In an upfront interaction, Nitin Chalke, President – Hydraulics and Vehicle, Asia Pacific, Eaton spoke of the transmission manufacturer emerging stronger from Covid-19 hit quarters. He drew attention to the company staying focused on building a strong profit plan for 2021 to stay on course with the long term strategic goals.

Interview by: Ashish Bhatia

Q. How was the Virtual Mechanics’ Training initiative conceived amidst a disruptive pandemic and with strained resources?

A. Mechanics and technicians of commercial vehicles constitute a significant share of the end-user community for Eaton. They are essential pillars of the automotive industry, as they keep the customer’s vehicle running. This makes it vital for them to have in-depth knowledge to inturn increase the serviceability aspect of the vehicle. Eaton has been conducting hands-on practical training workshops with mechanics from Tamil Nadu since 2019. This was a part of our strategic end-user and influencer engagement program. We had trained almost 75 independent mechanics across four locations in Tamil Nadu and had plans in place to continue with the hands-on training for more locations across India when the pandemic struck. 

To ensure we went through with our plans, we came up with the idea of focussed-group training through virtual platforms with a focus on skill development and to reach out to our target group. We switched to virtual training in April 2020, where we used video conference apps to broadcast our comprehensive product animation and training videos using minimal resources. So far 250+ mechanics have been trained under the initiative. It has grown to a pan India implementation now. 

Q. Which key skillsets and focus areas are targeted and what is the demography of the target group like?

A. With these training sessions, the aim is to help participants gain extensive product knowledge, including on the maintenance and repair of essential powertrain components and other speciality products. As part of a special practice session on disassembly and reassembly of Eaton’s six-speed manual transmission, a highly interactive one, Eaton experts answer the participants’ queries along with imparting a focussed training with demonstrations and practical learning experiences. Through this program, Eaton aims to provide end-users with advanced skills and matchless expertise on knowledge expansion in service and repair. 

Demographically speaking, the target population includes independent mechanics, members of mechanics’ associations and OEM mechanics. So far, we have trained more than 250 independent mechanics across Tamil Nadu (Namakkal, Sankagiri, Salem and Thiruchengode) and across East India (Jamshedpur, Dhanbad, Bihar and Odisha). The duration of each session is about 1.5 hours and extends depending on the interaction level of participants. The total training man-hours amount to approximately 400 and also include a recital in the local language for ease of understanding.

Q. In hindsight have you achieved what you set out to and how do you see the initiative evolving in the Indian context? 

A. The training was adapted quickly to unforeseen situations without the focus shifting from the requirements of customers and end-users. The response for our in-person training has been tremendous, and we were hopeful that the shift to virtual platforms would be a success too, as long as we are able to deliver value. The mechanics have been sharing good feedback too and have found it useful and informative to the extent of broadening their skillset. Eaton has a strong focus on learning and the success of this program symbolises us realising the organisational focus. 

We see the virtual format gaining even greater momentum as we go along given that we are still in the midst of the pandemic. With the program already reaching out to more than 250 participants pan India within a span of six months, we are confident of successfully reaching out to more participants. With the Indian commercial vehicle landscape undergoing a change with major OEMs adopting a modular business program, the virtual training workshop is designed to equip the mechanics on surviving a changing market and effectively adapting to it. It is a direct outcome of the time we spent and the efforts that went into understanding the mindset and requirements of the target group in the market.  

Q. How was the company poised ahead of the pandemic induced disruptions over Q3-Q4FY2020?

A. While we were expecting a surge in demand in Q3FY2020 and Q4FY2020, in expectation of a pre-buying activity ahead of the BSVI rollout, the expected surge in demand did not come good. Some of our export businesses had also started feeling the pressure in Q4FY2020 due to the lockdown. Even in the absence of pandemic and no significant pre-buy, we were anticipating an uneventful but low-performance Q1FY2021. However, the pandemic negatively impacted even those assumptions.

