Despite being in a sweet spot with demand outpacing supply, key machine tools vendors continue to look for ways to support customers with new technologies and solutions.
by mitalee kurdekar
Given the thrust on manufacturing as well as other key sectors, the Indian machine tools industry is expected to thrive in coming times on the back of unabated demand from user industries. In fact, demand levels are already seen to be outpacing supply. However, the industry continues to depend heavily upon imports. This reliance on imports, and the resulting foreign exchange drain, is significant in the backdrop of the manufacturing sector gradually gaining momentum.
Agreeing on the existing issue of import reliance, Swapnil Apte, director, Danobat Group Machine Tools India, points out, “Particularly for turning & grinding machines, the overall expected growth is more than 20%. Within this growth, the market share from foreign suppliers would be approximately 65%.” European manufacturers, he says, have an edge in grinding technology.
Having said that, with the Government’s continued push on Make in India and efforts to make India a reliable source of regional supply, the industry is witnessing many global players being drawn to India as an alternative outsourcing location. Cost competitiveness, availability of requisite skill-sets and a favourable investment climate are the key factors helping with this intent. Having said that, challenges such as lack of local technology development, a price-sensitive marketplace and absence of a complete range of products, remain.
When asked about how policy changes are helping, TK Ramesh, CEO, Ace Micromatic Group, explains, “The governmental initiatives certainly play a role. For the first time, a platform for manufacturing has been created by the Make in India initiative. A lot more needs to be done. Infrastructure is still lagging, newer skills are to be imparted and some labour reform definitely needs to be made for the initiative to start yielding big results. Nevertheless, a beginning has been made. We believe the next decade will be the decade of Indian manufacturing.”
The future certainly looks positive for India-based makers. Leading players are re-organising their businesses to face the challenges and exploit available opportunities. As Subrahmanya Kumar, country sales manager – India, SBU Metal Precision, Tyrolit India Super Abrasive Tools, suggests, “Demand for machine tools is sky high. We are seeing the trend changing at a faster pace after the GST implementation. An important change in the market today is that most of the industries are preparing to for tomorrow both in terms of capacity creation and quality needs. This is extremely essential to be able to serve the market in this positive environment, which is expected to continue in India.”
India’s Potential
The best part of the growth story that has played out thus far is the fact that the industry demand has been outpacing supply. And given the market drivers, OEMs will be kept busy with work in the coming years. Vendors, however, are not becoming complacent because of this, instead looking for ways to grow further. Ramesh states, “Demand outpacing supply is a sign of growth in the manufacturing sector and a welcome problem. The machine tool industry should respond and has been doing so by adding capacity and increasing productivity.”
Rajesh Khanna, chief executive, Wendt (India), is confident about the industry’s good showing. He states, “India’s automotive industry is evolving at a rate faster than ever before. Riding on the back of a buoyant end-user market, positive consumer sentiments, government initiatives and return of adequate liquidity in the financial system, the industry is poised for its next big leap. Defence, aerospace and the Indian railways are also the focused sectors attracting growth. The gap between demand and availability of features on machines in India is narrowing down with improved offerings by Indian machine tool manufacturers.”
Apte too believes that India’s future growth in grinding technology is particularly related to aerospace components, medical instruments as well as automotive parts. He says, “The demand is for small footprint machines with higher stability and better accuracies.”
As a matter of fact, the automotive sector seems to be spearheading user demand. Mohini Kelkar, director (sales & marketing), Grind Master Machines, proclaims, “The automotive industry, particularly commercial vehicles and passenger cars, has witnessed substantial (double digit) growth in demand. This is coming from the domestic market as well as export of components. The growth is also from the new designs of auto components that will need new machines to produce them. The machine tool industry is therefore witnessing 30-40% growth in demand.”
Vendors are responding by building their strength in local manufacturing. Sunil Badave, director, sales and service, Erwin Junker Maschinenfabrik GmbH – India Branch Office, points out, “Most of the OEMs have started manufacturing or developing critical precision parts in India, instead of importing these from other countries. The incremental compliance demand in automotive industries like emission norms to Euro-IV and Euro-VI, safety features, better fuel efficiency, ease of driving, etc., calls for the adoption of new technologies and new processes, which would drive demand for high-quality, reliable products.”
