control, there are a number of other heterogeneous factors such as commercial efficiency, product quality and product-mix, strongly influencing the profits of a textile mill.
This article discusses the salaries and wages cost of 183 spinning mills which have participated in the 18th Costs, Operational Performance and Yarn Quality inter mill study conducted by SITRA for the period Oct.-Dec.2005 and productivity performance of 187 spinning mills during the period Sept.2004 (30th productivity survey). Case studies of two SITRA member mills achieving very high labour productivity are also discussed.
2. Salaries and wages cost (SWC)
For a mill producing an average count of 40s, the four cost elements, viz raw material, power, stores and administrative overheads together account for about 80% of the yarn sales revenue in normal times. An amount of atleast 10% of sale value goes to meet interest charges and provision for depreciation. So much so, only the balance of 10% of the sale value is left out for salaries, wages and profits. Clearly, therefore, for a spinning mill to stay with black bottom lines today, the salaries and wages bill should not be more than 10% of the sales revenue.
Table 1 gives the distribution of SWC in 183 mills as found in a recent study by SITRA.
Today there is a challenge that confronts every mill, large and small; how to make profits at all, more so, to make sustainable profits. In the quota free trade regime, in view of tough competition, mills will have to make determined efforts to improve their productivity, operational efficiency and cost effective manufacturing of quality products. Only those mills, which forge ahead in this direction, will emerge as the stronger ones in the long run, utilising the opportunities that come their way.
Over a short period a mill may manage to earn high profits due to favourable trading conditions, or because management happens to procure raw material at low prices just by chance. But, in the ultimate analysis and in the long run, what decides the profitability of a mill is the ability of the management to bring down the real cost of production. This can be realised by maintaining high levels of productivity of both labour and machine, lower cost and production of high value yarns. However, as the latter has only limited markets, the more sustainable course for a mill to gain competitive edge in the WTO environment is only through high levels of productivity and cost reduction.
Apart from high productivity and cost control, there are a number of other heterogeneous factors such as commercial efficiency, product quality and product-mix, strongly influencing the profits of a textile mill.
This article discusses the salaries and wages cost of 183 spinning mills which have participated in the 18th Costs, Operational Performance and Yarn Quality inter mill study conducted by SITRA for the period Oct.-Dec.2005 and productivity performance of 187 spinning mills during the period Sept.2004 (30th productivity survey). Case studies of two SITRA member mills achieving very high labour productivity are also discussed.
2. Salaries and wages cost (SWC)
For a mill producing an average count of 40s, the four cost elements, viz raw material, power, stores and administrative overheads together account for about 80% of the yarn sales revenue in normal times. An amount of atleast 10% of sale value goes to meet interest charges and provision for depreciation. So much so, only the balance of 10% of the sale value is left out for salaries, wages and profits. Clearly, therefore, for a spinning mill to stay with black bottom lines today, the salaries and wages bill should not be more than 10% of the sales revenue.
Table 1 gives the distribution of SWC in 183 mills as found in a recent study by SITRA.
Table 1 Frequency distribution of SWC in spinning mills
Source : 18th inter-mill study on Costs, Operational Performance and Yarn Quality for Oct.-Dec. 2005
In one-sixteenth mills, mostly EOUs and hi-tech mills, the SWC is very low at below 3% of sales turnover. In about one-fourth mills, it is at a healthy level of 3% to 5%. As against this, in about one-fifth mills, the SWC is more than 11% of sales. It averaged 8.1% of sales turnover, varying from a low of 1.5% to a high of over 20%. Such a wide variation in SWC is mostly due to the differences in labour productivity, wage rate and sales turnover.
Mills can control the wages cost by best combining the three elements, viz productivity, wage rate and sale value, within the inherent constraints under which they operate.
