Will US Automakers Take Obama’s Challenge?

Posted on January 27, 2009 by indra

President Obama will soon get the government directive issued through federal regulators to set strict automobile emission and fuel efficiency standards.

The Obama-Biden comprehensive New Energy for America plan on White House website includes a target to put ‘1 million Plug-In Hybrid cars — cars that can get up to 150 miles per gallon — on the road by 2015, cars that we will work to make sure are built here in America’. The government will also create a new $7,000 tax credit for purchasing advanced vehicles.

Will US automakers take up this technological challenge? It will mean a lot of investment in the development of new technologies in a time when almost all of them are almost bankrupt financially and there is hardly anyone but the government to bail them out. It is also time taking.

California wants to reduce the emissions by 30 percent by 2016 to address global warming. California wants carmakers to use paints that reflect more heat, tires that roll smoother and improved air conditioning to boost efficiency beyond the fuel mileage requirements. Researchers will have to work extensively for cutting down the weight of the vehicles with high strength light weight materials, for improving combustion efficiency, and other breakthrough innovations to improve fuel efficiency. US automakers must shun the idea to live on the traditional fossil fuel as main driver and hybrid and hydrogen cell must commercially replace gasoline.

Many other states also want to follow California that basically represent over half the population of the United States. It requires the auto manufacturers to produce and sell vehicles that are 30 percent cleaner. Automakers have only one point reason for not committing- the changes could add substantially to sticker prices. However, according to Mary Nichols, California’s top air quality regulator, it would add a little over $100 to the price of car, and the improvements would pay off within a year through improved efficiency. I wish automakers see the reason behind the need for new technologies for cutting fuel consumption as well as making the vehicles cleaner.

Automakers historically have been producing vehicles based on the bosses’ whims and must now make vehicles with features that match customer preferences and save the mother earth from the ills of the emissions.

It is certainly difficult task for General Motors and Chrysler that were close to declaring bankruptcy. I don’t think US and US automakers are lacking talents for coming out with the engineering breakthroughs that can make them the leader of the auto world. However, it seems the management in driving seats is not ready to change its old mindsets. It requires disruptive innovation both for the product and manufacturing processes. It will have to here after build flexible and lean manufacturing based capacity. It must take the help of the government and union to get over the huge legacy costs. It will have to develop product line-ups that can compete in every respect with the European, Japanese and Korean, who knows Chinese vehicles. The immediate problem of steep drop in demand for automobiles is in all the critical markets worldwide. But US automakers with their presence in almost all these markets has an advantage to pull together the synergies of its talents from all corner to solve its long term problems. Americans, in general, already have started preferring smaller compact vehicles.

I wish Obama’s priority and focus on clean vehicle initiatives make the US automakers take up the challenge and succeed to prove that Americans are really indomitable. I wonder why not US automakers should lead the world when its superiority in engineering and science is well established. It is also strange, as US engineering institutes work in very closely with the industries. Perhaps it is because US no more gets a Henry Ford.

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India as Republic: My Reminiscences

Posted on January 26, 2009 by indra

India became republic on January 26, 1950. Dr. Rajendra Prasad took oath as the first President of India.

In 1950, I started my regular schooling in class six at the age of eleven years in Birlapur Vidyalaya at Birlapur in district 24 Parganas of West Bengal. I passed out my school final examination in 1955 and got admission in Presidency College for Intermediate science course of Calcutta University. Dr. Rajendra Prasad had his education in Presidency too and lived in Eden Hindu Hostel. The plaque on the main gate of the hostel states, ‘Dr. Rajendra Prasad, the first president of India lived here’. I lived in the same hostel for the two years of my course in the college. I visited my college and hostel with Shannon and Anand last January after many years. The memories are sweet.

Interestingly, the first Indian Institute of Technology started in May 1950 in an old prison building at Hijli in Kharagpur, West Bengal. In 1957, after appearing for intermediate in science examination, I appeared in the entrance examination of the lone IIT at Kharagpur and got selected for doing my mechanical engineering that I completed in 1961.

The first Indian car that became known later as Ambassador, based on Morris Oxford, rolled out of Hindustan Motors’ Uttarpara Plant in 1950. Straight from IIT, Kharagpur, I joined Hindustan Motors in 1961as executive trainee that was one of the best paying jobs those days. I worked till 1997 in Hindustan Motors and retired.

