2009 CONFERENCE REPORT
India is set to become a world centre for small cars, as A and B segment vehicles take over 80% of accelerating domestic sales, and OEMs push harder for manufacturing efficiencies which can deliver cars at the prices demanded by cost-conscious consumers.
‘Small is the new big,’ declared MM Singh, managing executive officer for production for Maruti Suzuki, at the AMS India conference in Pune this week. Swamy Kotagiri, vice president of global engineering at Magna’s Cosma division, added: ‘India is becoming a global hub for small cars.’
The second AMS India conference was held in one of the country’s three key automotive production centres, Pune in Maharashtra state, between Nov 30 – Dec 3. It took place in the same week as the Automotive Logistics India conference, organised by AMS's sister magazine Automotive Logistics.
Delegates heard from Dr Surojit Gupta, deputy director of automotive trade association SIAM, that India had resumed its growth with nine model launches and five facelifts in the year to October, and that the automotive sector was expected to reach 10% of GDP by 2016.
He said that €11 billion of investment was planned for automotive production, half of which was committed. After plateau’ing at 1.4 million units in the economic turmoil of this year, MM Singh expects 12-14% growth next year and a doubling of automotive production every three years in the future.
Indeed, the conference opened as India’s press was reporting the national economy in ‘zoom mode’, with Q3 GDP growing at 7.9%, and manufacturing with even stronger 9.2% expansion.
While most manufacturers already offer a choice of small cars, new models continue to be introduced. Maruti Suzuki, with five out of the top 10 sellers in India, has recently launched the A-Star (Nissan Pixo); Hyundai has its i10; and Tata is well-represented with its Indigo and Nano models. Ford, long-absent in the small car market, has announced the introduction of its Figo model in early 2010.
Meanwhile, a new Mahindra & Mahindra plant is just coming on stream in Pune, the Renault-Nissan plant near Chennai will start production in April 2010, and Maruti Suzuki has just announced a third new plant in the north, near Delhi.
All this growth is not without its strains, as OEMs battle to raise productivity amid shortages of trained labour and restrictive employment laws, but is also not without its successes either. Sudhakar Panda, vice president of human resources at Fiat India, said that productivity in automotive production is ‘substantially’ higher than other manufacturing sectors in India, and indeed is acting to pull up general levels of performance.
Tom Chackalackal, vice president of manufacturing at Ford India, reported that his activity was rated 7.2 out of 10 on the Ford Production System global measure.
The conference had 10 individual sessions on different production technologies, from visualisation and automation to stamping, body-in-white and paintshop. And it was followed by tours of the Mercedes-Benz and Fiat-Tata plants in Pune, arranged especially for delegates.
But human factors were uppermost in the minds of the most senior OEMs executives present. MM Singh reported that he had driven down manufacturing costs by 36% by focussing on people. ‘People are our most difficult challenge’ in managing growth, he said. But ‘we are not doing anything extraordinary. Treat human beings like human beings.’ Chackalackal also supported the idea that people were the critical element in delivering high-quality vehicles, pointing out that over 50% of Ford’s line employees hold engineering diplomas.
Nevertheless, Piyush Arora, technical director of Mercedes-Benz India, described how the twin pillars on which effective production sits – technology and labour – are unbalanced by the latter being much weaker, and being hampered by multiple and outdated employment regulations.
Fiat’s HR director Panda called for a national institute for training in the various disciplines of automotive production. He noted that a large number of good mechanics operate without certification in the ‘unauthorised sector’ of India’s economy, and could be brought into automotive production.
Labour versus automation
The other principal theme running throughout the conference was the challenge of achieving the right balance between (low cost) manual operations and (high output quality) automation. In a detailed explanation of the creation, from a greenfield site, of his new Pune plant, the chief executive of Mahindra Vehicle Manufacturers, Louis Pereira, outlined the careful analysis needed to make the right decision.
At the business dinner on the middle evening of the conference, the well-known guru of production analysis, Ron Harbour, addressed the same topic, observing that automation could prove a costly mistake. ‘You can try to automate a person out of the equation, but then you need three people to support the robot.’
Renault-Nissan’s senior vice president of engineering, Jacques Foulquier, told delegates that ‘reducing automation by a factor of two of three compared to a high-cost country can reduce overall manufacturing cost (in India) by up to 20%.’ And as a comment on the dangers of a rush to automation, he told delegates: ‘When I visit suppliers they show me their full automation and then present a full Western price, indeed (a price) sometimes higher than Europe or Japan. In India you have to challenge some levels of automation and think out of the Western box.’
However, quality demanded that some further levels of automation be adopted. Volkswagen India’s managing director Krishna Swamy said that defects at around 30 ppm compared with Japan’s sub-two ppm. And Nitin Rajurkar, general manager for passenger car production at Tata Motors, illustrated how adding automation can improve overall build quality by also using in-line checking. For the production of camshafts, he said, ‘we have automated what used to be manual’. Part production systems are capable of not only spotting manufacturing errors, but also correcting them while still on the line or rejecting the ones that cannot be fixed. ‘Production such as this dramatically improves quality,’ he said.
Tieing the themes of labour and automation together, he explained how the two basic elements of glass application – flexibility and ergonomics – were addressed by cameras identifying up to five individual models entering a robot cell, allowing exact windscreen alignment, while the robots were clearly better than people at handling a component unit that is both fragile and heavy.
While automation may be questioned, technology is not. Ford’s Chackalackal described the installation of his new press line, completed ‘from peat to part in 12 months’, which features die changes in less than two minutes and operating noise under 80db.
Ford has also recently completed a new paint shop which was the first in Ford globally to use their new three-wet, high solids system. Ford India has developed a track-and-trace system for the plant which will be used in other countries, while a new $1.5m four-post test rig and a new test track have been installed to better simulate Indian road conditions.
But finally, back to those cost-conscious Indian consumers. Some 70% of India’s population is under 35, is increasingly well educated, and has aspirations to buy a car. But not at any price. And not in necessarily in a rational way.
Honda Siel’s vice president of manufacturing, Rajeev Wasan, lamented how India’s domestic OEMs had conditioned consumers to expect that the hatchback version of a particular model should be 20% cheaper than the equivalent sedan, despite the fact that the production cost is the same.
‘A seat is a seat, a door handle is a door handle, an engine is an engine,’ he observed. ‘The sedan and hatchback are on the same platform – so how can they be different prices? That’s the challenge.’
As the head of GM’s Talegaon plant, Rakesh Sabbarwal, headed on his Powerpoint presentation, it’s all about ‘cost, cost, cost’. Maybe India is like the rest of the world after all.