Q. How did exports fare and what’s the overall impact vis-a-vis domestic demand?

A. The exports (specifically to the developed western markets), were impacted due to lockdowns, however, the bounce-back has been sharp. The volumes also went up, in anticipation of building the pipeline of stocks. During the lockdowns, with freight movements impacted, the inventory holdings witnessed a dip. In the domestic market, specifically, the commercial vehicle industry has been lagging. While we are seeing some improvements, the drag is still significant considering the industry witnessed degrowth prior to the pandemic. Our supplies to agricultural equipment markets have been good courtesy of strong rural demand.

Q. What is the recovery outlook across segments spanning passenger vehicles, commercial vehicles and the off-highway segment?

A. Passenger vehicles are already showing strong growth. The growth in rural and semi-urban markets is driving good demand. In commercial vehicles, we do see growth in the segment catering to the last mile reach. The heavy commercial vehicle segment is expected to lag due to overcapacity. Construction equipment vehicles may show some growth as the activities in this segment start picking up, driven by the extent of government spending and the return of labour to these sites.

Q. What is the canvas like for the Truck division in India in terms of the global exposure on the production, after-sales service and product design front? 

A. Eaton’s Truck division is engaging with all the commercial vehicle players in India. With more than 150,000 transmissions on the field, we do have a strong understanding of customer behaviours and vehicle duty cycles. It has enabled us to further customise our products and to bring more value to our customers and live up to the “We make what matters work” motto. With the changing fleet utilisation and duty cycles (due to axle norm changes, BSVI implementation, quick turnaround times etc.), we have been working closely with our customers to efficiently cater to the ever-evolving niche applications with our reliable and robust range of transmissions. 

We have also brought in our clutch designs to the Indian market and are getting very favourable feedback on the value to add to the customer. We are also currently making the MD electric vehicle transmissions to cater to the global requirements. As electrification gains traction in global markets, we do see it as a growth vertical for us.

While Covid-19 kept all of us locked in, we have utilised this time well to reach out to our end users on virtual platforms to listen in to their concerns and to find novel ways of addressing them, in turn, adding to their efficiency and profitability. We also plan to bring in the Eaton ReMan program in a big way to India. This will help the fleet owners extend the life of their vehicles at lower costs.

Q. How have you added to the shop floor, supply chain and vendor level efficiencies in order to be future-ready? 

A. Currently, we are investigating on a topic related to predictive maintenance solution for pumps and motors. These are in very early stages of Technology Readiness Level (TRL). Once successful, we can horizontally deploy it at multiple facilities since pumps and motors are omnipresent in factories. Eaton holds critical Intellectual Property (IP) on these algorithms, the deployment of which will enhance our product capability and robustness while also helping to enhance the overall productivity. The architecture currently under development can help extend the predictive maintenance solutions for other assets in the future as well. 

On the supply chain side, we are looking at making our data sources transparent and linked, while also improving the data quality. Efforts are ongoing towards accurately classifying our spend data and mapping it with our product life-cycle management data. The game-plan is to strengthen our data sources while creating a single source of truth, developing a knowledge layer by linking the various data sources and finally developing an artificial intelligence layer on top of the knowledge layer. 

Q. What is the near-medium and long-term outlook?

A. We are still not clear about the actual impact and possible rebound of markets in India. We are witnessing severe economic recession, which has impacted Eaton’s revenues and margins as well. Eaton, however, continues to deliver strong decremental margins, along with smooth cash flow. There have been many learnings along the way – working from home, virtual FATs, customer connect, etc. The team has run 100+ webinars, connected to over 2000 customers, and put in over 2500 hours of product training. 

Till the demand returns for good, all of us have the responsibility to manage costs and revisit our strategies. It looks like the worst is behind us and things can only get better. The short-term goal is to build on resilience displayed in 2020 and consolidate to recover as much as possible in the coming year. We have already embarked on a project to capture learnings of Covid-19 impact to the business and its processes, only to revisit and arrive at a new normal. The dependencies on the supply chain, processes and associated skill-set, ability to get things done digitally, will be major focus areas. We are focusing on building a solid profit plan for 2021, to align with the long-term strategic action plan. ACI

“The dependencies on the supply chain, processes and associated skill-set, ability to get things done digitally, will be major focus areas. ”

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