The purpose of this thesis is to examine the relative importancernof the metal industry in the Ethiopian economy and productivity situationrnin the metal factories. In the pursuit of the former objective. thernhistorical development and the role of the metal industry in differentrnsocio-economic netting vis-a-vis the Ethiopian reality were analyzed.rnTo achieve the latter objective. Economic and non-economic factorsrninfluencing productivity have been analyzed. Based cr. the findings.rnattempt has been made to make relevant policy ::recommendations inrnorder to : improve the role and map out the strategy for the developmentrnment of the sob-sector and improve the facto' use efficiency of thernsub-sector. The problem has arsines because of the little recognitionrnand support: provided to the sub-sector in Ethiopia.rnThe results of the study indicate that the successful developmentrnof the sub-' sector plays a key role in the economic and social progressrnof a country . Although the potential role of the sub-sector is importantrnin the Ethiopian economy, :it is still by far lower than the role of thernsub-sector in different economic settings. It is also found that thernsub-sector has increasingly become associated with high cost of production.rnIt therefore pays to focus on the strategy for the developmentrnof the sub-sector and the removal of all managerial and operationalrnbottlenecks to progressively improve and make the industry morernprofitable.