I am proud of the educational institutes that I attended, the last two happen to be among the best in India even today.

Are these not great connections with the institutions started in 1950?

I think India must celebrate the Republic Day as well as Independence Day in some unique way that gets acceptance of all the people of all ages in all corners of the country. Can it not become a colour cum lighting festivals for all and thus integrate the Indians? Is it difficult for the Indians to have lighting and fireworks on this day? I am sure Republic Day must be more than just seeing a parade on TV or going out for picnic.

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Corporate Corruption

Posted on January 23, 2009 by indra

Many have raised questions if Satyam scandal is a solitary case of unscrupulous corporate governance in India. I, for one, will like to answer with a big NO. Promoters or the MDs who are generally one of the promoters or from the family of promoters find ways and means to make money by means that may be called unscrupulous means. Most of the small and big companies, particularly manufacturing units generate scraps and waste that are sold in a way that is always suspicious. Mostly, the person responsible is one of the very confidential persons of the top men. I doubt if the auditing can take into account these practices. Purchasing of the general supplies and components constitutes another area that is susceptible for all sorts of corruption. Similar unscrupulous practices may find place in buying capital equipment and machinery. In most of the case, the beneficiaries of all these corrupt practices are the men at the top.

However, there are many interesting aspects of this scandal that require serious in-depth research. Why and when Raju’s mental faculty switched over from building Satyam as a globally top ranking IT service company to siphoning Satyam’s money to personal properties? Did he change on his own or he got induced to do that after some amount of convincing from some near and dear ones from inside the family or some ones from outsides?

40,000 employees worked with Satyam, when the official rolls showed more than 53,000. The inflated numbers made Raju richer by Rs 20 crore a month. Raju diverted Rs 74 billion (Rs 7,400 crore/$1.48 billion) from Satyam for personal wealth for which according to his own confession he cooked the figures in balance sheets year after year. According to a media report, Raju’s total remuneration as the Chairman of Satyam Computer Services Ltd was lower than that of the chief executives and chairmen of the other top four Indian IT services companies. Why would have Raju bothered if he was managing it through ghost payrolls? With the practice of huge lot of temporary workers getting popular in industry, the chances of manipulating the number of men employed and paid become pretty easy as well as difficult to detect. How can any say that the other companies have not been involved in malpractices that are being detected in Satyam scam? Doesn’t it remind us of the cooked muster rolls in NREGS?

According to the state revenue department, the Maytas groups, Satyam and Ramalinga Raju and his family members, all put together bought an estimiated 3,000 acres alone in Ranga Reddy district. I think, inflating land requirement, acquisitions and even grabbing has been pretty prevalent with most of the business houses. Many old companies such as those in textile and jute sector have made a lot of money even after closures through the land sales. Most of these deals have a portion that never comes in open. Big business houses kept on procuring and owning land in different parts of the country in name of some or the other projects.

Infosys chairman Nandan Nilekani considers the Satyam fiasco as a blessing in disguise, as it will make authorities enforce better regulations and auditing mechanisms for the industry. I wish it happens. But basically it is an aspect of business ethics and it depends on the moral values of the people of the country. But I and many were wrongly surprised and shocked to know what Raju did under the intoxicating greed. Unfortunately, most of us talk against greed but we hardly control it when we get opportunity to test our susceptibility for greed.

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Bihar: Something Unusually Exciting

Posted on January 17, 2009 by indra

I wrote in my earlier blog ‘From Janata Durbar to Vikash Yatra’, “I wish him a success if it is not a pre-election gimmick. He should also see that all the normal work doesn’t stop in the area he visits because of the excuse of his visits. I don’t know if he will also spend his nights in the villages to understand the reality from nearer quarter or in the towns with circuit house or some other government accommodations.”

Interestingly, Nitish provided the answer in his ‘last durbar in Patna’, “I will live in tents prepared by prisoners of Buxar jail in the villages. I will have night halt in the villages and will listen to the problem of the people,” Nitish’s Vikas Yatra promises to take the government at people’s doorsteps, officially termed “Janata ke durbar mein mukhyamantri (CM in people’s court)”. Every camp will have accommodations for at least 300 officials, including security personnel. Important departmental secretaries, district magistrates and superintendents of police would accompany Nitish. Will the chief minister or his secretary do some home work about the villages to be covered from one location? Are they having the master plan of the projects for the area or will they prepare one? Will Nitish look into the personal problems such as employment or transfer or financial help?

