Manufacturing Today for a better tomorrow: Views from the Manufacturing Conference

Yesterday I attended the Pune conference organised by Manufacturing Today of the ITP Publishing Group. It was the fifth year of the growingly popular event which was attended by around 400 participants relating to manufacturing industry.

ITP Publishing had added the Excellence in Manufacturing and Future of Innovation competitions to this event for the first time. This brought in teams from the shop-floor level – operators, supervisors, junior engineers, as well as students of engineering. It was a first step in the direction of making it an inclusive event, and not an elite one consisting only of top-floor.

With the backdrop of national target of increasing manufacturing share of GDP from 15% to 25% over the next decade it was extremely important to listen to the people who are going to make it happen. The much talked about demographic dividend can turn into disaster for the country if one million young people entering the job-market every year are not provided with work. Such enormous number of jobs, at diverse skill-levels, year after year can only be created in manufacturing and manufacturing-driven services.

Following were the major observations made and insights shared by some eminent and highly experienced people from the field. I am compiling those with a few of my own remarks.

 Prominence of manufacturing and how to give importance to the fraternity it deserves

• Manufacturing has to be great if a country wants to develop. Greatness of the UK (post-1st industrial revolution), greatness of the USA (post-invention of assembly line) as world powers can be attributed more to their industrial strength than to the military might. Germany, France, Italy grew 150 years ago due to industry. The tiger countries of Singapore, Hong Kong, Taiwan, Malaysia, and Thailand grew in the last decades of 20th century thanks to rapid industrialization. Do we need to speak about China?
• Manufacturing needs to be made glamorous in order to attract more engineers to work in this field. By losing most of its top mechanical, electrical, electronic engineers to IT and Financial Services during last 10-12 years, Indian industry has a weak middle management.
• More stalwarts of the industry need to actively participate in such events, speak at forums, talk to students in engineering colleges and at ITIs.

Consensus surrounded following key improvements needed to make India a global manufacturing hub

• Government Policies and Reforms
• Infrastructure
• Ease of Doing Business
• Technology and Innovation
• Change in Mindset

Manufacturing and Indian Geography

Coastal states of Maharashtra, Gujarat, Karnataka, Tamil Nadu, Andhra are already ahead of the pack industrially also due to better access to infrastructure – ports, seaways. The Government needs to focus more on landlocked states of Chhattisgarh, Jharkhand, MP, UP which are rich in natural resources but poor in industrial infrastructure.

Land is a major issue for Manufacturing

Cost of land is making the things challenging for manufacturing industry. This can only be handled through land reforms. Having said that, industry too needs to find solution for optimum utilization of land.

Manufacturing costs and competitiveness

It is a paradox that, at times, cost of production in India can be higher than that in Germany. This happens primarily due to three reasons: Landed raw material costs, financial arbitrage and productivity. Often, if engineering value (value addition) is not substantial, Indian manufacturing is not competitive.

Alliances and Partnerships

Unlike in countries like Germany, in Indian manufacturing there is no sufficient focus on forming long-term alliances. Partnerships with suppliers, customers, consultants, universities, research institutes which can work on new product development, productivity, quality, safety, environmental issues etc. Most of our dealings are transactional and opportunistic. The focus is on price negotiation. It is a race to the bottom. To get a foot in the door, vendors often agree extremely low prices – which are not sustainable. They do not cover post-delivery costs like quality, warranty or service. Companies continue to look for a new, cheaper supplier after one fails.

Manufacturing and ERP

Surprisingly the leaders mentioned about implementing of ERP (Enterprise Resource Planning) as the basis for integration. So far Manufacturing has been focused on its SCADA (Supervisory Control And Data Acquisition system), MRP (Material Requisition Planning) and AutoCADs. Increasingly, they want ERP as the basis of new technologies applications – robotics, additive manufacturing, IoT, Industry 4.0, augmented reality and so on.

Talking of New Technologies, quite a few people think that the companies must start investing in those, even if the results could take some time. If they wait for too long, it could be too late.

Having said that, quite a few mentioned the conflict between automation and job creation. It was heartening to know that a lot of people from manufacturing are thinking also of men on the shop-floor, and not only of money for the shareholders.

Financial inclusion is an important aspect also from manufacturing perspective

Educated and urban population may find it difficult to understand, but micro-finance, JAM (Jan-Dhan Yojana, Aadhar, Mobile) are helping contract employees in remote corners of the country. They bring in transparency and help reduce exploitation of unskilled or semi-skilled workers in mines, on projects sites.

Smart manufacturing

• Smart manufacturing starts with the smart idea of having a better gender balance also in manufacturing. Pradeep Bhargava of Cummins mentioned that he has been able to improve female ratio in the company from 3% to 28% within 12 years. And today it is a much better company than 12 years ago.
• Eliminate (waste) ==> Simplify (work-flows) ==> Standardize (processes) ==> Digitize is a ideal way for smart manufacturing.

Skills, Talent and Training

So far as employability is concerned, quality of our engineers was claimed to be between insufficient and pathetic. Majority of the private engineering colleges churn out engineers who have no industry connect. They need to be trained on the job for the first two years.

While we have high unemployment, we are not able to find people with certain basic skills. This is primarily due to lack of vocational training. It was discussed that the German model of Dual Education could be ideal for our situation. Some German companies in India are already applying it by adopting ITIs and training candidates specifically suitable for the use of those companies.

Innovation and R&D

Often used synonymously but are different. India’s R&D spend it just 0.9% of GDP of which two-third comes from PSUs (Public Sector Units), 5-7% from universities, and barely one-fourth from private sector. Technology-driven manufacturing economies like Germany spend 4-5 % of GDP on R&D. 60% of that spend comes from private sector and 20% from universities.

The situation about R&D is not as bad as we make it out. Quite a few major MNCs are partially moving their research to India. Certainly, it is not basic research; it is more of applied or contracted research. But then we have something in this field to built upon.

Defence and Aerospace

• Defence and Aerospace is undergoing a sea change. India is realising her potential as consumer and also as a supplier of products and services. In spite of being generic manufacturing conference, heads of Indian operations of international giants like Airbus, Boeing, Lockhead Martin and Rolls Royce made presentations. Interestingly, different Tata companies are partnering with these companies at various levels. I guess technology focus, professionalism, transparency, experience and long-term view makes Tata's a preferred partner for many large manufacturing MNCs.
• Airbus and Boeing are going to increase their sourcing from India enormously in the near future. Willing vendor should gear up.
• Boeing and TAL Manufacturing Solutions (Tata enterprise) are widening their base in Nagpur.

Summary

A lot of industry leaders, who are on Government committees, deal with Ministries and top bureaucrats, vouch that things are changing for better. We may not see the results so soon (in 2016) but within foreseeable future (5-6 years) things would have changed drastically and permanently. It was encouraging to leave the conference on a positive note.