Thus, it is not uncommon to find many mills with old machinery and low productivity levels seek to reduce the impact of the fundamental disadvantage of their low productivity through low wages to operatives. However, the low wage rates by themselves would not lead to profits in the long run unless combined with a high level of labour and machine productivity. For instance, EOUs and other high-tech spinning mills are able to make impressive profits, by containing the salaries and wages cost at no more than 2% to 3% of the sale value by varying combinations of very high labour and machine productivity, relatively lower wages and production of high value yarns.
However, the opportunity of leveraging the profits through production of high value yarns has only a limited scope for the industry taken as a whole, for two reasons. For one thing, the total market for such yarn is limited. For another, all mills are just not equipped to produce such premium quality yarns to command high sale value.
From the above, it emerges that a more enduring foundation for profitability can be laid only by maintaining high productivity, whether at high wage rates or otherwise.
3. Productivity standards
SITRAs productivity norms represent the productivity levels being attained by the top 10% of the mills in the industry. And, as such, these norms can not serve as the productivity targets to be aimed at by the mills already achieving more than the standard productivity. For such mills, two sets of bench-marks (9 HOK and 11 HOK) to aim at are indicated in Table 2 along with the corresponding department-wise break-up of current standard HOK of 15. The level of modernisation of machinery and work assignments of major categories of operatives corresponding to the three sets of productivity bench-marks are given in Table 3.
In one-sixteenth mills, mostly EOUs and hi-tech mills, the SWC is very low at below 3% of sales turnover. In about one-fourth mills, it is at a healthy level of 3% to 5%. As against this, in about one-fifth mills, the SWC is more than 11% of sales. It averaged 8.1% of sales turnover, varying from a low of 1.5% to a high of over 20%. Such a wide variation in SWC is mostly due to the differences in labour productivity, wage rate and sales turnover.
Mills can control the wages cost by best combining the three elements, viz productivity, wage rate and sale value, within the inherent constraints under which they operate.
Thus, it is not uncommon to find many mills with old machinery and low productivity levels seek to reduce the impact of the fundamental disadvantage of their low productivity through low wages to operatives. However, the low wage rates by themselves would not lead to profits in the long run unless combined with a high level of labour and machine productivity. For instance, EOUs and other high-tech spinning mills are able to make impressive profits, by containing the salaries and wages cost at no more than 2% to 3% of the sale value by varying combinations of very high labour and machine productivity, relatively lower wages and production of high value yarns.
However, the opportunity of leveraging the profits through production of high value yarns has only a limited scope for the industry taken as a whole, for two reasons. For one thing, the total market for such yarn is limited. For another, all mills are just not equipped to produce such premium quality yarns to command high sale value.
From the above, it emerges that a more enduring foundation for profitability can be laid only by maintaining high productivity, whether at high wage rates or otherwise.
3. Productivity standards
SITRAs productivity norms represent the productivity levels being attained by the top 10% of the mills in the industry. And, as such, these norms can not serve as the productivity targets to be aimed at by the mills already achieving more than the standard productivity. For such mills, two sets of bench-marks (9 HOK and 11 HOK) to aim at are indicated in Table 2 along with the corresponding department-wise break-up of current standard HOK of 15. The level of modernisation of machinery and work assignments of major categories of operatives corresponding to the three sets of productivity bench-marks are given in Table 3.
Table 2 SITRA norms for HOK (up to spinning)
Table 3 Level of modernisation and work assignments (major categories)
assumed for the standard mill
assumed for the standard mill
40s Count
* for a 30000 spindle mill
From Tables 2 and 3, it is clear that to attain very high labour productivity of around 10 HOK or less, high work assignments and hi-tech machinery with automation are essential.
4. Productivity survey in spinning
SITRAs 30th productivity survey in spinning for September 2004 covering 187 mills shows that between mills the labour productivity (HOK) up to spinning varies very widely of the order of over 500% (Table 4) which is due to the differences in level of technology and automation of machinery, work assignments and operational efficiency (such as production per spindle, spindle utilisation and balancing of machinery).
From Tables 2 and 3, it is clear that to attain very high labour productivity of around 10 HOK or less, high work assignments and hi-tech machinery with automation are essential.
