The Hindu Business Line : Auto components exports cross $1 b

LOOKS like touching the $1-billion mark seems to be what the Indian industry is aiming for. First it was Infosys in the software industry and then close on its heels came Wipro. Now it is the turn of the automobile component manufacturers in the domestic market to cross this figure.

For the year ended March 2004, this segment has touched $1.1 billion (Rs 4,800 crore) as its export figures. This is 38.8 per cent higher compared to last year and double the $578 million exports which it had registered a couple of years ago. This is by no means a small feat, but compared to the $1 trillion global auto components market, it is only a drop. The projected compounded annual growth rate (CAGR) is 18 per cent and the Automotive Component Manufacturers' Association of India's (ACMA) export projections for 2010 is $2.7 billion.

Commenting on the Indian export scene, Mr Ramchandra Rao, Chairman, ACMA, Western Region, said that with the global auto industry witnessing its worst slowdown in the past two decades, the manufacturing base is shifting towards the low cost countries. The manufacturing bases, which had all along been in the high cost countries such as the US, France, Japan, Canada, etc., have now seen a gradual shift to the low cost countries such as India, Indonesia, China, Mexico, Russia, etc. This may be due to the fact that the average manufacturing compensation in the high cost countries is about $20 per hour while the low cost countries average manufacturing compensation is about $1.10 per hour. Mr Rao noted that India is fast emerging as a preferred destination for most of the global auto companies as it provided low cost advantage mainly on account of vast availability of low cost-high skilled manpower. The average wage rates stood at $6 per day compared to up to $20 per hour in the developed markets, he pointed out. Indian manufacturers have also shed their image of `low cost producers' and had developed a mindset for quality, higher productivity and just-in-time supplies, he said.

He said the challenges faced by the Indian counterparts were pressures on sales and margins, stringency in regulation driving technology, discerning customer demand, shift in global markets and disintegration of global barriers.

To bring these people on par, the ACMA has initiated a six-sigma black belt programme in November 2003. The aim was to inculcate problem-solving technique in a systematic manner and had been launched in three regions, North, South and the West. It plans to give about 80 black belts to the industry in the first year and aimed to have a multiplier effect in the industry. In the Western region 20 six sigma black belts were handed out and the second batch would begin on April 26. The Northern region second batch has already begun, he added.

Mr Ram Narayan, Faculty for the six-sigma programme, noted that the aim was to bring out zero-defect product consistently. The other aim was to bring in total savings to the company, train the people internally and ensure that the entire programme is deployed within the organisation, he added.

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