“Once the economy gets back to normal, the purchasing power will get stronger and that will drive demand for practically every industry. This, in turn, will help us, the tool makers, with huge domestic demand. I believe, India will remain as the world’s next growth destination,” says DK Sharma, President, TAGMA India & EVP and Business Head, Godrej & Boyce Mfg. Co. Ltd in conversation with Nishant Kashyap.
What are your thoughts about the current scenario?
The current scenario doesn’t look good. The economy is down, the consumer sentiment
is low and there is a lot of uncertainty among manufacturers. But I feel, the past 3-4 months should be considered as a big learning period for all of us. There are fears around in our personal and professional lives, but we need to learn to live with such uncertainties. The manufacturing industry around the world is impacted with no clear sign of revival. So we, the tooling fraternity, need to learn to adapt to the changes and act accordingly. The current time and the immediate future look very challenging. We are all struggling with cash crunch, machines are lying idle, and the unavailability of the workforce and raw materials are other concerns. The whole ecosystem is so uncertain. No one—including customers, suppliers, partners or even the government—was prepared to deal with the situation.
What trend do you see emerging from this pandemic?
I see a huge shift in people’s behaviour, especially in the way they are making lifestyle choices. They are now approaching travel differently and their spending habits are changing too. It’s a precursor to how our entire lifestyle is going to change. While this change will close some avenues, it will open up many others. For example, the demand for consumer electronics or any digital platform is set to rise in the coming days, while that for automotive may continue to be uncertain for some time. Lifestyle changes will also bring some changes in how we operate and conduct business. I see companies adopting digital solutions for their daily operation. The shop floor machine layout might change keeping the social distancing in mind. We might learn to work remotely.
What are the current challenges in the industry?
Our immediate challenge is how to start operations on a small scale and meet our customers’ demands. Tool makers must learn to sustain during this time and support their customers. When things are normal, your customers will have a soft corner for you. Also, OEMs should release payments soon. Unless they do so, tool makers cannot pay employees’ salaries or pay their vendors. This impacts the whole supply chain and has resulted in massive pay cuts and layoffs in Indian SMEs. Owing to the lack of payment and fear related to the current situation, a huge number of workforce have left the big cities. So, companies are not able to resume operations even if they have projects. Now, the biggest challenge will be to bring them back. If you want to bring them back, there should be some incentive. But companies do not have money to pay them the salary, then from where will they pay incentives?
Has the government done much to help the industry resolve this crisis?
The government is facing a tougher challenge, namely, finding ways to contain the epidemic. Their first priority is to save lives, which is what a responsible government should do. However, economic revival is also critical in order to ensure sustainability. So, while they are making an attempt to revive the economy and making announcements to help the industry with packages and policy reform, I think it will take some time to see a real change. Since all the stakeholders are impacted, conserving cash in this kind of situation is supreme. So, while the government is given some relief by way of deferment of paying EMIs/loans, they have not really given cash. Direct cash is not coming into the entrepreneurs’ hands. When I say cash, I take an example of some countries where the government has helped companies with the salary of employees in small companies. It is a big relief for any SME. In India, we could not pass on the direct benefits to the entrepreneur yet. So, the situation continues to be grim for Indian tool makers.
We have been working very closely with the government and informing them of the intensity of the situation. The current ‘Atmanirbhar’ campaign is a good initiative and will help in localization, but it will take some time to reflect in the real benefits.
Also, it looks like the government has become aggressive in luring FDIs. We are seeing news that some global companies are planning to invest in India. The government should also work on ease of doing business in India. There has been a huge improvement, however, there’s still a long way to go.
Also, the improvement of infrastructure should be the highest priority. They should focus on improving the roads, ports and railway lines.
Any suggestions for the tool makers?
It is imperative for tool makers to explore new avenues. The honeymoon period in the automotive industry may be over now, but there are a whole lot of industries that look promising. Our future can’t depend on just one industry, we must step out of our comfort zone.
