Gathering up from the disruption caused by the two waves of pandemic, the machine tools industry and its association bodies have collected themselves to not only garner positive government attention towards its long-standing woes, but also shown quick response in adapting new technologies and changing its perspectives on things to do. On its way to recover from the pandemic onslaught, the industry is poised for adaptation of innovative technologies and also benefit from alleviation of its long festering hardships.
“Although it took a little time to stabilize following the pandemic, we could witness a surge in demand in the machine tool industry after a few months and we are not too far from the pre-COVID levels in general,” says Pradeep Patil, Managing Director, TRUMPF (India) Pvt. Ltd.
TECHNOLOGY ADOPTION
Indradev Babu, President of Indian Machine Tool Manufacturers’ Association (IMTMA) and MD, UCAM Pvt. Ltd., says “Technology adaptation is bringing transformation in all the activities of industries at a faster pace, saving cost and enhancing customer service and support.”
“Industry is using technology for enhancing performance and production, reducing wastage and optimising inventory. It is using automation for dull, dirty and dangerous activities. It is establishing digitalisation for faster decision making, remote assisted maintenance and installation and commissioning of machines and equipment and for online training,” he elaborates.
The perspectives and ways of driving growth have changed post lockdown, says Patil, adding that digitalization and automation are really gaining traction. “This was the time when most of us, including our customers, realized the importance of value addition through digitalization,” he added.
Patil says he had great cooperation from his customers and also from his associates in getting connected and availing information in terms of support, virtually.
“We could support our customers by taking machines online and by giving necessary feedback virtually during the first lockdown,” Patil, whose products and solutions are largely centred around sheet metal space, elaborates.
He further mentions that they were trying to bring AI based solutions within their products which will ultimately help their customers.
Indeed, industry experts like Patil believe that excellent product innovation is incomplete without having a smart support mechanism. Furthermore, Patil added it is a necessity of creating smart support infrastructure for machine tools to make customers profitable and sustainable in their respective businesses in addition to technologically advanced machine tools.
Elaborating on the technologies being adapted, Patil talks about e-mobility as one of the focus areas. Industry4.0 and AI are the backbones of advance technologies on which various modules are now available.
Primarily, he says, the change is not only due to emerging market demand, it’s also due to change in perspective in most of the businesses. “And that is really supporting machine tools”.
IMPACT OF COVID-19
As per a global report quoted by IMTMA, India ranked 12th in production and 7th in consumption of machine tools in 2019 in the world.
With a consumption of Rs21,329 crore and production of R9,612 crore in 2018-19, the industry had ended with Rs15,672 crore and Rs6,152 crore in 2019-20 with pandemic towards its end; a shortfall of 36% and 27% respectively on y/y basis. Industry bodies were already seized of the matter and were parlaying with the government on industry issues. Just then the pandemic struck.
With the advent of the pandemic and the exercises of the industry, the government became cognizant of the urgency of the matter. The representative body’s efforts bore fruits and an economic package was announced by the Government of India in May 2020.
Collateral-free automatic loan for MSMEs for up to Rs3 lakh crore, covering borrowers with up to Rs25 crore outstanding and Rs100 crore turnover, made it possible to meet their operational expenses. Approximately 2 lakh MSMEs to benefit from the Rs20,000 crore subordinate debt for stressed MSMEs from this initiative. Rs50,000 crore equity infusion for MSMEs, revision of investment limits upwards, elimination of distinction between manufacturing and service sector, tax reduction by 25% of existing rates for TDS among others were the industry booster that came with the efforts of IMTMA.
Even while the industry troubles were being addressed by the government with the intervention of its representative body, the companies were quickly learning and adapting new technologies to meet the challenges of the new normal.
The recovery had already started. Auto and general engineering industries were recovering well during December 2020 – February 2021 period when the second wave struck.
“Machine tool industry was returning to normalcy when the second wave of coronavirus hit India. Indeed, the development has caught us off-guard,” the President of the IMTMA says.
THE DISRUPTION CHALLENGES
With strict region-wise lockdowns in place, most companies are working with drastically reduced staff. Companies are operating with just 10% to the maximum of 30% staff as a preventive measure. But, many of the company’s staff members themselves are getting infected, making it more tough.
Lockdowns are hampering production and as a collateral the supply chain too.
Diversion of oxygen for medical purposes is essential in the circumstance but it is affecting industries, especially sheet metal and fabrication, welding and brazing operations.
“Following the pandemic, all the industries are under stress. This includes industries on which the machine tool industry is dependent upon,” says the IMTMA President.
“Auto and auto component sectors are the key drivers for the machine tool industry and it is still driving its core business,” says Babu alluding to the consequent stress on machine tool industry when the auto and component parts are stressed.
Infrastructure spending by the government is another driver to the machine tool industry besides upcoming trends in automotive, growth in Agriculture and other sectors.
TRUMPF’s Patil maintains that there are no let downs on infra projects and “the projects are still going on and investments have not been stopped by customers,” he says of his own experience.
“Champion sectors such as electronics, toys manufacturing, agriculture machinery, railways, medical equipment, defence, aerospace, power equipment, and textile machinery, among others are the driving businesses for the machine tool sector,” explains Babu to set the correlation in these sectors doing well to the wellbeing of the machine tool industry.
“The longer the pandemic takes, the deeper will be the distress for the machine tool industry, just like any other industry,” says Babu. “Disruptions in supply chain, logistics, cash flow and financial stress can be expected,” he cautions.
Pandemic apart, there are traditional challenges before the industry. “Increased price of steel is a big concern for industries and especially for committed purchase orders,” says Babu. “Liquidity is one of the biggest challenges in the market.”
With all the obstacles that the industry has gone through ever since the pandemic struck and even before, industry stalwarts are very positive about the industry. Not in small measure, the confidence comes from the new technologies being adapted by the industry.
“But what has happened, what has changed post lockdown, the perspectives have changed. The ways of driving of growth and businesses have changed. So, these are the building blocks of growth. Now, the importance of AI, Industry 4.0, SMART Services, Automation, digitalization, is really gaining traction,” sums up Patil.