ACMA Annual Convention shows the way to leverage Global Opportunity

Releasing the joint ACMA-McKinsey study titled ‘Capturing the global opportunity – The next imperative for the Indian auto component industry’ by Anant Geete, Union Minister for Heavy Industries & Public Enterprises and the panel discussion on the subject were the highlights of the 54^thAnnual Session & National Conference of ACMA, the apex body of the Auto Component Industry in India.

The topic of the study is incidentally the central theme of the annual session that saw captains of the components industry and a few from the vehicle manufacturers participating in it. The study findings suggest that globalisation in the auto-suppliers industry is an irreversible trend and is likely to increase. There are five macro-trends which will drive this:

Globalising OEMs with suppliers following them;
Maturing of low-cost countries (LCC) as export hubs;
Platform consolidation and shift towards large global suppliers;
Increasing aspiration of emerging market suppliers to access new markets;
Technologies and market diversification for margin resiliency

The report also identifies and suggests that Indian suppliers are well positioned to benefit from these global trends and can significantly accelerate their international presence in the next few years. Based on market comparisons, supplier and OEM surveys, the Indian suppliers can nurture a three-pronged 2020 aspiration:

Increase exports from the current USD 10 billion to USD 35 to 40 billion
Increase revenues from overseas assets from the current USD 6 billion to USD 20 to 22 billion
Increase count of Indian suppliers in global top 100 from the current lone figure to five by 2020

The year gone by has been one of the most challenging in the history of automotive industry in India. During these trying times, each one of the players have had to go back to the drawing board, revisit strategies, reorient their organisations, streamline processes and revitalise their companies to gear up and deal with the challenges. This has helped the component manufacturers to evolve into stronger entities with better capabilities to be globally competitive. This period has made them look at international markets in a much-more serious way and the need to become an integral part of a global auto supply chain has become ingrained as a strategic intent. It is in this context that ACMA has chosen ‘Capturing the Global Opportunity – The Next Imperative for Indian Auto Component Industry’ as the theme for this year’s annual session.

The report has identified potentially 12 globalisation models and six critical functional imperatives for Indian suppliers to evaluate and successfully globalise. However, the sharing his experience at the roundtable discussion on the theme of the conference the Managing Director of Bajaj Auto, Rajiv Bajaj said, “What we did not do were two things that helped us: listen to advice from business schools and management consultants,” Jagdeep Singh Rangar, MD of Stork Rubber Products, said one of his takeaways with global customers was to be patient and persevering as it typically takes 3 to 5 years for a breakthrough in export business. Recalling his experience Philipp Radtke, Director of McKinsey (Munich) said it is important for component manufacturers to constantly have an interface with OEMs. The best way to grow according to him, is to grow with the OEM concerned, he said pointing out the examples of the Japanese and Korean suppliers. While Nigel Harris, President of Ford India is confident of Indian suppliers going global in terms of exports Vinod Dasari, MD of Ashok Leyland, asked the vendor community to follow the OEMs that go overseas. The panel discussion was also participated by Rajeev Kher, Secretary, Commerce Ministry and Dr Rajan S Katoch, Secretary, Heavy Industries and Public Enterprises.