Posted on 07/30/2003 3:01:41 PM PDT by Willie Green
For education and discussion only. Not for commercial use.
CHENNAI: If Detroit is motown to the world, India could well be the source point for the nuts and bolts that set the hot wheels into motion.
With outsourcing orders pouring in from Europe and America, the $1-billion auto components export target could well be advanced.
Indian engineering and auto components never had it so good with a bull run both in domestic and export markets. The estimated export earnings for 2002-03 stands at $800 million against $578 million in 2001-02.
The auto outsourcing boom could well match the vigorous IT-based BPO operations. There is tremendous pressure on European and American automobile manufacturers to reduce cost of production. Sundram Fasteners CMD Suresh Krishna said, “Like BPO, India is sitting on a gold mine of outsourcing opportunity from Western countries in manufacturing. They think of only two markets: India and China. We are not anyway closer to the surfeit.“
Recent weeks have witnessed a spate of strategic export tie-ups and outsourcing orders. Names like Ford Motor, Hino Motor, Agco, Volvo, Cummins, John Deere, GM, Hyundai, Volkswagen, Deutz, Caterpillar and TRW have either scaled up sourcing capacities or adopted India as new source destination.
Rane group vice-chairman L Ganesh said, “India is definitely ahead of China in terms of quality, productivity, technology and communication skills. Exposure to India has come thanks to the entry of giants like GM, Ford, Hyundai and Toyota.’
Coupled to this is the fact that Indian manufacturing has undergone a major restructuring over the last four years and has shed the stodgy ways of doing business. Sundarman Clayton MD Venu Srinivasan said “Now, India has a robust manufacturing base after rightsizing, restructuring and implementing TPM and TQM processes. They are well equipped to tap the outsourcing market boom.’
Global giants are making a beeline with bigger export orders and the bull run is too good for the Indian suppliers. Sample this:
Strong rupee fails to deter
Ford Motor is set to source components worth $120-160 million from India over the next two years. It has already placed orders worth $40 million for its US and Europe operations.
Hino Motor will commission a study on sourcing parts from Ashok Leyland and other suppliers.
Swedish parent to source parts worth 100 million euros from Volvo India in a year, instead of the targeted three years.
Atlanta-based partner AGCO signs up with Tafe for sourcing engines and a range of components for its plants in France, Brazil and other countries.
IP Rings will broad base product line and help its partner, NPR, make India an export hub.
CG Igarshi to boost exports by supplying motors to global tier I suppliers.
Hyundai plans to export 50,000 engines and transmission to its facilities in Malaysia and Indonesia as well as to Kia motors in Korea.
Rane Engine Valves emerges lead supplier to Deutz and has created a new production line in Hyderabad.
Volkswagen picks up REVL for supplying to the next generation engine.
Rane Madras´ OEM contract with TRW for supplying outer ball joints.
TVS Group is in the forefront of capturing the outsourcing boom catering to Cummins, GM and Caterpillar.
Pioneer in outsourcing, Sundram Fasteners gets 40% to 50% of exports (total Rs 96 crore) from supplies to GM plants. Its subsidiary, TVS Autolec, became a major supplier to Cummins and John Deere.
Caterpillar, which accounts for 20% of the export business of Wheels India, will source for non-US plants as well. The company also expects big surge in exports to other OEMs like Daewoo, Komatsu, John Deere, TCM and Bell.
Despite a strong rupee casting a shadow on price competitiveness, players are not lukewarm to outsourcing. CII president Anand G Mahindra said that the rupee appreciation has not yet affected the margins of Indian exporters, but the price competitiveness is threatened by China, which has a stable currency.
FIEO president Rafeeque Ahmed argued that unlike other items, auto parts would not have felt the heat of rupee gain due to their import content. Soon, they will feel the pressure.
Seems like philosophy texts have also been outsourced to these people for a long time. Source destination? Is that like final cause?
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