4. Productivity survey in spinning
SITRAs 30th productivity survey in spinning for September 2004 covering 187 mills shows that between mills the labour productivity (HOK) up to spinning varies very widely of the order of over 500% (Table 4) which is due to the differences in level of technology and automation of machinery, work assignments and operational efficiency (such as production per spindle, spindle utilisation and balancing of machinery).
Table 4 Productivity performance (up to spinning)
30th productivity survey in spinning No.of mills: 187
30th productivity survey in spinning No.of mills: 187
* adjusted to 40s count; # from mixing & blow room to ring frames
The labour productivity falls short of the standard by about 30%, of which two-thirds is due to mills engaging more operatives than the standard and the remaining one-third can be ascribed to lower production per spindle. The average production per spindle (92 g per 8 hours adj. to 40s) is lower than the standard (105 g) by 13% of which 9% is due to lower spindle speeds, 2.5% because of high tpi and the remaining 1.5% is ascribable to lower machine efficiency.
The ring frame machine productivity index, which is a combined measure of production per spindle and spindle utilisation, varies between mills from 49 to 118, the average being 84.
5. Impact of productivity on SWC
Table 5 shows the SWC for a spinning mill manufacturing 40s carded single yarn at different wage rates and productivity levels.
The labour productivity falls short of the standard by about 30%, of which two-thirds is due to mills engaging more operatives than the standard and the remaining one-third can be ascribed to lower production per spindle. The average production per spindle (92 g per 8 hours adj. to 40s) is lower than the standard (105 g) by 13% of which 9% is due to lower spindle speeds, 2.5% because of high tpi and the remaining 1.5% is ascribable to lower machine efficiency.
The ring frame machine productivity index, which is a combined measure of production per spindle and spindle utilisation, varies between mills from 49 to 118, the average being 84.
5. Impact of productivity on SWC
Table 5 shows the SWC for a spinning mill manufacturing 40s carded single yarn at different wage rates and productivity levels.
Table 5 Impact of productivity and wage rate on SWC#
# of the total SWC, salary component is assumed as 25%
* than SITRA standard
A spinning mill achieving SITRA standard labour and machine productivity (HOK up to spinning: 15; HOK in autowinder: 2.4; production per spindle per 8 hours: 105g) can maintain the SWC at about 3.2% of sales if the wage rate is Rs 100 per worker per day (ie a wages cost of about Rs 31000 per worker per annum). At higher wage rate, say Rs 250 per day (ie Rs 78000 per worker per annum) the SWC can be maintained at 8% of sales, which is at par with the industry average.
It can also be seen that a 25% higher productivity (than SITRA standard) would result in a reduction of 0.8 to 2 percentage points in the SWC depending on the wage rate.
From the above it is clear that if the labour productivity is maintained at a high level, even at a high wage rate of Rs 250 per day, a SWC of 5% to 6% of sales turnover will be possible to achieve. Mills operating with lower wage levels of below Rs 150 per day, by achieving high labour productivity, can maintain the SWC at no more than 2% to 3% of sales.
6. High labour productivity in spinning case studies
As seen earlier, to maintain the SWC at a healthy level, say well below 5% of sales, high labour productivity is required. It can be achieved with high speed machinery, higher work assignments and higher production rates. The first step towards improving the labour productivity is optimisation of labour complement in various categories/ departments under the given working conditions
As mills are aware, SITRA has been offering services to mills in the area of optimisation of man-power by conducting scientific assessment of work assignments. In the last 2 decades in particular, over 200 mills, which included a number of very hi-tech mills and a few overseas mills, availed this service.
The following case study illustrates the optimisation of labour employment in a 100% EOU based on a detailed study conducted by SITRA.
6.1. Case study I
Profile of the mill
The mill has a capacity of about 20000 spindles. It is equipped with very hi-tech machinery such as bale plucker, chute feed blow room and cards, auto- leveller draw frames, long length ring frames, automatic cone winders with centralized bobbin feed, yarn conditioning plant, fully automated humidification plants and most modern testing laboratory with HVI, AFIS and UT-3.
