Parveen Satija, Managing Director, Stitch Overseas Pvt. Ltd
“The Indian toolmakers and SMEs should make themselves leaner, more productive, more reliable, more competent technically and more competitive in terms of enhancing their products’ quality. This will help them to not only tackle the ongoing situation but will also make them future-ready for encashing the upcoming opportunities,” says Parveen Satija, Managing Director, Stitch Overseas Pvt. Ltd in conversation with Nishant Kashyap.
Please give us an overview of the challenges currently being faced by toolmakers during the COVID-19 pandemic.
The industry has been going through a very rough phase since the recent past and the pandemic has further hit the industry hard. Everything came to a standstill during the lockdown. Even after a relaxation period in the lockdown, toolmakers are struggling to restart work owing to limited availability of manpower. Also, it is difficult to practice social distancing in tool rooms due to the nature of work. Cash flow is a major problem throughout the supply chain, as OEMs have not been able to respond because of various limitations during the lockdown. In addition, there is uncertainty as well as delays in the new projects from OEMs.
How will automation in manufacturing help with the COVID-19 response?
COVID-19 has made us think and re-strategise manufacturing processes. We have to practice social distancing as well as manage manpower shortage. With these limitations, implementing automation wherever feasible is the only way. Automation – whether by way of better software or by process automation – will shift the methodology of manufacturing in a tool room. It is a known fact that using automation will result in lesser dependency on manpower. It can improve the quality of deliverables, and repeatability of process and productivity.
But, why are some manufacturers reluctant to use automation in their manufacturing processes? Automation requires a lot of initial capital investment, which is one of the biggest deterrents for manufacturers. To encourage manufacturers to adopt automation, OEMs need to lead the way. They will have to handhold and nurture tool rooms by investing in teaching the best systems applicable and the automation practices. If tool makers earn higher profits, they will be happy to reinvest in their manufacturing systems and finally grow qualitatively with the industry.
What short and long-term opportunities do you see amid this crisis situation?
The COVID-19 pandemic hit manufacturers in an unexpected and unprecedented way. For the first time in the history of modern manufacturing, demand, supply and workforce availability are affected globally at the same time. However, on the brighter side, this pandemic has forced companies to utilise their time in more efficient and effective ways. Like, for instance, in conducting online training of employees to help companies re-strategise on ways to achieve their goals.
Moreover, the ongoing pandemic has generated Anti-China sentiments globally. Many customers have reduced or stopped outsourcing from China. This could actually be a big opportunity for the Indian manufacturing industry with the Government of India’s ‘Atmanirbhar Bharat Abhiyan’ playing the role of a catalyst. But it all depends on how the Indian manufacturing industry plans to encash on this opportunity.
In this uncertain time, what measures have you adopted to keep your team productive?
This pandemic has impacted everyone not only financially but mentally as well. Therefore, it is very important to keep all the employees motivated. We have been providing various online training sessions for all the employees at regular intervals.
Some of our employees have reported back to office, while some are still working from home. Therefore, it’s important to ensure that each and every employee feels connected to the workplace. For this purpose, we have been organising periodic interactions amongst all. We have also arranged for daily online meetings during which all of our employees from various locations pan-India connect and interact with each other to share their working experience, insights, best practices and business trends.
What will manufacturing’s new normal be after COVID-19?
The manufacturing industry wasn’t prepared to deal with a crisis of this stature. The crucial aspects of production often rely on humans who are now restricted, or even forbidden, from entering factories. Where automation is applied to assembly and inspection, manufacturers struggle with antiquated production lines that can’t be reconfigured easily. The new normal will be with modern automation that will help manufacturers quickly scale up production using modular automation, better software and flexible manufacturing lines that are less reliant on humans; thus, upgrading from traditional assembly and inspection processes. Also, the new normal will be “digital mode normal”. This would include, but not be limited to, virtual shifts, working from home, less travel, online meetings, virtual exhibitions and autonomous working, among others.
What policy changes or support do MSMEs need in such a challenging time in order to revive?
It’s true that the government’s incentives have helped some MSMEs with loans to keep their enterprise going. However, unless the recovery is quick, many MSMEs may not be able to service the loans. As a result, they would not only end up losing their net worth, but also their assets which would have been collateralised.
