SIALKOT,
Pakistan—This is the city the soccer ball built, a global manufacturing
hub in a nation starved for foreign capital and mired in terrorist violence.
Nike
Inc., the official soccer-ball supplier to Britain's Premier League, gets
soccer balls here. So does Denmark's Select Sport A/S, which sells to the
Danish national league and clubs across Europe. The city exports 30 million
balls a year, or about 70% of the global output of hand-stitched soccer balls,
and an estimated 40% of the total market.
This summer's
World Cup is Sialkot's latest win. Germany's Adidas
Group, licensed by soccer's governing body to sell the official World Cup
ball, has contracted with a company here to produce the entire supply of
mass-market hand-stitched replicas of the "Jabulani" World Cup ball.
But Sialkot's
hand-stitched balls face competition from machine-made and machine-glued balls
produced in China. Indeed, the balls used in actual World Cup matches this
summer, made by hand in Sialkot in previous years, are being produced in China
by machine.
A
Sialkot-produced soccer ball has 32 panels that are stitched together, while
the Jabulani World Cup ball made in China for the matches has eight thermally
bonded pieces. The Jabulani match ball retails for about $150; the
hand-stitched replica can sell for as little as $25.
Sialkot became a
stitching center for soccer balls during the British colonial era. In the
1970s, European soccer ball makers, including Adidas, moved their production to
the city to avoid rising labor costs at home. The city's workers, stitching
balls by hand in dusty villages surrounded by wheat fields, made their first
World Cup balls for the 1982 tournament in Spain.
Adidas contracted
with Sialkot's Forward Group to make the replica World Cup balls. Forward Group
expects to ship six million balls this year, up 40% from 2009.
But even with its
Adidas contract, Forward Group faces big challenges. It has to run its own
electric generators because of daily nationwide power shortages. The roads to
Sialkot, in eastern Pakistan near the border with India, are rutted. And
foreign sports executives remain reluctant to visit because of the terrorist
threat. German's Adidas Group has given one company in Sialkot, Pakistan, the
contract to produce the entire range of mass-market-hand-stitched replicas of
the "Jabulani" soccer ball that will be used at this summer's World
Cup. The city, once the soccer ball capital of the world, is facing stiff
competition from China. WSJ's Tom Wright reports.
Adidas made the
decision to switch to thermally bonded balls for the matches at the 2006 World
Cup. The goal was to make the balls perform more consistently when players
kicked them. With a hand-stitched ball the seams inevitably produce dead spots.
Initially, Adidas made those balls in Thailand before switching production to
China ahead of the 2010 competition.
In recent years,
China has also taken over most of the production of World Cup promotional
balls, a lucrative market of about 40 million little balls emblazoned with
sponsors' logos, says Khurram Anwar Khawaja, a soccer-ball producer and former
president of the Sialkot Chamber of Commerce and Industry.
Sialkot has also
lost a big share of midpriced mass-market soccer balls to China, which began
producing cheaper machine-stitched balls a decade ago.
Forward Group and
the other soccer-ball makers here are determined to defend their turf. They
have cut costs by automating many parts of ball production. Local businessmen
joined together to build an international airport in 2008 after the government
failed to do so.
Now, the
soccer-ball makers are planning to set up a research center to develop their
own version of the latest thermal-bonding technology that Adidas is using for
World Cup match balls, a process that involves fusing together patches of
synthetic "leather" by machine.
Two years ago,
Adidas transferred its proprietary technology to Forward Group, which has been
making small amounts of thermal-bonded balls. Recently, the company
successfully lobbied Adidas for permission to use the technology to produce
balls for the UEFA Champions League final next month in Madrid, one of the
biggest events on the global soccer calendar.
"It was hard
to persuade Adidas to let us make this ball here," says Khawaja Masood
Akhtar, Forward Group's chairman, who is trying to bring back the production of
World Cup match balls to Sialkot. "We're 100% sure we can do it. Don't
cry. Stand up and do the job."
Mr. Khawaja, the
former chamber president, plans to start using machines to help his family's
company lower the cost of competing with China, and he says he expects Sialkot
will win back the World Cup promotional-ball market in 2014.
"Right now,
Sialkot is in a very delicate balance, looking for new technology and trying to
maintain its position as the top manufacturer of high-quality, hand-stitched
balls," Mr. Khawaja says.
Most producers
here believe that for now, the hand-stitched market will continue to attract
soccer clubs and other consumers seeking high-quality match and practice balls,
especially because thermally bonded balls remain so expensive.
And there's no
question that despite the challenge from China and the preference of most of
Sialkot's three million inhabitants for cricket, the area's economy is still dominated
by soccer.
A huge statue of
a soccer ball graces the city's main traffic circle. The industry directly
employs 70,000 people and accounts for about a fifth of Sialkot's $1.25 billion
in exports, with medical instruments and agricultural commodities accounting
for some of the rest.
But hand-stitched
balls are increasingly unable to compete in the cheaper market segment. A
machine in China can produce 36 balls a day, while a Sialkot worker makes an
average of six balls by hand in the same period, Sialkot's exporters say.
In a village
stitching center run by Mr. Khawaja's company just outside Sialkot, Maqbool
Hussain, who has been making soccer balls for two decades, brings in about $4 a
day, much more than Pakistan's average wage.
He sews octagonal
pieces together using a strong thread before inserting the rubber bladder and
closing up the ball.
In a separate
room, women stitchers, who account for more than half of the employees in
Sialkot's soccer industry, sit on the ground under a ceiling fan.
In the late
1990s, companies like Mr. Khawaja's moved production to stitching centers after
pressure from international labor groups because of the widespread use of child
labor in Sialkot.
The U.N.'s
International Labor Organization says the centers are more easily monitored,
and Sialkot has combatted the problem.
At the Forward
Group factory, machines cut thousands of octagonal ball segments stamped with
the World Cup logo before workers sort them into boxes. They are then taken by
truck to village stitching centers.
By the end of the
year, Mr. Akhtar says, he'll start making machine-stitched balls to compete
with China for sales of cheaper balls.
Write to Tom Wright at [log in to unmask]