The auto industry is pushing the machine tools industry to develop new products and technologies, says Eliza Waghmare.
The auto industry is going through a dull period and this is having far reaching effects on other industries too. One of these is the machine tools industry. Highly competitive, the auto industry is one of most important consumers of machine tools. It drives the development of new products and technologies that would give it an edge to stay competitive in an environment that is as challenging. Turning out a diverse nature of machining tools - from a simple lathe machines to a high advanced 5-axis machining centre, the machine tools industry assures the precision the auto industry needs. It offers machines that help to manufacture engines and transmissions that really last long.
In terms of market scenario, globally, the industry is pegged at Rs 460,000 crore and is classified mainly as metal cutting and metal forming machines, and machine tool accessories, which includes metrology products. In comparison, the Indian machine tools industry is currently at approximately Rs 9,000 crore. This industry is a mix of both organised and unorganised players. With the rising competition and an aim for business expansion, the Indian machine tools industry is highly focusing in involving the foreign players through partnership. This further helps the industry to diversify in its export business. As per the recent survey by Indian Machine Tool Manufacturers' Association (IMTMA), by FY2016-17, the share of the domestic manufacturers into machine tools segment is expected to grow by 50 per cent. And by 2020, the industry will grow to Rs 23,000 crore.
The machine tools industry gets its 40 per cent business from the automobile manufacturing sector. Their quest for competitiveness calls for solutions that are often tough to arrive at. Huge investments by the machine tools and accessories industry are required into R&D, which will then help in developing tools that are truly cutting-edge, viz., modular units with multifunction capabilities and titanium carbide, titanium nitride and aluminium oxide coated cutting elements, to last long, and ensure higher quality of manufacture. Given the rate at which the Auto Component Manufacturers Association (ACMA) expects to grow, the machine tool operators, by the year 2020, will have had to scale up 7-8 times in terms of capacity.
The Indian machine tool industry and the automobile industry, it is clear, are not moving in step with each other. The machine tools industry has not capitalised on tremendous growth of the automobile and auto components industry. This could answer the fact that the Indian automobile industry has to rely on imported machine tools. This is also partly to do with the need for high precision machine tools. Irrespective of the fact that imported machine tools cost much higher than locally produced ones.
FTAs with countries like South Korea does help when it comes to the auto industry procuring the right machine tools, and at the right costs. Germany continues to enjoy the edge. It continues to be regarded as the best machine tools destination, and perhaps, the costliest too. The German machine tools industry is known for its capabilities to turn out the highest quality of machine tools in the world. It thus enjoys a leadership position, which among other things gives it the prowess to be the nation that ranks second in exports, superseded only by China.
In India, an estimated 33 per cent of the automotive industry sources for imported machine tools. Thus, the machine tools industry expects the dependence on import to come down, as the local players ramp up on capacity and technology. The industry is now targeting to introduce technologically advanced products apart from focusing on exports. Exports could after all lend the Indian machine tools industry the edge to assure world-class quality products and solutions. Not that the Indian machine tools industry does not export, it does. In fact, there is enough scope on this front, especially for the lower-end of the spectrum. By 2016, the machine tools industry catering to the need of the auto industry expects the thrust for export to increase from the current US $ 4.1 billion to US$ 145 billion.
Some of the homegrown machine tools manufacturers that are expected to drive exports include Lokesh Machines, Bharat Machine Tools, PMT Machines Ltd, Machine Tools Industries (India), Jyoti CNC and others. They along with machine tools manufacturers like Meiban Engineering, Kenametal, Ace Micromatic, Haas, Taegu Tec and Yamazaki Mazak make up the organised part of the Indian machine tools industry at the moment.
As the organised players drive forward to address the exacting needs of the Indian auto industry, the unorganised players, despite various challenges (the biggest is perhaps the need for finance), are expected to move up the scale. This will ensure that the machine tools industry is capable and can sustain in terms of qualitative products. The auto industry will continue to be one of the most demanding consumers of the machine tools industry in India, exactly the way it is the world over. What makes it imperative therefore, is for the organised and the unorganised players to understand the challenges that the auto industry will pose in front of them in the future. It is necessary for the machine tools segment to understand the changing needs of the auto industry and gear up to address them as they emerge. Therefore, there is a need to be precise and focus on quality, innovation and numbers.