One of the biggest initiatives by the government was to change the definition of MSMEs, which now includes a greater number of firms within the formal classification of MSMEs. This is expected to help in the transition of the ‘mindset’ of small and medium firms. They are now aiming to grow without the fear of losing out on the benefits given to MSMEs.
However, these steps are not sufficient. The current situation demands that in order to restart the MSMEs to their full capacity, the government could help bring back the migrant workers. Easy credit availability will help many save their businesses, as today’s challenge is paying salaries, discharging vendor bills, and other fixed expenses. While some banks have already opened such emergency relief measures for this sector, wider credit guarantee schemes backed up by the government are still required. A wage protection scheme for at least six months could be the need of the hour. If not complete wages, the government needs to help MSMEs pay partial survival wages during these critical months. Also, the government could consider providing an edge to MSMEs that respect government compliances and have good conduct. This will motivate others to improve on compliances and conduct in the future. The government could consider slapping the anti-dumping duty to discourage Chinese manufacturers and encourage the Indian manufacturing industry.
There have been several discussions about the disturbing supply chain globally. Now, companies are looking to diversify their resources to many countries instead of depending on only one. Do you think such a scenario could benefit India? Also, what policies will be needed to attract maximum investment to the country?
The global Anti-China sentiments and the global supply chain disruption have prompted everyone to diversify their resources and suppliers. This situation provides an excellent opportunity to encash on. India could certainly stand to benefit from this if the Government of India succeeds in luring companies that are looking to shift their manufacturing base.
A Nomura Group Study found that in 2019, of the 56 companies that shifted their production out of China, only 3 invested in India, while 26 went to Vietnam, 11 to Taiwan, 8 to Thailand and 6 to Mexico. In April 2020, Nikkei noted that of the 1,000 firms that were planning to leave China and invest in Asian countries, only 300 of them were seriously thinking of investing in India.
This is a very serious concern to the ‘Make in India’ initiative.
India has been overplaying its demographic advantage for too long. Unlike China, its market is not large or rich enough to allow economies of scale for manufacturers. Indian wages are lower compared to China, but so is its labour productivity. There is also the challenge of finding the right skilled manpower and thereafter, putting the new workers through training specific to their production process. Further considerations include transparency in all compliances, governmental support, a favourable tax regime and legal framework and the ease and speed of starting a business in a new country.
Other countries have rules and laws simple to understand and give permissions fast. India needs to improve on this account. We frame unnecessarily detailed and highly complicated laws (with enough interpretation loopholes) and combine that with a lethargic enforcement mechanism.
In my personal interaction, my Japanese counterpart was quoted saying that in Vietnam, there is a single point of contact, a person who takes care of everything from the government’s side.
India needs to further liberalise trade, spend more on infrastructure construction, reform land and labour laws, which will all lure foreign investors. Legal reforms, liberation and favourable taxes are necessary for economies to reach their full potential.
In India, there is heavy dependence on road transportation, but if modern rail and water transportation are more readily available, it can save businesses significant costs and time.
Moreover, the culture of manufacturing, which is prevalent in countries like Germany, Japan, China and South Korea is missing in India. This means that not only must there be strong and readily available vocational training programmes to equip those interested with the necessary skills, but that their smartest citizens must want to consider joining this sector.
How do you think should tool makers or any manufacturing SMEs tackle the situation?
They should be ready to brace new technologies, automation, software, digitalisation or digital transfor mation. They need to upgrade the skills of their team by conducting skill development programmes. The quality control orders get notified, but enforcement remains normal. The manufacturing culture also needs to be transformed. In short, the Indian toolmakers and SMEs should make themselves leaner, more productive, more reliable, more competent technically and more competitive in terms of enhancing their products’ quality. This will help them to not only tackle the ongoing situation but will also make them future ready for encashing the upcoming opportunities.
An important lesson you have learned from the COVID-19 outbreak?
We must understand the importance of prioritising health and research. We should never put all of our eggs in one basket, as the dependency of the globe on China has proved to be rather detrimental. And last, but not the least, we must learn to respect Mother Earth.
In the coming days, what changes are you planning to make to your production and business operations?
We have already started remodeling our business strategies. We organise weekly webinars for our customers. Daily online meetings within the company and with the customers is now a new routine. Moreover, we are planning to digitalise all our product promotions by listing online and are strengthening our dependency on “digital mode”, which will be an important contribution to enhance efficiency and transparency.
Note: This interview was first published in TAGMA Times newsletter