I have no complaint about Nitish’s Vikas Yatra. It may be a good PR move. It may sort out some grievances. It may provide Nitish a firsthand glimpse of the actual conditions of road, electricity, and health care provisions including the sanitation in the villages. But I doubt if it is an effective way to get the desired fast development. I wish the collectors or Block Development Officers taking clue from Nitish’s Yatra provide the services to the people at their doorsteps in their respective region for which they are accountable. They can have one day of the week for a village or panchayat. Additionally, I request Nitish to address the people and explain how education is bringing revolution in other states and appeal to send their children to schools and to demand better functioning of the schools. It is the education, and education only that can bring about the change. I wish if he requests panchayat executives to prepare a master plan for all the villages and ask for the suggestions to create employment locally.

I do believe that there are many excellent and missionary officers in the state. They require motivations. One such case has come to my knowledge that is related to Kosi. “We are using all the skill and hard work at our disposal. If we fail to meet the work deadline, we will dive in the river and create a human chain to check the devastating of settlements,” said N. Sanyal, the head of the Kosi Breach Closure Advisory Team. It has been monitoring the embankment rebuilding project at Kusaha in Nepal. The statement of Sanyal – a civil engineer of repute – sums up the pace, urgency and spirit with which 72 engineers, 1,500 workers, over 20 trucks and 12 rollers and dumpers are engaged in the massive engineering exercise. This is certainly something that can make one feel proud.

On education front too, the improvements in number appear to be excellent. According to the Annual Status of Education Report on rural India of NGO Pratham survey that covered 564 districts, 16,198 villages and 3.35 lakh households, Bihar has done remarkably well in getting children to go to school. From 13.1% out-of-school children in the age group of 6-14 in 2005, the state has brought the number down to 5.7% in 2008. Similarly, the proportion of out-of-school girls in the age group of 11-14 in the state has dropped from 20.1% to 8.8%. Again the Educational Development Index for 2007-08 prepared by the National University of Educational Planning and Administration (NUEPA) has also similar encouraging news. Bihar has considerable increase in primary enrolment to 11.27% from 8.9% and 8.22% in upper primary from 6.6% in 2006-07. Interestingly, Muslim girls form 46.8% of primary school enrolment and 44.76% of upper primary enrolment.

However Bihar is go miles before it comes anywhere near the developed states of the country. For example, less than 1% schools in Bihar have computers. And it is only Nitish and his government that can provide the infrastructure and equipment. But Bihar must drop the practice of engaging the teachers on a dismal fixed pay. Let it employ the best and dismiss those who are useless, but not degrade the profession.

I wish from the exposure of the rural Bihar in different regions, Nitish may get enlightened and will take some innovative steps for mitigating the misery prevailing in the different parts of the state. I have at least some suggestions.

Can the civil engineers of Bihar come out with some housing design for rural Bihar where the age old practices of living with the cattle be effectively avoided?

Can a cheap water filtration plant for safe drinking for each village be planned and executed?

Can a knowledge kiosk with computer and Internet manned by an interested local person be set up on the line of ITC’s e-Choupal for education, telemedicine, and other services in every village?

Can the women of the villages be engaged in adding to the household earnings through various engagements, be it dairy, homemade toys, or embroidery?

Let the Nitish’s Vikash Yatra bring in a new dawn for Bihar.

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Changing India Bringing Hope

Posted on January 14, 2009 by indra

Satyam saga has shocked the nation. The World Bank revelations and bar against Wipro Technologies and Megasoft Ltd raise doubt about its real intention. Are all these the results of the suddenly slowing economy because of the global melt down started by some innovative and greedy Americans? Have Mumbai menace and the resulting war of words added fuel to the fire? It may be a challenging situation to face many tsunamis from different directions for the government and the people of India. But from all the gloom rises the hope for a stronger and agile nation.