Considering the long-term scenario, I think we must remain positive. I believe huge opportunities will be generated for tool makers in the coming days. The government initiatives like ‘Atmanirbhar’ will definitely help us grab some of those orders that otherwise, we would have lost to China and South East Asian countries. The government is planning to set up a trade barrier on imports to boost the domestic supply.
With our huge young population and internet penetration, I believe, the coming decade belongs to India. Once the economy gets back to normal, the purchasing power will get stronger and that will drive demand for practically every industry. This, in turn, will help us, the toolmakers, with huge domestic demand. I believe India will remain as the “world’s next growth destination”.
With the lifestyle change, people are avoiding any physical interaction and opting for a digital platform to purchase goods. The same will happen in our industry as well. Tool Makers must adopt digital platforms for all their operations such as production, marketing, sales and finance. They can start with low-cost automation and gradually upgrade the system. Now, customers cannot visit you for any trial and testing. So, you must build the level on confidence that the tools that are shipped is perfect and as per the desired dimensions. This can only happen if we upgrade our existing infrastructure. This is a big change in our industry. Unless you are winning the confidence of the customer, your survival is questionable.
Quickly diversify from auto to other industries. We have a market-ready in lots of consumer-related products and tooling is required everywhere. If automotive remains slow, we have other industries ready to be tapped.
Lesson learned during this pandemic
So, the lesson learnt in this pandemic is that there are many other avenues that are opening up and creating a huge demand. We must keep our eyes open and develop skills accordingly. The automotive has gone down, but the e-commerce sector is doing great business and will continue to grow. The lifestyle change will also bring about a change in consumer preferences. So, there will be a huge demand from the packaging industry, consumer durables, electronics, white goods, agriculture, and medical, among others. The manufacturing sectors such as automotive, heavy engineering, aerospace, and oil & gas may remain in slowdown mode for some more time.
Another lesson learned during the lockdown is that some work can be done from home or from a remote location without compromising on quality and efficiency. Rather, it proved to be more efficient for certain departments such as design. Our designers have done a great job during the lockdown. I feel we should trust our people and allow them to work from home if need be. In my opinion, about 30-40% workforce in manufacturing companies can work remotely.
How did you ensure the productivity of your team during the lockdown?
During the first phase of lockdown, for a week, we had shut all operations. However, eventually, we shifted everything online and started operations. Our designers were very busy with the new designs and they completed all their work so that when we are ready to resume full-fledged operations, we are ready with our designs. Apart from all our sales teams, our marketing and purchase teams were active from home and in touch with customers and vendors. We also conducted many training programs for our employees. We ensured everyone is productive while staying safe.
Do you think the global sentiments towards China could provide opportunities for India?
The current pandemic has taught the world that over-dependency on one country is not sustainable. China has become the world’s factory. Practically all the industries around the world are highly dependent on China for components or material supplies. However, because of the COVID-19 situation, there has been a lack of supplies, which has impacted production around the world. Sensing this challenge, companies around the world are looking to diversify their manufacturing operation to other countries. This definitely will help India to project itself as a better alternative to China.
How do you foresee the future of the tool making industry?
I will divide my response into two parts–short term and long term.
The immediate future looks uncertain. As I said earlier, there is uncertainty in the entire ecosystem with no clear sign of relief. The tooling industry will have to manage the cash flow and employee retention. There are many small companies that are fighting for survival. So, at the moment, our aim should be to sustain somehow and develop new skills. This time should be used for research and skill development.
When I consider the long-term future, I have no doubt that the coming decade belongs to India. I feel, with the world’s largest young population and user of the internet, we are going to see a massive demand coming from the consumer electronics industry. The usage of automation is going to rise with huge internet penetration, which will enhance efficiency. There are many companies that are planning to make India their manufacturing hub, which will help domestic players. Overall, I am very optimistic for the coming days.
I suggest my fellow tool makers invest time in learning new skills during this pandemic and wait for the market to open up. The next quarter may be the same, but the subsequent quarters are likely to reveal some movement.
Courtesy: The interview was first published in TAGMA Times
Thank you Mr. Nishant Kashyap – https://mfgtechupdate.com