Luminary Pakistan

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STRAIGHT TALKING BUISNESS MOGUL TAKES ON SHAHKAM…

Luminary: How you started your journey?

Mr. Shahid Kamil Butt: Shahkam Industries was founded in 1992 by my beloved father Mr. Kamil Butt (late). My sister Saiqa Butt was its first MD. We started with only 100 stitching machines and 5 knitting machines. I joined in 1996 after completing my bachelor’s from University of California, Los Angeles, (UCLA). We continued to grow in the same areas and added more machines and space. At present, we have almost 39 acres of land compared to 2 acres in 1992 when we started.

Working in a family business has had many positive and negative aspects to consider. In my case, the foundation was already set by my father and sister for four years. My father taught me initially about business practices and how to do things in Pakistan. I made a few adjustments according to the requirements of a family business but my leadership style was my own. When I look back from 1996 till today, a major portion of my life has been spent in Shahkam, like many in my management team. I was only 22 years old when I got here, and have spent 20 years of my life with the factory.

Our growth in Shahkam has been gradual of at least 10% per year. We have done 5-6 major expansions over the years as well. In the textile industry, growth comes the hard way. When we say 10% we mean approximately 10 million dollars a year. With an average price per garment of 6$, you can see we have to do a lot of garments to expand our revenue.

This is a lot of work and easier said than done. Each garment can make or break us. Apart from that, we are a vertical factory. Every process is done within our walls. We don’t outsource much in order to maintain the quality. We have consistently enhanced our capacity in all areas of the factory, whether it be energy or warehousing.

Luminary: What are your major customers and how do you retain them?

Mr. Shahid Kamil Butt: We are working with many major brands in North America such as GAP, AEO, Macys Sears, US POLO, and Belk among others. We also work with European clients like Zara, Pull & Bear, Okaidi, Bershka, Celio, Springfield and Next in the UK. Retention of the clients is our prime focus area and we do this in many ways. First of all we have very good relations with agents who represent buyers. We respond to them promptly and listen to their concerns. We also make samples, new developments, and designs very often. Our quality and delivery are of paramount importance to us. This is the reason that some of our customers are with us since 1992. Personal relationships and integrity is something which also connects us for such a long time. At times our customers send their own staff for compliance and safety checks. I myself travel a lot and if I meet one buyer and take an order from them, I make sure I meet them the next time as well. At that time I want to make sure that my company has fulfilled the quality and delivery promises.

Luminary: How do you cope with the energy crisis in Pakistan?

Mr. Shahid Kamil Butt: The textile industry is suffering from energy crisis from a long time. Big companies can afford their own generators and buy boilers individually, but emerging companies do not stand a chance to survive in such conditions. Apart from energy, there has been many other challenges that we have had to face. Such as the sudden drop in the Dollar price from 108 to 99, Geopolitical issues like terrorism, nuclear tests, sanctions and 9/11.

This has led to a massive reduction of the textile industry which in turn means a shortage of skilled staff, labor, and trainees. Overall the situation is bad and there is no more industry except for financially strong names and big players. On the other hand, if you stay and survive for some time on alternative energy options, some opportunities may come to your way. You can pull some of the left over employees and train them according to your needs.

We are also not happy with the methodology of gas supply. We have added new generators and boilers and constructed reservoirs to store furnace oil to ensure smooth production to meet the deadlines.

Luminary: How do you look at the textile industry in Pakistan and Internationally?

Mr. Shahid Kamil Butt: I believe Pakistan has unbelievable potential in textile. We have an abundance of skilled labor and most importantly an upcoming population under 25 years or less, which is charged up to deliver. If we look at it regionally, India is moving toward heavy industry, China is moving towards retail, so Pakistan can increase its manufacturing. Another important player is Vietnam which is almost fully saturated. There is a vacuum for sure and Pakistan can fill it. Sadly it seems the government is not interested in supporting the value-added textile industry. They need to offer incentive-based assistance so more jobs can be created. Targeted assistance can be given to factories for forward integration from crop to apparel which would mean more investment, jobs, and exports.

On the other hand, internationally the retail industry is struggling and consumer habits are changing and evolving. Traditional methods of big orders, long lead times, and set buying sheets are all things of the past now. We have to be flexible, look closely to the new trends, and be adaptable. We need to be face up to that challenge. This is now our philosophy, and we observe trend closely to be able to respond and take orders with quick lead times. We don’t want to make more profit in one order and prefer to have composite relationships over the course of time with our customers. Actually, we are looking for a sustainable and mutually beneficial relationship with our buyers.

Luminary: How you deal with innovation in your organization?

Mr. Shahid Kamil Butt: We have our own design and research and development department. We are always looking to innovate, play with fabric and get something new out of it. We often try very difficult processes and experiments. In the late 90s we did a lot of embroidery innovation and nowadays we are working on denim for diversification. Overall our innovation is focused on the fabrication side, that’s where we can introduce something new and gain a competitive advantage.

