The Edge Factor - Nov 2015

The industrial landscape in India is changing rapidly. Innovation and global quality are the expectation of the day. To attain these capabilities, companies need to change mind-sets on quality and R&D. What have companies achieved? What role does training play in this? Read the two articles below to get a perspective on these imperatives.

(Contributions by: Omkar Nerurkar, Neha Uttam, Mayank Kumar, Sahil Kapoor)  


Auto component manufacturers need to move up the value chain

Long before the success stories of Infosys, Wipro, and TCS, India’s best bet towards economic development was believed to be in leveraging its low-cost manufacturing base and employing of engineers and legions of workers in jobs on low-tech production lines. It did not happen then, but things are changing now.

Today we can easily mention Pune and Chennai in the same breath as Detroit, Stuttgart and Shanghai as emerging global automotive hotbeds. The Indian auto-components industry has experienced healthy growth over last few years. Some of the factors attributable to this are a buoyant end-user market, improved consumer sentiment and the return of adequate liquidity in the financial system.

A success story

Yet, it was always a struggle to sell Made in India products to global automakers. The journey has not been an easy one for companies like Bharat Forge. They grabbed an opportunity along the way when in 2002, Dana wanted to divest its Kirkstall facility in the UK. Bharat Forge was interested in Kirkstall’s customer orders, but not in the plant assets. By creatively structuring the deal, Bharat Forge helped Dana find buyers for the plant assets. Bharat Forge bought some of the tooling & dies for GBP 3 million and moved them to Pune. Meanwhile, the order book went up by GBP10 million a year for seven years. Today more than 55% of sales from Bharat Forge’s India operations cater to export markets and every second heavy truck manufactured in USA runs on a “Made by Bharat Forge, India” front axle beam. Similarly, component manufacturers like Motherson Sumi, Sundaram Clayton, and Bosch India are moving from commodity products to special, high value added and safety critical products. These are mature and skill-intensive products.

The auto component market being highly competitive, many companies had to build capacity in advance in anticipation of demand. Bharat Forge has increased its R&D expenditures close to 10 times in last decade. With the PM inspired Make in India campaign reaching into 2nd gear, the results are starting to show with a 17% spike in exports during the first half of this year.

What next?

India contributes to only 1% of global auto component exports against 10% of China. There is scope for auto component suppliers to exploit the potential of global markets. Those who did, like Bosch India, Bharat Forge, and Motherson, are performing better. Auto component manufacturers should not restrict themselves to short-term gains if they want to achieve sustainable growth. Manufacturers will have to differentiate themselves and India from other low-cost manufacturing destinations. This will be possible if there is stress on R&D, shifting the focus from price as the only differentiator. Adoption of best shop floor practices like six sigma, Kaizen, and Lean manufacturing will need to be taken up more rigorously. The government is investing significantly in various programs and developing 7 NATRIP centers to help auto component manufacturers test their parts to global standards.

Increasing high-value exports will help in de-risking component manufacturers from domestic slow downs. They should seek to triple the export business from current levels by 2021. This will not only contribute to the true potential of Make in India, but will also drive revenues and margins for individual companies.

India’s Global Powerhouses: How They Are Taking on the World , A book by Nirmalya Kumar


The role of training in
driving transformation

A famous bank had conducted a 4-week leadership development training program in major cities around the world. The program offered striking design from a knowledge perspective and included project assignments for its participants. This very expensive program with an overall cost per person of approximately $100,000 did not yield the result as expected and failed. Why do such expensive programs fail to give the expected results?

The Association for Talent Development published a report in 2014 on the State of the Industry. The report says that organizations have increased their expenditures on training after the recession six years ago. The overall training expenditures in 2013 was approximate $306.9 billion. This has increased from $291.7 billion in 2012, with Asia having expenditures $31 billion (10%) and India $21.5billion (7%).

Issues with training

Training usually loses effectiveness because:

• Training objectives are set by trainers rather than learners
• There is a gap between the learning requirement and the training imparted
• Managers consider training as idle time despite its future benefits
• Insufficient time spent in delivering the training

The research on the “forgetting curve” shows that the human mind forgets 50% of the what was input within an hour and 90% within a week. This can be changed by revision. Remember how you prepared for your school exams? In companies, when training is done under a time constraint and without useful revision it really doesn’t help build the skills of the trainees.

Training is more than mere information exchange

Everyone agrees that training is important. Unfortunately, many programs still view training as exchanging information, or knowledge sharing. However, training can be a powerful tool to drive change within an organization. In most cases, change is what is wanted.

During transformation initiatives, organizations go through many changes in terms of people and process. To successfully support a transformation initiative, specific elements relevant to the changed business objective should be picked up and incorporated in the training program.

• The reason for change should be made clear, and
• The impact on the organization as a whole needs to be reiterated.

Injecting training where needed

We at CGN work on organizational transformation initiatives where we understand the transformation requirement of the client organization and facilitate the change. 

In one case, in the healthcare industry, we designed a changed process. To transition into the new process, a change plan was prepared. This plan involved facilitatory training interventions at each stage, covering both core and soft skills training. This helped the client in dealing with the change by transitioning much more effectively and efficiently. It also led to a more sustained change, that gave lasting results.



What We
    Found Interesting

Are you curious to know why this is a promising time for Indian auto component manufacturers to make it big globally? The link below gives a quick revelation.

Training is one of the important tools to bring about change. Watch this to see how training can effectively be imparted to employees to yield maximum benefits.

Watch Full Video at:


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Alagu Balaraman

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