emco case study

EMCO; Problem Basket 1

EMCO INDUSTRIES

One fine day Mr. Rana Aziz (HR Manager & QA) entered his office with a heavy heart, not

knowing where the industry was headed. “How to satisfy these people in the current situation of

energy crisis?” The company had no finances to keep its

people with EMCO. Employees at EMCO are extremely

unhappy and de-motivated, be it workman or non

workman. In the case of non workman, People who did

their first job with EMCO have been there working with

the company, but now after 25 years of their industrious

service they plan to switch. In the case of workman wages,

EMCO is one of the very few industries on Sheikhupura

road that does follow the concept of minimum wage but

unfortunately the minimum wage that is around 7,000 is

not enough to run a house. EMCO used to be Pay Masters

sometime back but now they have no finances to do so. It is

majorly attributed to the financial crunch that Pakistan is going through and the huge energy

crisis that has made the survival difficult. The situation has become so worse that the company is

left with limited options in order to fix this flux.

Pakistan is currently facing a harsh energy crisis and no sensible steps have been taken by the

government to install new capacity for production of the required energy sources. Now, the

demand surpasses supply and hence “load-shedding of electricity and gas” is a common

phenomenon through repeated power shutdowns. This shortage is badly affecting industry,

commerce and daily life of people and EMCO is one of the hardest hits. Mr. Rana fears that this

situation will completely choke the growth in a couple of years. In Pakistan more than 80 percent

of employment is generated by the industrial sector of the country. The gas crisis is hitting this

sector badly. As a result of load shedding EMCO has to run the industry on LPG which increases

the cost by 4 times because 2,500,000 of natural gas means LPG of 10,000,000 which then

leaves no money for other activities and due to this The Tile Plant remains close 4 days a week,

whereas Insulator Plant runs on expensive energy source that is LPG.


“It is very expensive to shut down the Insulator Plant because it takes three days or more to

reach the temperature of 1200 degree Celsius in Killen Machines, in case the plant is shut down

and we are using LPG as an alternate energy source in order to meet our targets. The

government is constantly increasing LPG prices while WAPDA is not willing to pay any extra

penny. WAPDA demands that the orders should be completed at the price stated in the tender

and if not delivered in time, high penalties shall be implemented”. Mr. Naseem Khan (G.M)

EMCO Industries Limited:

The parent company, The Imperial Electric Company (Pvt.) Ltd., was established in 1931 and

has been involved in trading of electrical goods. Soon after the creation of Pakistan, the needs

for import substitution was felt and the sponsors of the parent company made the decision to

establish a small manufacturing unit for electrical goods.

In 1951, a very modest beginning was made by setting up a small facility located in the basement

of the offices of The Imperial Electric Company (Pvt.) Ltd., for the production of electrical

accessories. With single minded initiative and efforts of late Mr. Ataur Rehman (the former

Managing Director), the facilities were continuously upgraded and a fully fledged facility was

established in Lahore, Pakistan by 1954 under the same name of Electrical Equipment

Manufacturing Co. Ltd. (EMCO). The first comprehensive Insulator Manufacturing Plant was in

operation with the active participation, know-how and machinery coming from Japan and

France.

Keeping pace with the ever increasing and diversified demand of Insulators for national utilities

and electrical industries in Pakistan, it was decided in 1965 to expand the facilities to produce all

types of insulators including those required for extra high tension lines. At this stage, Associated

Engineers (Pvt.) Ltd., joined hands with The Imperial Electric Company (Pvt.) Ltd. (IEC) to

further expand EMCO.

The new plant located at Lahore Sheikhupura Road, Lahore was commissioned in 1968 under

the guidance of competent and seasoned engineers of NGK Insulators, Japan. Since electrical

ceramics is a very highly specialized industry, requiring skill, experience, time tested formulae

and proven know-how, EMCO signed a technical collaboration agreement for fifteen years with

NGK, Japan, who are the world's largest and most renowned manufacturers of insulators. With


the active support of the personnel from NGK and Pakistani engineers, EMCO was producing

quality insulators using mostly local raw materials. The plant is now managed by a team of

highly qualified and experienced Pakistani engineer’s of over 600 technicians and workers. The

company has a present installed annual capacity for the production of 6000 tons of insulators

which is being upgraded to 7500 tons by the end of 2006.

With the untiring efforts of the present Chairman, Mr. S. A. Mannan and the late Managing

Director, Mr. Attaur Rehman, the company continued to be one of the best facilities

manufacturing quality insulators in the world. In 1983, the company was listed on the Stock

Exchanges of Pakistan as a Public Ltd., company and was renamed as EMCO Industries Limited.