It manufactures 100% cotton yarn, a large quantity as value added products like combed, doubled and hosiery yarns, with an average count of around 22s. Average production per day is about 14 tonnes. The mill employs about 390 operatives per day and has a staff strength of 75. It achieves a labour productivity of 14.5 HOK up to spinning (adj. to 40s count) and a production rate of 100 g per spindle per 8 hours (adj. to 40s count).
Suggested assignments/operative strength
Based on a detailed study, SITRA identified the scope for higher assignments/ operative reduction in both production and non-production categories of operatives which are given in Appendix I. The number of staff employed by the mill and those recommended by SITRA are given in Appendix II.
By implementing the SITRAs suggestions, the mill could reduce 69 operatives per day, resulting in a saving of about Rs 30 lakhs per annum in wages cost. The reduction in staff strength (13 per day) would help the mill to reduce the salary bill by about Rs 5 lakhs per annum (Table 6).
As seen earlier, to maintain the SWC at a healthy level, say well below 5% of sales, high labour productivity is required. It can be achieved with high speed machinery, higher work assignments and higher production rates. The first step towards improving the labour productivity is optimisation of labour complement in various categories/ departments under the given working conditions
As mills are aware, SITRA has been offering services to mills in the area of optimisation of man-power by conducting scientific assessment of work assignments. In the last 2 decades in particular, over 200 mills, which included a number of very hi-tech mills and a few overseas mills, availed this service.
The following case study illustrates the optimisation of labour employment in a 100% EOU based on a detailed study conducted by SITRA.
6.1. Case study I
Profile of the mill
The mill has a capacity of about 20000 spindles. It is equipped with very hi-tech machinery such as bale plucker, chute feed blow room and cards, auto- leveller draw frames, long length ring frames, automatic cone winders with centralized bobbin feed, yarn conditioning plant, fully automated humidification plants and most modern testing laboratory with HVI, AFIS and UT-3.
It manufactures 100% cotton yarn, a large quantity as value added products like combed, doubled and hosiery yarns, with an average count of around 22s. Average production per day is about 14 tonnes. The mill employs about 390 operatives per day and has a staff strength of 75. It achieves a labour productivity of 14.5 HOK up to spinning (adj. to 40s count) and a production rate of 100 g per spindle per 8 hours (adj. to 40s count).
Suggested assignments/operative strength
Based on a detailed study, SITRA identified the scope for higher assignments/ operative reduction in both production and non-production categories of operatives which are given in Appendix I. The number of staff employed by the mill and those recommended by SITRA are given in Appendix II.
By implementing the SITRAs suggestions, the mill could reduce 69 operatives per day, resulting in a saving of about Rs 30 lakhs per annum in wages cost. The reduction in staff strength (13 per day) would help the mill to reduce the salary bill by about Rs 5 lakhs per annum (Table 6).
Table 6 Reduction in operatives and staff in the Case Study mill
The
achievable HOK (up to spinning) with the revised work assignments will
be 13 (adj. to 40s), ie a reduction of 1.5 HOK from the existing level
which is about 15% lower than the SITRA standard of 15 HOK.
6.2. Case study II
As seen earlier, SITRA standard HOK (adj. to 40s count) up to spinning for very hi-tech spinning mills is 9. One of the SITRA member mills has been achieving a HOK of 8.8 up to spinning (adj.to 40s). The various particulars relating to 8.8 HOK are given below.
Profile of the mill
The mill has 32 long length ring frames fitted with auto doffers, chute feed blow room lines with bale plucker, auto leveller draw frames, high speed super lap formers, combers and fly frames all imported. It manufactures 100% cotton combed hosiery yarns with an average count of 27s. Production per day is 20 tonnes. It achieves a production rate of 102g per spindle per 8 hours (adj.to 40s).
