Preparing for export:A project proposal from VSO

September 2014

Background

VSO working at Kombolcha Institute of Technology (KiOT)Linking KiOT with local industry

To improve teaching through industrial experience

To facilitate education of employment-ready graduates

Opportunity spotted to assist Kombolcha Textile Share Company

Marketing development to achieve high-added-value exports

Building on previous investment in plant and machinery

Initial analysis

3 main stakeholders:Kombolcha Textile Share Company (KTSC)Kombolcha Institute of Technology (KiOT)Ethiopian Government

Initial analysis: KTSC Issues Massive investment

already made Under-utilisation of

resources Domestic market: Products yield low returns Exports: Smaller market penetration

than desired Low added value items (yarn)

dominateNo benefit of vertical integration

All impact profitability and ROI

Drivers Need to add sales which:

* Benefit from vertical integration* Are profitable* Are sustainable

These factors indicate development of high-added-value exports

Initial analysis: KiOT Issues Low levels of resources…but

good people Engineering academic staff:

low levels of industrial experience

Need to build industrial experience to add quality to teaching

Improve graduate employability

With manufacturing/industrial understanding

Need to develop a research focus

To attract best students and retain best staff

To enable links with international academic institutions

Drivers Work in collaboration with

industry Establish meaningful links

with mutual benefits Start with KTSC Keen to explore areas of

mutual assistance Development of a Centre

of Excellence:

Proposed manufacturing advisory service focusing on preparation for high-added-value exports

Initial analysis: Government Issues Need to achieve higher

levels of export to meet GTP projections

Hard currency inbound flows Balance of payments Achieve successful sale of

KTSC ROI Development of

employment opportunities In line with national policy of

industrialisation Particularly quality employment

for youth and young adults

Drivers Increase hard currency

revenues through development of exports

Export order book improve likelihood of sales of KTSC

Development of export volumes could drive employment

Aim to support initiatives that drive the development of exports, particularly high-added-value exports wherever possible

Stage1Initial pilot project

Stage 1: initial pilot project

To develop a collaborative team between VSO, KTSC and KiOT in order to:

Evaluate market opportunities and establish market contactsStart from potential customers’ perspective

Establish requirements of potential export customersNot just product specification

Analyse KTSC activities in the light of these requirementsAdvise KTSC on a plan to meet these requirementsAssist in implementation of the plan

Stage 1: initial pilot project

May 2014 Agreement between KTSC and KiOTJune 2014 Collaborative team beginsAugust 2014 First major report back to KTSC

Next steps now under review

For summary of activities to date see separate document

Stage 1: initial pilot project

Current status:Extensive advice and support received from UK and international companies

Using networking capabilities of VSO volunteersEvaluation against ethical audit requirements completed

Recommendations made; next steps under review with managementAim to be ready for ethical pre-audit within 3-4 months

Evaluation against technical audit requirements underwayAim to be ready for technical pre-audit within 4-6 months (or sooner)

Stage 1: initial pilot project

Current status:KTSC samples evaluated by major UK companies

Encouraging results, particularly for terry towelling UK samples received and examined

Matching work being undertakenPreliminary enquiries made about possible sources of sustainable cotton

Needs more research and understanding

Stage 1: initial pilot project

Next stepsContinue working towards ethical and technical auditsMatching UK samples research to be carried out

Fineness of yarnDensity of weaveQuality of finishFinishes and treatments

Work starting to look at how to standardise finishing and achieve consistency of final product

Stage 1: initial pilot project

Overall stage 1 aim 1. Start developing active sales strategy and

pitch plan within 6 months to achieve exports of high-added-value items

2. Apply learning to current product ranges to improve penetration in domestic market

Stage 1: initial pilot project

Ongoing benefits already accruingCompany: improved market understanding

process control risk assessment methods and

applicationWorkforce: health & safetyExisting products: quality of finishKiOT members: developing industry experience

Practical application of academic knowledge

Stage 2Scaling up

Stage 2: scaling up Target date Q1/2 2015

With a focus on enabling the Ethiopian textile industry to maximise high-added-value exports

Using the experience from KTSC pilot study, develop a protocol and method of approach based on target market requirements that can be applied across textile facilities

Flat linen, apparel etcFormalise the establishment of the manufacturing advisory team on a long-term basis

To apply the protocolTo act as industry advisors

Stage 3Replication

Stage 3: replicating Target date Q2/3 2015

Aim of Stage 3: to replicate the industry-university collaborative approach for other industries where added-value exports or improved manufacturing and industrial standards are sought

Using the experience from KTSC pilot study and the developed protocol

What we have learned about the textile export market requirements is NOT INDUSTRY-SPECIFIC

Example of possible industries: leather products, coffee, steel, furniture

Stage 3: replicating Target date Q2/3 2015

The university project partners:For each industry, an Institute of Technology geographically placed in an area with close links with the industry.Develop a collaborative network of these IOTs

Share ideas, experience, resourcesA focus for developing university industrial experience

Staff motivation, quality of teaching, retention of best staff, opportunity for researchProduce students with better understanding of manufacturing: INCREASED EMPLOYABILITY

Stage 3: replicating Target date Q2/3 2015

The manufacturing project partners:Access academic support from partners who have knowledge of target market approaches

No need to reinvent the wheelDevelop a collaborative network of manufacturing partners

Share ideas, experience, resourcesIncreasing requirement for skilled engineers and technicians

Through the accrued benefits of the projects, have access to employment-ready graduates equipped to understand engineering in the manufacturing context

Stage 3: replicating Target date Q2/3 2015

The VSO project partner:VSO propose supporting each industry project development with experienced volunteers

Experienced in international markets

Significant potential across many industrial sectors

Stage 3: spin offs 2015 onwards

Issues that are being encountered in companies all over Ethiopia

E.g. large stockpiles of fluorescent tubes; cannot be treated as general waste (ISO14001).

Possible spin off industrial development proposals e.g.

Fluorescent tube recyclingBattery recyclingIndustrial waste water reprocessing and conservation