In addition to electric porcelain, EMCO runs a fully fledged department for the production of

chemical porcelain such as acid proof lining bricks, raschig rings, saddles and special

refractory’s. This line is now fully developed to cater to the requirements of beverage factories,

milk plants, chemical, edible oil, fertilizer industries, for acid proof wares. EMCO, in 1995,

signed a licensing agreement with M/S. SIEMENS, Germany to manufacture Surge Arresters

from 66kv to 420kv (max. system voltage).

EMCO, in 2005, signed a know-how contract with M/S. HAPAM B.V., Netherlands, for the

manufacturing of Disconnecting Switches.

EMCO firmly believes in a continuous research and development program to keep abreast with

ever-diversifying requirements of porcelain insulators, chemical porcelain and ceramic tiles. The

normal production of insulators requires rigid quality control, with limited performance

tolerances allowable. Considerable efforts, as such, are directed towards the production of

insulators with better performance characteristics and EMCO has all the in-house testing

facilities for this purpose. Moreover, our progress and development is benefited by the rich

experience gathered from NGK of Japan. EMCO is still the only unit for manufacturing high

tension insulators in Pakistan and is not only supplying the entire requirement of the country, but

is also exporting to developing and developed countries all over the world.

Having achieved an enviable position in the field of electric ceramics, EMCO, in 1983 decided

to broad-base their manufacturing activities and utilize their long experience in ceramics by

adding an ultra modern plant for the manufacturing of decorative WALL TILES with an annual


capacity of 700,000 square meters. The entire machinery for the manufacture of tiles was

supplied by world renowned machinery manufacturers from Germany and Italy. This plant was

commissioned in 1985.

Another plant for Floor Tiles having an annual capacity of 1,000,000 square meters was

commissioned in late 1991. The machinery and know-how was supplied by SACMI of Italy and

the plant is producing comprehensive range of Floor and Facing Tiles according to international

standards. In 1996, the need was felt to increase the production of the Wall Tile and

subsequently an agreement was signed with an Italian Company to supply machinery and

equipment to increase the output of the Wall Tile plant from 700,000 to 1,500,000 square meters

per annum. This expanded facility was completed in 1997. Currently the overall production

capacity of both plants is 2,500,000 square meters. EMCO is the largest ceramic complex in

Pakistan producing over 30,000 tons of ceramics material annually.

Eight Dimensions of Quality:

EMCO is ISO 9000 certified. Technically, EMCO didn’t have any choice but to become

certified because its competitors such as Master tiles, Shabir Tiles, Swat tiles, National Tiles, so

on and so forth, all are ISO 9000 certified. However, EMCO is clearly meeting all the eight

dimensions of quality standards. For example; EMCO tiles are very easy to clean and maintain.

No polish or machine cleaning is needed. Simple soapy water and a mop can do fine cleaning.

All stains can easily be wiped off. Moreover, its features such as fine glazing, strong printing

dyes, clay quality, etc are also up to the standards laid by ISO 9000. EMCO manufacture tiles in

three classes. First one is called, “standard”, second one is called “economy” and the third one is

called “awaami”. According to these three classes, the features and quality and performance

criteria differs. Standard ones are for example; used in homes while economy ones are used in

public areas such as schools, hospitals, etc. awaami class tiles are used in places like underpass,

foot paths, drive ways, kitchen, wash rooms, so on and so forth. These tiles are made according

to their usage. Naturally, a tile with a glittery design printed on it will not be durable in kitchen

or wash rooms!


Products:

EMCO has basically two types of products that they produce. The first product is TILES and the

other product is INSULATORS. The Tiles are only used by the major builders and architect

firms. The second product Insulators is majorly consumed by WAPDA (Water and Power

Development Authority); the general manager marketing of EMCO said that EMCO hasn’t been

able to recover the payments from WAPDA that it gave on credit and EMCO has no intention of

bringing in any innovation or technological change in that commodity.

EMCO Granite Tile is an ideal medium for coverage of floors and walls in the interior as well as

exteriors in a practical cost effective and durable manner. (Appendix IV for process flows)

Recruitment at EMCO:

HR strategies are subject to constant change at EMCO because the senior management believed

that only one thing is constant and that is change. A position can fall vacant due to several

reasons like resignation, retirement, promotion, transfer, death and incase a new position is

created. So, there are two types of vacancies old and new; old are referred to the ones that are

created when somebody leaves the organization and GM has the authority to get the person

employed as a result of this vacancy but in case of a new vacancy that is when the company

needs a new position altogether which never existed in EMCO the permission had to be taken

from the Director. The department that needs a new person fills in a requisition form for the

request to HR department.

“The first and the foremost source that we at EMCO go through are the unsolicited resumes. But

the most famous way is by posting the vacancy in-house on boards or on the main gate. So

Referrals in case of EMCO are considered and hired also but they are rejected lest there is a lot

of negativity in the air” (Manager HR and QA)

The recruitment for managerial position is done through simple interviews where as technical

tests are conducted only for the technical jobs. GM plant does directly see into the new

inductions for engineers and managers especially.


