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(Continued from last fortnight)
When I was in Delhi once, I ran into the Sales Manager of Pan American World Airways, Seshadri. I tried to impress upon him the focussed readership of Mobile in South India and asked for Pan Am's advertisements. Pan Am was then the largest global airlines. Seshadri pointed out the difficulty of advertising in all newspapers and magazines across the globe. I offered him a barter: 12 colour advertisements for a return ticket to Europe; I had long been intent on visiting industrial facilities abroad. And lo, Seshadri agreed!
The Press Bureau of German industry representing six major German corporations agreed to host me for a week in Germany to look at the production facilities of the six companies that built the Rourkela Steel Plant. The German Consulate agreed to provide another week's tour of Germany to cover several automobile plants, including Daimler Benz, VDO and Volkswagen. The topping was the offer of a visit to the Hanover Fair. The programme took care of travel, stay as also the services of a guide, and even a visit to East Berlin.
H.B. Stanford, a British engineer who worked for Simpon's, provided a reference to a senior manager of British Leyland who, in turn, introduced me to the Society of Motor Manufacturers and Traders Ltd (SMMT), the organisation that represented the British auto manufacturers. SMMT offered a three-week programme that took care of my visits to several leading British auto companies, including Rooters Motors, Leyland Motors, Standard Triumph, British Motor Corporation, and also component manufacturers like Forte Dunlop, Joseph Lucas, Tube Investments, York Trailers and Edbro Tippers. SMMT stated that I was the first non-European journalist to have such a close look at the British auto industry with such rich facilities.
Of course, it was not the best of times for foreign travel. The foreign exchange position was extremely tight. Also, remember the country suffered a steep de-valuation of the Rupee just a year earlier? The RBI would not clear my travel until late Saturday. I was to leave for Delhi and catch the flight to Frankfurt on Sunday night. The Exchange Control Chief at last relented and permitted my travel with a P form clearance that permitted around 3 Pound Sterlings and 10 Shillings of foreign exchange to cover my travel in Germany!
I got the clearance for my trip to London with more foreign exchange while I was in Germany.
It was boom time for Europe, Germany and UK were enjoying unprecedented prosperity and growth. I could see production booming in the dozens of factories I visited. Among the best of them was the visit to Volkswagen. It was producing the single model Beetle for the global markets at the rate of 6200 cars a day! Those were the years of centralised production of large capacities and shipments to different markets. This changed over the next two decades to having assembly plants nearer to consumption points.
The experience both elated and depressed me. Elated in looking at cutting edge technologies in the engineering sector and the heights of engineering excellence and productivity. Depressed in looking at India's screw driver technology and the low scale of production. India's annual production of 50,000 vehicles distributed amongst three manufacturers was the equivalent to a week's production in a single company, Volkswagen. I understood the long haul before India to catch up with the developed countries. I decided to phase out Mobile and launched the Industrial Economist (IE) with wider focus on industry and economic development.
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When I re-visited SMMT a few years later, I noticed the full impact of globalisation experienced by the Western countries. The several household names of the auto industry in the UK had vanished. None of the large British-owned automobile manufacturers had survived: BMC, Rootes, Standard Triumph, Leyland and Rover were all dead and gone. Even in the component sector, there had been mergers and acquisitions by global giants. Interestingly, UK retained her yen for design, research and development.
The limited volumes of production in India did not provide for any great interest in research or innovation. For years, the industry was content to buy technology and continue with repeat production, paying royalty for dies, tools, components and sub-assemblies that had to be imported.
When the collaborations initially entered into had ended, auto manufacturers scrambled to continue with production on the limited endowments and skills assimilated. Falling demand and limited resources came in the way of interest towards quantum growth.
I cite a Chennai experience:
Standard Motors (SMPI) was built on the initial healthy relations with Standard Triumph of UK. SMPI entered into collaboration for progressive manufacture. The initial models like the Standard 10 and the Standard Herald were sleek and reliable. With sizeable import content, the quality was also consistent. When the collaboration ended, SMPI designed the Standard Gazel with several modifications over the earlier models. But, the Gazel did not attract much attention. The company concentrated on the Standard 20 light commercial vehicle which enjoyed better custom.
I expressed interest to buy a Gazel. The then Managing Director K.V. Srinivasan initially told me that there were no plans to manufacture cars in the immediate months. A couple of days later he phoned and informed that if he got orders for 20 cars with full payment of on-the-road price, the car would be delivered in three months. I persuaded S. Ramayya, working for SPIC, to join me. We ordered two Gazel cars, handing over the full payment. Three months elapsed but there was no delivery in sight. When pressed for it, the company's legal advisor sent a terse note that there was no firm commitment on the delivery date!
I took up the matter with the then Secretary for Heavy Industry V. Krishnamurthy (VK). He was nice in asking a colleague of his to enquire with SMPI.
I noticed electrifying action. The company galvanised its purchase team to procure components, obviously not from major vendors as the volumes were low and the time was short. I heard from a paints dealer about the company procuring a few litres of paints from him! Ramayya and I did receive our cars in the next few weeks!
I did not witness much interest on the part of even larger manufacturers like Ashok Leyland Ltd. (ALL) to spend on R&D. For decades, ALL was making bus chassis on the Comet truck chassis which meant that a chassis designed for a 10-tonne payload was being used for building buses for a payload of 3 tonnes and less. Almost till 2000, for full five decades, R&D spend by leading manufacturers like ALL and Bajaj Auto was negligible. They spent about 0.17 per cent of sales; contrast that with Daimler Benz and Japanese and
South Korean manufacturers who were spending about 10 per cent of their much larger sales on R&D. – (Courtesy: Industrial Economist)
(To be concluded)
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