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Light engineering refers to making small mechanical parts and machinery by shaping metal. Light engineering is the natural beginning of industrial activity in most of the countries of the world. In a few countries, art and skill-based grassroots beginning of shaping metals has led to the creation of high-value addition, high precision industrial economy. They have succeeded in creating high-paying R&D jobs and generating increasing economic value from knowledge and ideas. But that has not been the case in most less developed countries, notably in Bangladesh. Despite low entry barriers, domestic market, low-cost labour, and government support, why have most countries failed to develop sustainable industrial economies out of light engineering?
The journey begins with melting metals, giving shape to molten flux, and doing finishing work to produce machine parts. In simple terms, it could be a blacksmith workshop. Like many other countries, Bangladesh has also such an industrial sector. From rural blacksmith workshops to a group of firms operating in the industrial state, Bangladesh's light engineering sector has a long history. One of the prominent light engineering clusters is inside an estate of the Bangladesh Small and Cottage Industries Corporation in Bogura. According to a recent media report, this cluster comprising ten foundries, 800 manufacturing facilities, and 745 workshops is busy producing agricultural machinery. There are also 60 other foundries and 1,000 light engineering units in different places in this district. Production units of this district alone have been meeting 70 per cent of the country's demand for agricultural machinery and spare parts. This industrial sector of Bogura began its journey in the 1960s and now produces more than 3,000 types of products worth BDT 500 crore each year by employing 15,000 people. But none of the industrial units has grown as large corporation, and they have been suffering from erosion of competitiveness.
Low-cost labour and easy reach to the growing domestic market are significant sources of competitive advantages for the light engineering sector in Bangladesh. But imports from higher-wage countries like Japan and China have been taking over the locally produced light engineering products market. Instead of losing the need to import, why cannot Bangladesh's light engineering products take over the market of Japan and other Western countries by leveraging low-cost labour advantage? One of the defining factors has been technology. By delegating roles from human workers to machines, advanced countries are succeeding in making light engineering products better and cheaper. As a result, Bangladesh's low-cost labour advantage has been eroding layer after layer. Furthermore, by focusing on advancing technologies to improve the competitiveness of light engineering products, Japan, China, and many other countries have created high-paying innovation jobs. In addition to labour, they have been leveraging the light engineering sector to create economic value from knowledge and ideas, opening endless growth frontier. A notable example is Japanese Shimano producing bicycle parts.
Bangladesh has been practising familiar approaches to deal with eroding competitive advantage like many less developed countries. It begins with importing capital machinery and offering training to operate them. Yes, such an approach improves the quality. But invariably, it reduces local value addition capability. But due to higher precision and lower wastage, replacing local labour with imported capital machinery is an indispensable option. Unfortunately, through such an approach, Bangladesh has been creating high-paying R&D jobs in advanced countries at the cost of local labour-intensive jobs. But what is the alternative for Bangladesh? Why can Bangladesh not pursue R&D in developing technology solutions to address eroding labour-intensive competency of the light engineering sector?
Unfortunately, instead of patronising local R&D capacity for technology innovations in addressing eroding competitiveness issue of the light engineering sector, the predominant policy has been to lower the import duty of capital machinery. Furthermore, the loan is ensured to pay for the import. The obvious argument is that it's cheaper to import than innovate them by patronising local R&D. Often, a well-known phrase such as "don't reinvent the wheel" is reiterated. Furthermore, foreign experts are imported to train local workers to operate them. In some cases, even the maintenance of imported capital machinery depends on foreign technicians.
Of course, modern capital machinery such as induction furnaces and computerised numerical control machines are complex. In addition to technical complexity, there are issues pertaining to intellectual properties. Furthermore, making them locally, primarily by assembling imported components, will not add much value. But those machines are amenable to progression. They could be improved further, primarily through sensor and software-based innovations. Why can't Bangladesh look into such windows as entry opportunities for creating high-paying idea jobs by innovating capital machinery for advancing the light engineering sector?
Furthermore, many complementary technology solutions could be innovated to create a system effect from the imported capital machinery. Besides, countries like Japan or China exporting those capital pieces of machinery also started the journey from a humble beginning. Instead of just making or importing, they focused on incremental advancement and reinvention. Such an approach of reversing the erosion of competitive advantage by adding value through knowledge and ideas appears to be a sustainable solution.
Ironically, increasing access to imported capital machinery has been running out of steam. Hence, offering tax differentials and cash incentives have been gaining increasing priority. Such a reality indicates that Bangladesh's light engineering sector has been on a path of perpetual erosion due to eroding local value addition out of low-cost labour. It's a vicious cycle. How to stop and reverse should be the development priority? Unfortunately, development programmes, often funded by loan and development assistance, are after increasing the import of capital machinery and loan portfolio. As a result, the sector has been weakening, let alone creating high-paying innovation jobs and developing a sustainable competitive edge. The argument could be that the alternative proposed here is utopian. It will take too long to show a result, even if it does. But unfortunately, that is the only long-run solution to the problem. Hence, instead of spending money and time to show quick temporary recovery, like pain killer, we should look into the long-term edge.
Finding a long-term sustainable solution is complex. It's going to demand high-end technology and innovation management capability. It's also going to take time and patience. It will also face criticism from special interest groups. Furthermore, lenders and foreign development partners may not find it worthy of funding, as such an approach may not meet the requirement of immediate loan disbursement target and creating the market of capital machinery of advanced countries. But that is the solution Bangladesh needs to make globally competitive value addition capability out of locally produced knowledge and ideas, and labour. It's an indispensable requirement for an advanced economy. Hence, to meet the goal of 2041, it's time to rethink our approach to strengthening the light engineering sector and developing a sustainable industrial economy edge.
Rokonuzzaman, Ph.D is academic and researcher on technology, innovation and policy.
zaman.rokon.bd@gmail.com