LCA, which is being used extensively in industrially developed countries, is defined as a technology that creates some degree of automation around existing tools, methods and people, by using standard components available in the market, along with mechatronics. LCA is expected to reduce manufacturing costs, increase productivity and improve quality as it is tailored to suit existing machines and people working on specific processes. For the automotive component industry, LCA is seen as a ray of hope. The industry's rate of growth of turnover has fallen short of the expected target. From the 2006-07 figure of Rs 62,500 crore, it was expected to grow 15 per cent (Rs 74,200 crore). However, it grew only by 11 per cent to Rs 71,600 crore. |
The rate of growth of exports also fell short of the target by 4.2 per cent. It grew only 15.8 per cent as against the targeted 20 per cent. Some of the products that were exported were vehicle spares such as piston rings, engine valves, fuel injection parts, filters, brake assemblies, clutch components and bulbs.
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Automotive Component Manufacturers Association of India (ACMA "" Southern Region) chairman Srivats Ram told Business Standard: "The situation appears grim at the moment for us as the two-wheeler and three-wheeler industry is witnessing a slowdown.
The passenger car industry is not accelerating at the expected pace. There is tremendous pressure to reduce manufacturing costs. It has become a question of survival."
There are around 1,500 automotive component manufacturers across the country of which 558 are members of ACMA. While the major problems being faced by the component manufacturers are high interest rates on automobile loans, availability of skilled labour and rising prices of steel and other commodity inputs, what has added to their woes is stiff competition from China and other SouthEast Asian countries on the price front.
In the domestic market too, the recent drop in automobile sales has forced the original equipment manufacturers (OEMs) to cut down on sourcing components.
"It is against this backdrop that the industry is looking at low-cost productivity improvements. We need to introduce innovative ideas and solutions in manufacturing to optimise capacity and achieve the competitive edge," Ram said.
To familiarise component manufacturers with LCA, the Association recently organised a workshop in Bangalore where experts in the field including Japanese-based Streamline Strategy's managing director, Takao Kasahara, made presentations.
In India, there are about 10 component manufacturers such as Sundaram Clayton Limited, TAFE Access, NRB Bearings, Godrej and Boyce Manufacturing Company, TVS Motors and Harita Seating Systems which have implemented LCA in their plants.
The outcome has been positive for these companies. For instance, Godrej's productivity in terms of units in the safe deposit assembly line went up after implementing LCA. While six operators worked to produce 78 units in the old safe deposit assembly process, with LCA the output was 133 units with three operators.
ACMA member S Thiagarajan said: "There are a lot of smaller companies which are battling rising manufacturing costs. For these, LCA makes for an ideal solution."
However, Kasahara has a word of caution for the component manufacturers. "The do-it-yourself concept will work effectively in the Indian context. Companies should only buy materials and not solutions." he said.
Attrition in the industry takes new dimension
Attrition "" a problem confined to the mid-level of management in automotive component manufacturing industry "" has now started affecting operators.
ACMA chairman Srivats Ram said: "Attrition at the lower level of the workforce is turning out to be a major problem, especially in cities like Chennai where automobile majors are establishing plants."
There have been instances of the workers of smaller companies failing to turn up at the workplace as they have been hired by bigger companies.
The attrition rate is around 5 per cent said ACMA member S Thiagarajan. "Most OEMs find it prudent to hire people from smaller companies instead of spending time and resources on training newcomers," he added.