Going the Extra Mile
The key issue though is about putting up specialised units of high-technology machine tools. Kumar of Tyrolit forecasts new trends by suggesting, “The capability of the Indian industry to produce the products in high-quality is a source of confidence for global companies to spread their presence in India.”
Many India-based companies have forged collaborations with foreign partners to bring in the latest technologies. Khanna confirms that, “Wendt India leverages a range of high-precision grinding machines such as rotary surface grinders, wheel profile grinders, TC roll/ guide roll grinders, notch milling and tool & cutter grinders. Wendt also manufacturers honing machines in collaboration with Delapena of the UK.”
According to Kelkar, Grind Master plans to support their manufacturing with the latest technological inputs. “Grind Master has introduced the next generation of microfinishing machines that fulfil the new surface finish parameters on engine & transmission parts. The new job drawings of Euro-VI engines show tighter finish requirements and geometrical accuracies. Of course, we are offering the machines with the Industry 4.0 feature,” she says.
Ace too has been connecting their machines at customer sites to a central system to get accurate data of production, productivity, OEE, machine maintenance data and such measures, and currently have over 1,000 installations in place. On the other hand, Ramesh confesses, “We have been adapting by adding capacity and bettering productivity through assembly line manufacturing, standardisation and creating empowered teams. We have been doubling our output numbers every three years, and during the last year, we shipped out 5,800 CNC machines, the largest ever in India.”
The demand drivers clearly seem to be more exports of machined parts from India, an increase in exports of the automotive industry as well as domestic increase of vehicles sales. The BS-VI regulatory changes are also playing a role. This is all in line with the Government’s initiative of making India a regional hub for manufacturing, and vendors couldn’t be more pleased.
Challenges and Solutions
At the same time, lack of locally developed technology has been a hindrance for promoting local manufacturing of advanced technology machines. This is being successfully addressed by encouraging joint ventures with well-known overseas technology providers. Manufacturers have started investing in local R&D facilities as well.
Danobat, which has an R&D centre and state-of-the-art manufacturing plants, is also offering a granite bed for better rigidity and good thermal stability, linear motors with digital scales and many more patented technologies in grinding machines.
Similarly, Badave says, “Junker has various proven products that use the latest technology, which we have introduced to Indian customers. We have increased the activities at our R&D centres, and added additional facilities and workforce to support new developments of our international as well as our Indian customers.” Manufacturing facilities with advanced technology capabilities would go a long way to reduce import dependence for India, which is another challenge the country faces moving into the future.
The highly price competitive Indian market also poses a challenge for local manufacturers with capital outlay on machine tools being high for users. Therefore, it is imperative that the OEMs make their deals palatable for their customers by offering a suite of products to meet their specific requirements, further lacing them with other services and providing cost-effective after sales support, besides proposing financing models that would lessen the burden of the initial expenditure.
Agreement on Value Proposition
Of course, most companies dealing with high-end machine tools work closely with their customers to agree on a value proposition based on their specific requirements, and thereby work out a deal that softens the cost blow. As Khanna admits, “We are mindful of cost and initial outlay, for customers as well as ourselves. The customer is looking forward to the European quality at an Indian price. We are trying to reduce cost by value engineering, following lean manufacturing practices to provide value for money to our customers.”
Emphasising the need to place a value on everything, Kelkar acknowledges, “There is an additional cost involved to fulfil the new demands and additional features on the machine. The benefits of these need to be separately calculated in terms of the time saving, low maintenance, availability of data for decision making, etc. Therefore, it is necessary to understand the life cycle cost and a value addition proposition needs to be carefully articulated.”
Ramesh states, “We have consciously, over the years, built a solid customer support. We have tie-ups with the best in the industry to provide complete support to our customers in areas of power conditioning, tooling, coolant & lubricants, finance, etc.” In fact, Ace works with partners to provide financing support and hire purchase schemes through EMI.
Another solution as Badave points out is wherein, “OEMs in India are working on plans for indigenisation of components that are being used in their main assemblies, as per Government guidelines.”
Judging by the way the industry is innovatively handling its opportunities as well as the challenges it faces, one can be certain that they are headed in the right direction. Also, with enough demand drivers for company, the current growth is sure to sustain itself.