Luminary: How do you see environment changes and regulations by the company?

Mr. Shahid Kamil Butt: We have our own waste water treatment plant. We also just installed boiler from Germany and Thailand. We are actively trying to reduce the general waste of our factory so we can have a more lean manufacturing facility. We also look forward to installing some solar panels.

Luminary:  What steps are you taking for the training and development of your staff and labor force?

Mr. Shahid Kamil Butt: We have a new sewing training school, from which primarily 50 female sewers are graduating every month. They are then integrated into the main sewing lines. We also have our own training center where we arrange lectures for labor and managers. This allows us to share our future strategies and get feedback from them as well.

I do many lectures myself for information sharing and to get on the ground feedback on what is happening in the factory. I share updates on expansion plans, construction, market research and customers’ feedback.  The labor is very intelligent and asks many questions pertaining to wages, holidays, benefits, clients, production requirements, and international innovation. Our managers can explain this to them but they prefer to hear it from me. They like to engage with me one on one.

Luminary: How do you manage stress, pressures, and maintain work like balance?

Mr. Shahid Kamil Butt: I am a very active person and I play football every day. I follow my own routine which changes every five years or so. Nowadays I show up early at work at 730 am and work till 2pm. When I joined I used to come at 8am and for half a decade in my 30s I had a routine to start work at 1pm. I find my routine every few years and then stick to it. I also go to the gym 4-5 times a week. I like to spend quality time with my wife and children and we take time out and travel a lot. My favorite place in the world is Los Angeles as I went to college there.

You need to empower the other members of management and they must take the ownership. My factory is still very owner-centric. I am improving on this and striving for a more professional management system all the time. My dream is for my company to work on the same level whether I am present at the facility or not.

Luminary: What is your toughest decision so far?

Mr. Shahid Kamil Butt: The decision to subcontract or expand vertically was a very critical fork in the road moment for us. I chose to go for vertical expansion. You can make more profit by outsourcing but somehow the quality is compromised. You have no control over the labor conditions and whether the subcontractor is compliant 100% of the time. It’s better to bring it all in the house where you can keep an eye on these things. As I mentioned earlier this is not built overnight. It’s a step by step process, especially when you want to do the expansion in a financially responsible and prudent manner. Our USP is we do everything in house and control the product.

I faced many challenges when I was confronted by favoritism and nepotism in some departments. I hate such things. We have 7000 people working for us and we continue to coach them to follow a professional culture. Change doesn’t come instantly but you have to be patient.

Luminary: Where did you lean and get inspiration and who do you consider you mentor?

Mr. Shahid Kamil Butt: I have spent all my time in the factory. Whatever I am today is because of my parents. I learned from my father the basic ethics of business, like how to hire, promote, and deal with the labor. The main thing I was taught with extreme diligence was the importance of commitment. Once you have committed something with your worker or customer, you have to fulfill it. I consider my father as my mentor. Professionalism is the only answer if you want to grow. My father never asked me to change my leadership style.  I like to keep emotions out of business as my first priority is to protect the financial stability and the future life of the company.

Luminary: How do you see entrepreneurs’ legacy and how we can break it?

Mr. Shahid Kamil Butt: The concept of family business is very strong in Pakistan. We don’t have that many successful start-up businesses. The majority of our businesses are of the traditional family oriented model. However I strongly believe it’s not going to work if you educate your child abroad and then when he or she comes back, you don’t accept his or her new international ideas. My father gave me full authority when I was 22 years old, and he was the Chairman who guided his CEO (me). However the decisions were mine, and the combination worked very well. To be frank, the new generation in Pakistan has more potential than the previous one. The new generation has every right to ask questions from the previous one. Have they improved the growth rate, debt rate, or the GDP? What has gotten better in the last 20 years? What major geopolitical issues have been solved? I think they have had their chance. Now it’s time for them to move to aside and let the new generation try to fix the country. It’s very simple if you want international business, you need to have international ideas.

Luminary: What are your future plans for Shahkam Industries?

Mr. Shahid Kamil Butt: We want to expand more into denim, woven and other apparel products. We are going to enter into the local retail environment as well. We will be adding more departments resulting in more jobs, in a lean and efficient manner. We want to create more jobs specifically in Pakistan.

Luminary: Your message to young professionals and entrepreneurs?

Mr. Shahid Kamil Butt: Pakistan is actually an amazing country with a lot of potentials. For whatever reason, we are very weak in international PR. Lots of things can be portrayed in a positive manner with better marketing. We have issues but we need to stay united. As new entrepreneurs, you should focus on critical analysis. Don’t just believe whatever is being told to you. Secondly, you need to study history to understand what is happening right now and why it’s happening. Understand certain things like why this country was made. What was the objective and goals of the founders? What amount of sacrifices has been given for this land? If you don’t understand these things you can’t change anything. I would also request seniors to encourage and believe in next generation.