Machine tool industry surpassed the odds

June 17, 2013 11:55 am

“The lean times have allowed Makino to shake off complacency and made us take a hard look at the areas of improvement”
– T. V. Raghava Badhya, Director and Vice President – Marketing, Makino India
Machine tool industry is going through testing times. Last couple of years was at peak and what followed was a steep fall. It was not difficult to ascertain the reasons although much of it wasn’t in control of the machine tool industry or the user industry. Indian economy as a whole was undergoing turbulent times with high deficit followed by high interest rate and free fall of rupee. The subsequent tightening of credit by the RBI had a cascading effect on the economy and the industry specifically. T. V. Raghava Badhya shares how these factors have resulted in the squeezing of the industry and Makino strides through all.
Benchmark 2011-12Makino benchmarks its operations to the years of 2011-12 which were very good for Makino wherein it sold close to 600 machines and passed Rs 600 crore in effort sales. However, what followed was a sharp dip. It is not common for any enterprise to have back to back best and worst years. This has been a very challenging time for Makino, but its customised engineering business, its support and infrastructure side of operations have helped the company manage itself in these challenging times for the entire industry.
Downstream effect of economyGiven the state of the overall economy and its cascading effect on customers, many are struggling to leverage existing capacity. This surely has a downstream effect on the machine tool industry, and falling demand as well as directly is affecting both top and bottom line.Performing well in industryEach challenge brings unique opportunities. These lean times have allowed Makino to shake off complacency and made it take a hard look at the areas of improvement. A frugal approach and finding ways to shed that extra weight will allow us to become leaner and fitter to survive under varying market and economic conditions. This time, it has too invested hundreds of hours and efforts on training and development for its staff to enhance their skill sets.
Makino has also embarked several initiatives for its customers like helping customers know its products better, capitalising these products for higher return on their investment, and all-round training around the CNC ecosystem. With better times forecasted, demand will certainly return and it hopes that all its customers would look back at Makino as someone who added value to their business and as a partner rather than a supplier — in turn reward it with their loyalty. The company also opened its 4th technical centre in Coimbatore. While this was a huge investment, the company does envisage that it would be a win-win deal for Makino as well as its customers. On one hand, Makino would be using engineering and manpower resources of the region, and on the other, it would be serving its customers by imparting all aspects of CNC machine utilisation.
Strategies for coming yearMakino as a brand caters to only niche technology segment of precision manufacturing industry. This may be a limitation to its ability to diversify its portfolio and its industry to a generic base. And at the same time, Makino is faced with an extremely competitive market, demanding customers, and high operational costs. The strategy for the coming year would be to look around for two or three core industries which fit with its application expertise and maintain the existing customer base with strong retooling support.  There are also certain evolving or maturing industries which Makino hopes would materialise into early requirements which in turn will help it firmly establish itself as a strong know-how provider and partner. Civilian aerospace is one such area although it has not matured with pace or scale of Makino’s expectations. The company expected that the demand in this sector would crop up much faster. Similarly, the energy sector is another area where it sees huge opportunity.
Makino is also looking at globalising its India-specific products and engineering activities which will not only augment its local revenue stream but also provide a few million dollars of additional revenue for its group companies in other parts of Asia. It is also having a few exciting new products in the pipeline which its sales and marketing people are eagerly awaiting. Makino foresees a revival in growth that can capitalise on huge capacities and infrastructure built not just by itself but also by other machine tool companies in India.
Increasing India’s share of manufacturing
It is high time that business leaders as well as political decision makers stop contemplating highly ambitious targets on manufacturing without alleviating the shortcomings on infrastructure. Currently Indian machine tool consumption has remained stagnant (under 3 per cent) for a long time. Now for a big country like India, the consumption should be easily somewhere between 6-8 per cent. Clearly, there is quite a gap to be filled. When compared to our nearest Asian neighbours our manufacturing is still much lower and very automotive centric.  Infrastructure improvement is the best catalyst for rapid industrialisation of India and the consequent increase in manufacturing demands presents huge opportunity for machine tool industry. If India has to really increase its share of manufacturing from 15 per cent to 25 per cent, it has to pour more concrete and melt more iron to create this demand. This will not only boost manufacturing share but also create a sustainable high GDP growth as China has done for the last two decades.
India has unique opportunity to achieve this goal as its machine tool industry is far more mature, far more capable and far more accomplished when stacked up against many other developing countries.  However, the small manufacturing base and low industrialisation have not enabled the industry to capitalise its advantages and strengths.