- Does Future Lie in Localization of Manufacturing?
- Does India have the opportunity to be a turnkey technology provider to developing countries?
- We should think about how will businesses absorb this impact and how?
VUCA stands for volatility, uncertainty, complexity, and ambiguity. We all have heard and talked of the VUCA world, and today we see it in front of our eyes. Could it be more surreal??? The day I heard of the COVID19 in China, the first thing which came to my mind – this is a Black Swan Event. Something which nobody imagined and even dreamt of was taking place. The past 1.5 years of delving into entrepreneurial philosophy and psychology with Empretec was so useful to understand what was happening in the world around me.
Does Future Lie in Localization of Manufacturing?
I was traveling to Algeria, Africa from 3rd to 8th Feb – just at the time when COVID19 broke out. I was tested at Algiers airport when arriving but did not see any test when returning. I could feel the vulnerability of our country, and probably our system was not prepared enough.
In Algeria while finalizing an agency agreement, I started conversing about manufacturing partnerships. The dependence on China for all the manufactured products was so glaring, and the imminent lockdown of China and its impact on Algeria and for that matter, several African countries were huge, as they were so dependent on imports. Therefore, I quickly changed my pitch in Algeria itself and looked at going a step further, and even with the prospective customers I started talking of partnerships for technology transfer, and Made in Algeria concept was shared. After my return, in a month’s time, I put together the pitch and started looking at not only Algeria but moving into the localization of manufacturing – reducing dependencies.
Short Term Impact of COVID19
The business which had shown few signs of reviving has again been delayed and the financial stress in the industry continues. Things like material shortages, increased rates on account of the shortage are impacting the decision making of foundries. Since component inventories for assemblies that are sourced from China are affected, the schedules which were to resume may not happen and projects which were waiting for commissioning with support from China are on a standstill due to travel restrictions, and funds crunch has initiated.
Long Term Impact of COVID19
We see a positive impact on the Capital goods, as there is already an introspection for increasing the localization by the industry. Manufacturing of consumables, parts in India is expected to increase replacing imports, which we expect will lead to an increase in plant and machinery investment. The buyer and seller in the Foundry industry i.e. the Foundry (Buyer) and Seller (Machines, consumables, etc.) will increase their collaboration and reduce dependencies.
India may have the opportunity to be a turnkey technology provider to developing countries, and partner them with not only casting supply but set up JV’s in their countries for local production of their imports, and thus earn income from technology transfer and manufacturing in these countries.
CG Industry is looking for from is that Govt can look at identifying CG manufacturers in India and supporting research, innovation, and development of import substitutes in CGI. A mechanism to identify industries like us who have gone through the grill, been recognized by The United Nations Industrial Development Organization (UNIDO), The United Nations Conference on Trade and Development (UNCTAD), Ministry of Micro, Small & Medium Enterprises (M/o MSME) but fail to get the advantage of developing technologies and are faced with investment limitations in technology development.
The government can start a collaboration of foundry and its supply chain of machine & material suppliers with UN agencies like UNCTAD & UNIDO providing the business and technology validation making it transparent and neutral.
What Shall We Think Up On
As an enterprise and responsible citizen, we are all complying with the lockdown and closures.
But our responsibility is also towards the people who are engaged with us and whose livelihood is dependent on business activities. We should think about how will businesses absorb this impact and how? There is a cost of money or lending which is not small – there are EMI's people and industry have to pay. If there is no business – how will these be serviced? There is a supply chain that needs to be paid – how does one balance these?
What COVID19 has Taught Us
Gandhiji used to say that Swaraj means self-rule but at the individual level swaraj is vitally connected with the capacity for dispassionate self-assessment, ceaseless self-purification, and growing swadeshi or self-reliance. Thus this outbreak has made us rethink our consumer attitudes and dependencies. In the future, it is necessary that we rethink value chains – where each buyer and seller have transparency and skin in the game for each other.
This outbreak will definitely create a new balance of capitalism and socialism will emerge as we look at materialistic growth and balance of human being. The constant fight between man & machine will continue, and we may move to appropriate automation instead of total automation.
The importance of Emotional Intelligence (Self-awareness, self-regulation, motivation, social skills, and empathy) over Human Intelligence and that of HI over Artificial Intelligence will stand out. Lastly, we will probably realize the relevance of balancing natural resources and our needs, increase our resource utilization efficiency from an abysmal 23% or so and reduce our consumption below 1.7 (an index by UN) to unity.
Way Ahead
External forces and happenings we may not be able to fully control, but may be able to avoid them. Warren Buffet's statement – Why should I solve world problems, if I can avoid them? While we are fighting the external forces, it gives us time to reflect on the internal forces. Can we dedicate this time to introspect within, search for the answers – start with ISK – Information seeking about ourselves from us and the family? Open up the Johari window a little – connect with people whom we got disconnected in this period, share and take feedback. Look at what irritates us the most – and try looking at finding the root cause of this irritation. Find a way to form a habit you may not be able to have. Like exercising, yoga, meditation, writing, reading, sharing, sketching, painting, making films, making videos – take this break as something which will help you look within.