As seen earlier, SITRA standard HOK (adj. to 40s count) up to spinning for very hi-tech spinning mills is 9. One of the SITRA member mills has been achieving a HOK of 8.8 up to spinning (adj.to 40s). The various particulars relating to 8.8 HOK are given below.
Profile of the mill
The mill has 32 long length ring frames fitted with auto doffers, chute feed blow room lines with bale plucker, auto leveller draw frames, high speed super lap formers, combers and fly frames all imported. It manufactures 100% cotton combed hosiery yarns with an average count of 27s. Production per day is 20 tonnes. It achieves a production rate of 102g per spindle per 8 hours (adj.to 40s).
Department-wise work assignments prevailing in the mill
Department-wise HOK (adj. to 40s)
7. Measures for improving productivity
Towards maintaining the salaries and wages cost well below 10% of sales turnover, preferably less than 5%, mills must initiate suitable measures, as given below, to improve the labour and machine productivity, besides taking steps to manufacture value added yarns.
As a first step, mills must optimise the labour complement in various categories for the prevailing working conditions by conducting a thorough study in all the departments including post spinning sections. While arriving at the optimum assignments, with a view to avoid underloading or overloading of operatives, the following must be considered:
Combine two separate categories into one, implementing team work, eliminating some categories by suitable redistribution of their work to others, changing the lay-out of machinery, etc. Fix agreement assignments/machine efficiencies in different departments based on scientific assessment.
Training the operatives scientifically for correct work methods results in lower elemental timings for performing various operations. With this it would be possible to increase the work load of the operatives. Hence, operatives training must form a regular activity of the mills.
Maintain the spindle utilisation at 98% and above consistently by eliminating the avoidable causes.
Scope for improving the production rate in ring frames by optimising spindle speeds, tpi and machine efficiency must be considered.
Maintain optimum package size in preparatory and ring spinning departments.
Initiate suitable modernisation programme for machinery, which must include increased level of automation such as bale pluckers, chute feed blow room lines, autoleveller draw frames, automatic cone winders, etc. and also AWES (automatic waste evacuation system) in blow room, cards and combers.
Regularly participate in various inter-mill studies conducted by SITRA in productivity, costs, etc. This would enable the mills not only to compare their performance with others but also to bench-mark various productivity and cost parameters.
Towards maintaining the salaries and wages cost well below 10% of sales turnover, preferably less than 5%, mills must initiate suitable measures, as given below, to improve the labour and machine productivity, besides taking steps to manufacture value added yarns.
As a first step, mills must optimise the labour complement in various categories for the prevailing working conditions by conducting a thorough study in all the departments including post spinning sections. While arriving at the optimum assignments, with a view to avoid underloading or overloading of operatives, the following must be considered:
Combine two separate categories into one, implementing team work, eliminating some categories by suitable redistribution of their work to others, changing the lay-out of machinery, etc. Fix agreement assignments/machine efficiencies in different departments based on scientific assessment.
Training the operatives scientifically for correct work methods results in lower elemental timings for performing various operations. With this it would be possible to increase the work load of the operatives. Hence, operatives training must form a regular activity of the mills.
Maintain the spindle utilisation at 98% and above consistently by eliminating the avoidable causes.
Scope for improving the production rate in ring frames by optimising spindle speeds, tpi and machine efficiency must be considered.
Maintain optimum package size in preparatory and ring spinning departments.
Initiate suitable modernisation programme for machinery, which must include increased level of automation such as bale pluckers, chute feed blow room lines, autoleveller draw frames, automatic cone winders, etc. and also AWES (automatic waste evacuation system) in blow room, cards and combers.
Regularly participate in various inter-mill studies conducted by SITRA in productivity, costs, etc. This would enable the mills not only to compare their performance with others but also to bench-mark various productivity and cost parameters.
Appendix I
Existing and recommended work assignments in the case study mill 1
Appendix II
Staff and non-production operatives employed
- actual and recommended
Staff employment
Non-production operatives per day
Source : SITRA - The South India Textile Research Association, Coimbatore.
No comments:
Post a Comment