Machine tools play a crucial role in the manufacture of precision components, which enable the production of robust and reliable equipment.
Without machine tools, no components or parts would exist. Without components and parts no machines would exist. Importance of machine tools in the manufacture of an equipment, irrespective of its form or nature, is undisputable. The manufacturing sector - especially the automotive and equipment sector - is one of the largest consumers of machine tools, driving the development of new products and technologies that would give it an edge to stay competitive in an environment that is no less challenging.
Machine tools could range from a simple lathe to an advanced 5-axis machining centre. Both assure precision of manufacture, whether it involves shaping a plastic mould or machine a metal part - as small as a plastic fastener or as big and heavy as a wheel of a mighty dump truck. Considering the intricacies of manufacture and demand for parts with low levels of tolerance, which translates into low PPM levels, machine tools have been playing a crucial role. They have been ensuring that equipment operate more efficiently than ever, are reliable and meet the stringent norms. The comments of L Krishnan, President, Indian Machine Tool Manufacturers´ Association (IMTMA) and Managing Director, TaeguTec India, assume importance here. He opines that the key user industries such as the automobile, auto components, defence, aerospace and power are set to fuel the growth of the Indian machine tool industry.
The machine tool industry is estimated to be Rs 460,000 crore strong. Germany has been the undisputed leaders in machine tools followed by Switzerland, Italy, Korea, USA, Taiwan and others. Classified mainly as metal cutting and metal forming machines (IMTMA segregates the production of machines into CNC machines, non-CNC machines, metal cutting machines and metal forming machines), not including the machine tool accessories or those that find use in the manufacture of non-metallic parts such as plastics, the machine tool industry is truly global with a local approach for every market. The Indian machine tool industry for example, is a mix of both organised and unorganised players. Estimated to be worth Rs 9,000 crore, the Indian machine tool industry is highly focused on the needs of their clients, which could range from a tiny lathe shop to an advanced manufacturing facility for aircraft components. From technology perspective, the auto and equipment industry range somewhere in between. These two segments also make one of the biggest consumers of machine tools. Enjoying the presence of almost every automaker and equipment manufacturer along with their suppliers, India makes a good machine tool market. Therefore, it is not surprising to find local and foreign players competing for a good share of the machine tool market in the new as well as used market in the country. It is not surprising to find a 40-year old lathe with ´Made in England´ inscribed on it in an SME shop. The machine besides the lathe is the most modern machining centre Haas has to offer. Such manufacturing set ups are also reflective of the fact that foreign partnerships in the Indian machine tool market add a unique flavour to it. According to a recent survey by IMTMA, by FY2016-17, the share of the domestic manufacturers is expected to grow by 50 per cent. By 2020, the industry is expected to grow to Rs 23,000 crore.
The quest for competitiveness by the equipment sector has prompted the machine tool industry offer solutions that are both efficient and reliable. This is backed by huge investments by the machine tools and accessories industry in R&D, which then translate into the creation of machine tools that are truly cutting edge. Modular units for example, with multifunctional capabilities and titanium carbide, titanium nitride and aluminium oxide-coated cutting elements that last long, ensure top quality of manufacture. Given the rate at which the components industry in India is looking to grow, machine tool operators, by 2020, will have to scale up 7-8 times in terms of capacity. The Indian machine tool industry and the component industry are not on the same page, at least for now. The machine tool industry has not capitalised on the growth of the automotive and equipment industry, the components end of which are closely interlinked. It is no secret that many auto companies and automotive suppliers cater to the needs of the equipment industry, may it be a mining tipper, a forklift truck or a backhoe loader.
The fact that the machine tool industry has not capitalised on the growth of the component industry, which caters to the needs of numerous industries and not just the auto or equipment industry, is ironic but true. The scope for foreign machine tool players has been high therefore. It will continue to be high until the Indian machine tool industry climbs on to the same page as the components industry. Aggression is required in working more closely with their clients and seeking better participation between the academia and the industry. The reliance of Indian manufacturing sector on imported machine tools is also partly to do with the need for high precision machine tools, irrespective of the fact that an imported machine tool costs much more than the one produced locally.
Free Trade Agreements (FTAs) with countries like South Korea do help when it comes to procuring the right machines and tools, and at the most competitive costs possible. Germany, as mentioned earlier, continues to have an edge. It continues to be at the forefront of offering some of the most sophisticated and productive machine tools in the world. Other markets like Korea and Taiwan are catching up. For the cost advantage they offer, Chinese machine tools are also finding acceptance in India. Close to 33 per cent of the component industry in India is estimated to source imported machine tools. Dependence on imported machine tools will not diminish overnight. Many local players are investing in technology and ramping up capacities in an effort to introduce the best machine tools a market could offer. However, it will take time. Vikram Sirur, past President of IMTMA, says that there is a need to create new capacities, which requires high technology. Drawing attention to the fact that the Indian machine tool makers presently lack technology to improve their product portfolio, he opines that to get technology there is a need to tie up with overseas companies.
New technologies in the machine tool space are finding their way to the Indian manufacturers. This is certain to diminish the reliance on imported machine tools eventually. The emergence of a local machine tool industry would also unleash export potential, which would lend the Indian machine tool industry the reputation it need apart from earning valuable foreign currency. At the lower end of the spectrum, exports is already an activity to reckon with. Expecting to bridge the $145-billion mark by 2016, the Indian machine tool industry currently earns in the region of $4.1 billion. Some of the home grown machine tool manufacturers that are expected to drive exports include Lokesh Machines, Bharat Machine Tools, PMT Machines, Machine Tools Industries (India), Jyoti CNC and others. They along with machine tool manufacturers like Meiban Engineering, Kennametal, Ace Micromatic, Haas, Taegu Tec and Yamazaki Mazak make up the organised part of the Indian machine tools industry.
Moving over to where the unorganised players operate, the challenges seem to amplify. The biggest challenge the unorganised part seems to encounter is finance. There are other challenges too. Offering small and medium scale enterprises with machines that cost lesser than those offered by the organised part, the challenge of securing finance also translates into a growth hurdle for many, especially for those machine tool companies that undertake retrofitment jobs.
It is no secret that many companies, understanding the need to automate, have been investing in modern, automated machine tools. Despite the need, many companies cannot and turn to retrofitment.
A retrofitted lathe costs considerably less than a modern CNC machining centre, which costs about Rs 35 lakh. It costs almost one-third the price of a new CNC machining centre.
Retrofitted lathes offer better precision and higher speed. Those who execute such jobs, procure CNC controls from a third-party and fit them with the help of suitable modifications. It is solutions like these that have found a place of pride in the Indian machine tool industry apart from indicating the complexity of undercurrents.
The fact is, the component industry is demanding. It therefore looks upon the machine tool industry to serve its many needs apart from the ability to operate at a global level. Especially, when one considers the fact that the components made in India are going to find use in a Toyota forklift that is made in a foreign market. Similarly, a hydraulic system component made in India is certain to find use in a Terex wheel loader or a Manitowoc mobile crane in some other part of the world. The possibilities are immense, and the scope of the components industry is growing. What makes it imperative therefore, is for the organised as well as the unorganised players in the machine tool industry to understand the challenges that will strike the component industry in the future. Understanding these challenges and addressing them even before they strike will assure good growth for the component industry and equipment manufacturers. It will also assure growth for the machine tool industry.
In fact, the growth impulse is back. The order inflows for machine tools are about 30 per cent better now than during the same period the previous year according to Krishnan. He is optimistic on the fact that the demand for high-end machines is on the upswing.
- Bhushan Mhapralkar