In Bangalore manufacturing is on a roll

In Bangalore manufacturing is on a roll
The Times of India

Bangalore: German auto component major, Bosch, is pumping in Rs 1,000 crore for expanding operations at its Indian unit, Mico. ABB
India recently got a nod from its Swedish-Swiss parent for an investment of Rs 450 crore, to be invested over 2004-06. SKF, leading international auto component maker, is mightily pleased with its Indian company and wants it to play a bigger role in its future scheme of things.

If you look around the Indian manufacturing sector, there is action almost everywhere. The companies are growing at a rapid pace — in the region of 20-30 per cent, and almost every company talks about expansion of capacity. The Indian manufacturing sector, which was completely written off in the early 90’s, is staging a smart comeback. Is this turnaround real and can we expect it to continue? Or is it just a bubble?

A robust economy, a change in the outlook of the manufacturing sector has brought in the change, says a Mico spokesperson. But for most companies this change was thrust upon them. If the domestic companies are looking smart and efficient today it is mainly because they didn’t have a choice. “The Indian manufacturing sector was used to the idea of selling the same model of cars and scooters year after year, but the entry of multinationals has changed the picture,’’ says Kumar Kanetkar, CEO, Kennametal Widia.

As a result, the Bajajs and Marutis had to focus on product innovation but at an affordable price. This meant pressure on the supply side, which in turn pushed the efficiency levels of the entire manufacturing sector. As Kanetkar says, the customer became demanding. Interestingly, the change in mood was not restricted to any particular sector. ABB says a number of industries, including those like steel and cement, have started expanding rapidly. “Many others are trying to become more efficient and/or go global,’’ says a company spokesperson.

And it’s not just the domestic sector that is creating demand, but also the global economy. Since most companies are catering to international companies or to domestic companies that are catering to international clients, the Indian manufacturing companies too have adopted global practices. Not only has this pushed up productivity but also given companies a new confidence to think global. If auto component makers like Bharat Forge and Sona Koyo have already turned outsourcing centres for global auto makers, others are pushing up their exports to parents. ABB India’s exports have gone up from Rs 70 crore in 2001 to Rs 300 crore in 2003 and Bosch expects Mico, together with its other plants in Brazil, China and Russia, to contribute 20 per cent of its global sales in the next few years.

And, according to experts, the story is likely to continue for a few more years, as India is a strong contender to become a global manufacturing hub. “The Indian manufacturing industry has today reengineered itself to meet the demands of a global economy,’’ says a Mico spokesperson.
What will also come to India’s aid is the growing costs in the current manufacturing economies — Europe and the US. Every global company which is keen on improving its profitability will be forced to look at India, says Kanetkar.

Betting big on outsourcing

Bosch
ABB
Kennametal Widia
SKF
Volvo
Timken