Indian voters elected recently better legislators and good leaders as chief ministers in most of the state that went to poll. Kashmir created history with the voting percentage breaking all records even under the threats of the secessionists and electing the youngest chief minister who may change the course of the state activities from corrupt politics to development for the people. The people’s movement for the ending of the terror from the neighbouring country is spreading fast to prepare the people of their effective roles for any eventuality. Media such as India Today and NDTV have taken some unique initiatives.

Even the government very lately has come up with some bold decisive actions that bring hope. It handled the two nationwide anti-people and wrongly timed strikes of the highly paid oilmen and well off truckers with heavy hands and fast enough to affect the people at large badly. Let the people responsible take lesson. Interestingly, the union and the state governments worked in unison and the politicians with vested interested kept their mouths shut. The transporters and the employees of the public sector oil companies had to call off their strikes without making much damage. And some more news from different sectors provides the hope of better days ahead soon.

According to a study by market researcher Nielsen, India ranks foremost in consumer confidence as investors have been safeguarded by India’s relatively nascent financial markets. Indians are “the most optimistic lot globally who think that their country will be out of the economic recession in the next twelve months.” The Nielsen Global Consumer Confidence study polled more than 26,000 consumers across the globe about their confidence levels and economic outlook.

Even with the automobile market undergoing the worst of the time, the companies are fighting to boost the sales with innovative and globally competitive products. Mahindra and Mahindra has launched Xylo, a multi-purpose vehicle, targeting high-end consumers. Tata Motors is busy in bringing Nano to market. Infosys for the December 2008 quarter has come out with its robust results on the back of improved operational efficiency. Infosys, the country’s second largest IT exporter has reported substantial fall in its expenses including selling, marketing, general and administration (SG&A) costs thereby improving operating margin for the third quarter increased by 200 basis points (100 bps= 1%) 35.1% from the previous quarter.

Jammu and Kashmir government will set up 119 model villages in the state at an estimated cost of Rs142.80 crore with every village spending Rs 1.2 crore. Will the heavenly valley extend to its villages too?

And news from my home state makes me excited. Nitish Kumar in “Janata ke durbar mein mukhyamantri (CM in people’s court)” programme “will live in tents prepared by prisoners of Buxar jail in the villages. I will have night halt in the villages and will listen to the problem of the people.” I had similar suggestion in my blog from ‘Janta Durbar to Vikash Yatra‘.

Am I doing a mistake in dreaming positive?

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US carmakers: A Clear Message to Innovate and Survive

Posted on January 10, 2009 by indra

US government recently provided financial assistance to GM and Chrysler. However, the companies must come out with a survival plan by the end of March 2009. And many consider this as a last chance for the survival of the domestic auto companies. Many conceive this as a chance for America to lead the world in technologies and manufacturing management related to automobiles. The Big three must agree to make only cars that are fuel efficient enough to get at least 50 MPG by 2011, 75 MPG by 2013 and 100 MPG by 2015. Failing to do that, the companies should go into bankruptcy and fend for themselves like all the other businesses that are having trouble.

American lawmakers interestingly have at least invented a new concept of ‘Car Czar‘ who knows how to spend the bailout money. According one expert, the ideal candidate for holding the position of Car Czar “would possess the manufacturing skills of Lee Iacocca, former president and CEO of Chrysler, who is credited with reviving the company; have the retail abilities of Michael Jackson, CEO of AutoNation, the largest chain of auto dealerships in the country; and have the diplomatic skills of former Secretary of State Henry Kissinger to negotiate with the auto unions “to realign and restructure their compensation and benefits package to enable domestic manufactures to be competitive.” Is US or for that matter the auto world having one such superman? I wish US finds one. There are hopes in two other innovative concepts: Better Place and Automotive X Prize.

Better Place is a new model for power distribution to replace the old model of gas stations that supported the evolution of the automobile to this point. Better Place’s revolutionary concept for distribution of power to vehicles actually lowers the price of the vehicle by making the battery free to the consumer and automaker, while a subscription allows the user to only pay for miles traveled. As reported, Better Place is taking hold in countries around the world and in some areas of the US.

The Automotive X Prize is a race of 100MPG vehicles across America in 2010 sponsored by the Progressive Insurance Company. As reported, “There are many entries. These cars must be safe and have a business plan that allows for at least 10,000 units per year. Automotive X prize contenders need to share their knowledge with the Car Czar.”

