Machine Tools: Ready for Growth?

A large portion of Indian machine tool industry consists of small and medium manufacturers, most of which is dominated by the entrepreneurs who are new into this field but are passionate about what they are doing. This industry has around 750-800 companies (source: IMTMA), of which 400 produce complete machine tools and 25-50 companies are very large scale industries. So, you can imagine the number of SMEs in this section. The growth in this field is driven by these technocrats who have originated from the SME segment. With their efforts, they are able to showcase their capabilities and able to compete in markets like Europe, Germany, etc. But like most other SMEs, the Indian machine tools industry also face numerous challenges. The manufacturers are not equipped with the latest technology and machinery. Also they cannot fund research in this field. Another problem that they face is in the import of technology and machines like CNC systems, precision bearings, etc which proves to be costly as they have to pay taxes and duties on top of the cost price. Also there are machines available at a lower price but they have obsolete technology and safety is also a concern with such machines. The Indian Machine Tool Manufacturers' Association (IMTMA) assists the companies to solve such problems. IMTMA has designed the schools and clusters to uplift the companies. The focus of IMTMA is to promote technology awareness, product development, and quality control amongst the machine tool producers. The machine tool consumption in India is around Rs 9,000 crores and a demand of Rs 60,000 to 70,000 crores is estimated over the next five years. If this industry overcomes technology and products barriers then it can reach a market share of 50%.

Key Industry Trends

Indian manufacturing is rapidly becoming a cost-effective hub for sourcing of automobile and engineering products, including cars, assemblies and components with a high engineering content that require quick turnarounds. India is also becoming a machining hub, which is trending companies to seek out both forward and backward integration strategies to fill out their value chain capabilities. Supporting these drivers is the Indian machine tool industry, which is also undergoing a rapid transformation towards multi-tasking technology, value-added features to better manage the machine and productivity, with an eye towards flexibility in manufacturing different types of components, without multiple setups.

Customer industry continues to demand lower cost per piece, which translates to easy to use (for small batch quantities) machines, or specifically configured machines (for high volume). Indian manufacturing is also being positioned to contribute 25% of India's expanding GDP by 2020, from 16% of today's GDP. This represents 100's of millions of new jobs, as well as a CAGR of 30-35%!

IT Usage in Machine Tools Cluster

IT is increasingly being used to enable business processes that can drive costs lower, or study key operational processes that can drive shop-floor productivity. IT is also being used to support training, and to enable people-independent business processes, which are critical for our industry to scale and grow CAGR by 30-35% over the next decade. We're also increasingly deploying IT to provide transparency in employee recruitment, retention, benefits administration and other workflows that enable the leaders of tomorrow to objectively manage employees. Examples are ERP, CRM, HRMS packages to drive down costs of business transactions.

Real-time machine monitoring, capture and tracking of Overall Equipment Effectiveness (OEE), solutions that track real-time parameters of assembly lines, and conveyors/assembly lines to respond at the rate required are examples of future looking solutions that are being rapidly deployed to drive shop-floor productivity and profits.

Challenges Faced in IT

In manufacturing industries, there are several challenges, some generic in nature, while some that are specific to the machine tools industry. Some of these include:

Ability to visualize next practices and effectively describe them as IT requirements



High total cost of technology acquisition and implementation



Access to personnel with the right intersection of manufacturing domain knowledge and IT expertise



Companies that can provide IT solutions (products and services) that are unique to Indian requirements



Cost of acquiring, training and retaining IT talent



High attrition of engineering graduates towards IT services industry

Expectations from IT

Manufacturing industries tend to be very value conscious (not necessarily cost conscious), and as such expect that their IT solutions provider is able to “partner” with them in co-creating value in the form of IT solutions.

An approach to just transplant existing solutions made in/for countries outside India, by aggressive MNC vendors is not something that can create instant value in the minds of Indian companies. Desirable characteristics of products and solutions that manufacturing industry seeks are those that have:

Low complexity of implementation and sustenance,



Ease and Low cost of "customization"



Ability to support mass personalization,



High data security and recoverability



Ease of use in migrating to other systems



Low overhead and cost of labor to administer and manage these systems.

Based on inputs from Chandrashekar Bharathi, Managing Director, PioneerCT, Bangalore

"With new markets opening up, companies are no longer competing domestically but at a global platform. While, this spells increased opportunities for the SMEs, at the same time it also means churning out products which are efficient and at par with global quality standards."

We spoke to Manoj Mehta, Country Manager- India and SAARC, SolidWorks to understand their range of solutions for SMEs.

What are the essential IT solutions that you think can be used to increase production, efficiency and profitability of SMEs in India?

In a competitive business environment, manufacturers are under intense pressure to offer innovative products which meet international quality standards without pushing prices. Thus, it has become crucial for manufacturers to get the product right the first time to minimize potentially damaging post-sales issues. They must increase manufacturability which is only possible with shortening design cycles, shrinking engineering costs with shorter product life cycles and minimizing raw materials usage.

The engineering design market in India was previously dominated by 2D players which left a lot of room for errors. SolidWorks entered the Indian market in 2002 with an aim to introduce the Indian manufacturers to the benefits of 3D mechanical design. Since its inception, SolidWorks has experienced exponential growth owing to its expertise in 3D CAD solutions specific to the needs of industry segments, ease of use which contributes to a faster learning curve for design engineers, better productivity for manufacturers and its extensive value-added reseller (VAR) network located in all major cities in India. Indian SMEs which were earlier resistant towards adopting and investing into new technology are now recognizing the role of technology in delivering better product results substantially adding to their company's growth. SolidWorks is focused towards improving customers' productivity by creating tools that reduce time, cost and improve the quality of products. Most of its 1.7 million customers fall in the SME segment. SolidWorks products enable SME customers to be more productive, without the high implementation pains and costs associated with traditional product development tools.

Please highlight some compelling IT solutions for Indian SMEs?

With new markets opening up, companies are no longer competing domestically but at a global platform. While, this spells increased opportunities for the SMEs, at the same time it also means churning out products which are efficient and at par with global quality standards. In such a dynamic business environment, innovation becomes the key to sustenance demanding accurate and efficient designing capabilities. SolidWorks offers unique design solutions to meet the requirements of SMEs operating in diverse sectors such as aerospace and defense, consumer durables, consumer packaged goods, high-tech, energy, construction, business services, industrial equipment, life sciences, ship building, automotive & transportation, education and electronics. We are focused on improving our customers' productivity by creating tools that reduce time, cost and improve the quality of products.