“Plant manager when hired is made sure that he has an engineering background because it

makes completely no sense to hire an MBA for the post” Production Manager Insulator

division.

One interview is conducted for each person being hired which is usually panel. The idea of not

having more than one interview is that candidates do not have to take pain of coming again and

again because industry is out of city. (Refer to Appendix V for detailed Employment Policy)

Employee Development & Succession Planning:

“EMCO does not hire people from outside for senior posts because this could de-motivate the

people putting effort in the company and eligible to run for the post and this is being unfair to

people within” (Manager HR and QA).

Due to the culture of internal promotions at EMCO the person promoted to new position is not

even apt for the post, for instance, HR & IR manager has a degree in law and HR & QA manager

is engineer by his qualifications

Hence the company has to identify, groom the employees in the necessary areas through various

courses and training workshops conducted by Pakistan Institute of Management and Institute of

marketing and sales etc depending on the job type so as to develop people to occupy higher level

jobs as and when they fall vacant.

“We do understand that over dependence on the internal sources may sometimes retard the

growth as all the employees are not competent enough for a particular job. In that situation we

do resort to fresh blood but that is in case of dire need” (Manager HR and QA)

Health and Safety Administration:

In today’s world, the number of people killed and injured at work had increased substantially.

Pakistan’s Industrial sector has embraced many systems to minimize workplace accidents and

incidents, yet despite the best intention the systems employed have not been implemented

properly, as a result there has been little reduction in the rate at which people are killed or injured

at work. Similar scenario prevails in EMCO Industries, the statistics told by the owner of the

company indicated that the number of occupational accidents have increased significantly,


workers especially those working in the insulator plant suffer a high level of occupational

accidents almost every year.

Government Role:

To overcome increasing Safety and Health issues, the 2002 government had came out with a

legislative framework to deal with the awful Health and Safety practices being exercised in the

Manufacturing Sector and developed inspecting teams, but corruption was the major factor that

hindered their performance. The government of Pakistan instead of taking some correcting

measures decided to shun the inspecting teams and the situation got exacerbating.

Health and Safety measures exercised at EMCO:

Factories Act of Pakistan, 1934 has been made to the perfection in Pakistan but its

implementation in majority of the factories is a big question mark. Mr. Rana Masood Anwar

(Manager IR & HR), referred to their Safety and Health system as OSHECOM which actually

was “OSHA”. An HR manager who didn’t even know the name of the system followed at their

organization; how he can expect his subordinates to follow the set rules. It shows that these fancy

words and documented guidelines are just left for papers.

Safety and Health Issues:

According to the HR Manager Mr. Khalid Anwar, they have implemented OSHA rules by giving

each supervisor a status of Safety and Health Officer. According to the Safety and Health Officer

Regulations, a SHO is an individual who has attended training in any National Institute of

Occupational Safety and Health institute or other accredited training body and has passed the

examination conducted by the concerned department. Unfortunately at EMCO Industries none of

the health officer has ever gone through any safety and health training except Safety and Health

orientation and instructions given by the company at the start of the job.

“Occupational safety and health is the discipline concerned with preserving and protecting

human and facility resources in the workplace. Nowadays, we always hear that the accident

cases are happening in the manufacturing industries. The percentage of accidents in the

manufacturing sector is always high as compared to other sectors. The reason is that poor

employees don’t care acting on Occupational Safety and Health performances in manufacturing


companies like EMCO, in fact their contributory negligence makes it even worse” Mr. Rana

Masood Anwar.

Mr. Rafique (Worker) was of the view that they get Health and Safety Orientation when they

join the Company, but verbally these things are not enough. The Supervisor who has been given

the status of Health and Safety Officer has no concern other than to increase the production level.

Setting aside what the industry and economy as a whole is going through EMCO needs to take

measures to keep its people content. HRD and HRM needs to have better communication

grounds. Policies need not to be developed only, but proper implementation is also required.

Unionization

What is the purpose of Union? To get more! More! MORE! John L. Lewis

A Union constitutes a source of worker power

by offering members protection through both

the Industrial Jurisprudence and Arbitration

System. As a result, management power within

enterprises is curtailed by unionism, so that

workers' rights are likely to be better enforced.

Consider, for example, a firm that decides to

fire senior workers immediately before they

become eligible for pension rights. In the

nonunion setting, a firm may be able to get

away with such a maneuver; in the union

setting, it is unlikely to have such power.

EMCO Management (Top and Middle) provided mixed views regarding the unionization factor,

but the concluding point in every discussion was that overall unionization hurts the organization

concerns.

