Survival Package-HM and Daewoo Motors
Posted : August 31, 2004 at 9:25 am [IST]
Every time I think of these two companies I feel like telling my ideas to make the plants working and profitable. Both the plants are having so huge a manufacturing capacity that I feel really miserable when I realize that the whole facilities are underutilized in one case and lying idle in the later.
I am having a natural affinity for HM as I worked for it for almost 36 years starting in its formative years. I knew Daewoo Motors from DCM Toyota days where my friend Late KKMangal was a senior executive. At one time he asked me to join the company. I used to visit it whenever I was in Delhi in those years. I saw it coming up as giant in the area and thought it to play the same role for Noida that Maruti Ltd did for Gurgaon.
Hindustan Motors (HM) at Uttarpara (near Kolkata) was country’s first totally integrated automobile manufacturing plant and is still having a huge capacity for manufacturing. Even if the manufacturing of the old Ambassador (may be oldest in the world today) model continues, it can’t justify so many facilities of yester years. However, HM can certainly be restructured to survive and even grow. With Contessa production discontinued, HM can always think of taking up contract manufacturing of products of other overseas manufacturers with some minimal investment. Contract manufacturing is a new trend in automobile industry. HM facility can take up the manufacture of passenger cars as well as commercial vehicles. It can even contract manufacturer vehicles of some Indian manufacturers for eastern region and Bangladesh, Nepal and Bhutan. It may appear as new idea but it may be a commercially sound proposition.
Further, HM can restructure and integrate its all tool making facilities- sheet metal and forging dies and tools, foundry pattern shop, tool room and cutter grinding- in one. The facility can do independent business of die tools, patterns, jigs and fixture for other engineering companies. The best will be to shift the facilities in a separate location, get them refurbished wherever necessary and commission the facility as a new separate venture. But if the cost does not permit this alternative, it can be done in present location also. However, a totally new managerial staffs will be necessary to make the project successful.
HM is still having one of largest number of sheet metal stamping facilities with large and medium size presses in four lines and huge number of stand alone ones that can serve the industry well as vendor of sheet metal panels. However, HM will require investment if it decides to be a vendor of skin panels. Today almost all car manufacturers are importing their sheet metal panels from their own facilities in absence of good and capable vendors in the country.
Both the forge plant and the foundry with huge underutilized capacity can also be made independent business units and perform to justify its existence. Both are today having a good export demand with closing down of forge shops and foundries in developed countries.
Story of Daewoo Motors India Ltd is almost similar. However, it is a new facility lying idle as GM did not include it in the acquisition of the parent Daewoo Motors in Korea. Almost all the facilities are world class. The plant can be subdivided into four plants- passenger car assembly, commercial vehicle assembly, Transmission plant, and Sheet metal plant.
Passenger car and commercial vehicle assembly facilities can take up contract manufacturing of other vehicle manufacturers who want to get into India. Transmission plant has a huge capacity. It can manufacture components and build transmission for any of the vehicles that are being manufactured in India with only a nominal investment for tooling.
Sheet metal stamping facility can be a reliable vendor for even the skin panels, as the facility includes transfer presses that are latest.
Transmission manufacturing facility can be independently run to manufacture basically any transmission for passenger cars with investment in tooling. It can be almost similar to Kirloskar Toyota Auto component Co near Bangalore that has started production of transmissions for Toyota plants located in other countries. Daewoo facility has a capacity to produce 300,000 units with some investment. It may even start with the production of gears and upgrade to total transmissions. .
If plant and facilities of Daewoo Motors remain idle for a long time, it may loose its advantage. The lenders must try to sell it out to one or more companies. It is a painful affair that a modern plant such as this one is lying idle.
Can the lead lender in Daewoo Motors move fast to sell Daewoo off so that it becomes a productive unit? The region of Noida where it is located is looking for it. I wish someone takes some clues from my suggestions and does something to make these facilities working.
- Indra
Category: Manufacturing |
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