According to Mr. Manan:


“Collective bargaining can induce better management and higher productivity. Unions are

somewhat important in the sense that they can increase the development and retention of skills,

provide information about what occurs on the work floor, improve morale and pressure

management to be more efficient in its operations, you can always expect such things to happen

when union representation is loyal to the company which is a rare case in Pakistan context. But

still we have a kind of union that gives weightage to the management concerns.

Whereas the middle management was of the view that the unionization at EMCO is inclined

towards negativity and too often they do strikes to emphasis their irrelevant demands. EMCO is

the only industry on Sheikhupura road which abides by the rules of the government and provide

employees at-least with the minimum wage but still the employees are restlessness. Today

EMCO is going through a difficult time, but still they are trying to manage the operations with

limited resources/options. At this difficult point in time a strike by the union really hurts the

operations of the company.

Appraisal:

A yearly appraisal is conducted at EMCO. For Workmen ranking method is used for job

evaluation as depicted in the table below but no formal appraisal is used as the management feels

that majority of the employees are illiterate and a formal appraisal has no meaning to them.

Despite of all the informality the employees are given rigorous feedback at the time of

inspections and rounds by the supervisors.

Ranking order Pay scale

Unskilled 7000/-

Semi-Skilled 7800/-

Skilled 8500/-

Non Workmen are subject to appraisal (APPENDIX VI) every June so it is conducted on yearly

basis. Traditional methods of appraisal are used at EMCO in which employee are judged on the

basis of characteristic and contribution. Performance of each Worker/Employee is assessed on a

prescribed form on annual basis.


The form is divided into three main columns, factor, rating and remarks, when completing the

forms the Employee’s entire work performance is to be considered giving due weight age to each

factor. As a result of this sometimes employees are rated higher or lower on all the factors due to

higher or lower rating on some specific factors.

Monetary and Non monetary Incentives:

According to the Mr. Anees (Manager Finance)

“Motivation is the power and fuel that keeps the machinery in our industry moving. But the

biggest motivation comes in through incentives and out of these financial incentives has the most

power. Non financial benefits only work when there are financial benefits tied to them. Love and

appreciation alone cannot work for very long”.

According to the Processes of HR department and the benefits that have been jotted down:

Employee’s old age benefits:

1. In accordance with Law department arrange the EOB Registration for all permanent

Workers/Employees.

2. Contribution @ 5% of Wages/Salary up to 7000/- per month as EOB contribution pays

every month to the Institution.

3. On attaining the age of superannuation & contribution for the period of fifteen years,

Employee/Worker is entitled to pension.

4. On the death of Employee his Widow is entitled to pension.

Social security:

Social Security Scheme is applicable only those employees fall in the said Scheme who draw

wages up to Rs.10,000/- per month

1. Contribution @ 6% of Wages is paid against each insured person.

2. In case of sickness secured person can avail medical facility for himself, wife, children &

parents for the Social Security Dispensary/Hospital.

3. In case the death of secured person, legal heirs can avail the facility of death benefits

from the Social Security Institution.


But at present due to crisis EMCO cannot pay its employees a handsome amount even the non

financial benefits keep on fluctuating. Further the company is not in a position to pay the medical

allowance for the benefit and welfare of the employees.

In the current economic crisis the company has

no clue how to deal with all these problems. The

senior management wants to take some

corrective actions in order to satisfy and retain

employees but the company is restricted in its

options. Management is of the view that systems

employed at EMCO need a fresh change but

financially the company is not so strong to

support new systems for the betterment of the

company. Mr. Rana Aziz is really upset and

impetuously went to Mr. Manan’s office in

order to talk and device a way to handle all the

unrest prevailing in the company.

APPENDIX II


Vision Statement

While enhancing our Brand as a Market Leader, Focusing our Human Capital, continues to

delight our Customers in the field of Building Materials, Offering Best Quality Innovative

Products at Prices Be-Fitting Stile Brand. Improving Efficiency, Conserving Energy and being

Environmental friendly. Taking into account the Stakeholders Interest.

Mission Statement

Our Mission is to maintain our position as the leader in the tile industry in Pakistan and for this

purpose we will continue to focus on:

We are committed to quality products and will provide our customers with innovative sizes,

designs and color scheme that they will be delighted to have and shall provide them with

excellent services to earn their loyalty

We shall treat our employees fairly and shall provide conducive working environment for them

to learn and to grow with the company

The company shall earn adequate profits for its progress and growth and for providing

reasonable return to its stakeholder.

Appendix III


Organizational Structure


APPENDIX IV

Process Flow Chart (Tiles):


Process Flow Chart (Insulators):

emco case study

Documents

rana masood anwar

imperial electric company

emco industries limited

hr

sheikhupura road

wall tile

manager hr

rana aziz