“Lincvolt, an X Prize contestant, is a 2.5 ton, 19.5 foot American classic now attaining 65 MPG utilizing electricity and domestic fuel. The converted 1959 Lincoln Continental MK IV demonstrates that today’s big sedans SUVs and pick-up trucks can get at least 50 MPG if they are fuel-efficient and use electric power, making it obvious that smaller cars could do even better than that. Ultimately, the Lincvolt team aims to demonstrate a Lincvolt hydro bio-electric series hybrid that will attain 100MPG with domestic fuels and very low emissions. In February, Lincvolt will begin an historic drive to Washington to showcase “the people’s fuel,”

Can America take back the reins of innovation and show the true wave of the future? Will America be able to lead the world?

It gives one in automobile industry a wonderful feeling seeing that happen. I wish the technocrats and managers of other developed and developing nations would have participated in the project.

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From Janata Durbar to Vikas Yatra

Posted on January 4, 2009 by indra

I hardly find any news regarding Bihar these days in the national dailies or TV news channels in New Delhi. Either the reporters don’t find Lalu as zester selling any more or they are not getting the incentive they were used to receive earlier. And hardly anything significant that can be of nationwide interest happens in Patna, the only city that Bihar governments are promoting since last six decades. I don’t remember when Bihar held Indian Science Congress or even a 20-20 cricket match.

Kosi deluge and the relief work thereafter did put Bihar in news. Most of them talked about the inefficiency of the relief operation and apathy of the bureaucrats. Even recently also I came across a shocking report about many of the flood affected poor people now staying at a makeshift relief camp at Jadia Middle School under Treveniganj block in Supaul who are facing grim situation because of severe winter condition.

Bihar’s engineer-turned-politician chief minister has announced to embark on a development march where he promises to provide service to his people right at their doorsteps. Perhaps this is another experiment after his Janata Durbar to reach to the people. I wish him a success if it is not a pre-election gimmick. He should also see that all the normal work doesn’t stop in the area he visits because of the excuse of his visits. I don’t know if he will also spend his nights in the villages to understand the reality from nearer quarter or in the towns with circuit house or some other government accommodations.

I wish the government with all the aids from the centre and various international agencies and individuals would have taken up the rebuilding plan in Kosi deluge affected regions with the same planning skill and efficient execution speed as those of the relief works in the Tsunami affected areas in South. Will the relief work include the building of safe highland disaster relief centres that may have cluster of the school, panchayat bhawan, information kiosk, community centre, health care and trade training centre along the highways with multipurpose uses for all situations?

I am sure many like me must be feeling sorry and sometimes angry with the news reports of the Lalu’s childish endeavours to gain publicity or to prove his concern for the people at the cost of the taxpayers’ money. Is it prudent to spend on full page advertisements of railway functions in Jamalpur and Bhagalpur in national newspapers? As reported, the railway minister has laid the foundation of or inaugurated as many as 15 railway projects in Bihar within 28 days “to make Bihar the best”. Is it not a very late realization? Lalu claims to “have planned to spend over Rs 65,000 crore to set up railway-related factories, a wagon factory in Chhapra and Digha-Pahleja rail bridge and services” in Bihar. Can we believe this? Lalu Prasad gifted Bhagalpur a weekly train to Yashwantpur in Bangalore and announced setting up of a railway divisional headquarters. As it appears, the train will facilitate the students of the region to go to Bangalore for seeking admissions in professional colleges that the Bihar failed to set up in last sixty years. Paswan has inaugurated the revival of the moribund Baruani Fertilizer factory in north Bihar’s Begsarai district. In last few years that he is minister, he could have certainly done better for Bihar. Lalu and Paswan mustn’t take the people of Bihar as fools who can get content with these gimmicks. They will prefer to not have those projects rather than having them in chairs again.

Leave aside their constituency it is unfortunate that the politicians of Bihar starting from Rajendra Prasad and Jagjivan Ram have hardly done anything for even their own villages where they were born and the schools where they got the pre-college education unlike Mulayam and Mayawati.

Competing with each other Nitish Kumar, Lalu Prasad and Ram Vilas Paswan have either led foundation stones or inaugurated many ambitious schemes. No one knows if that would ever come up. As reported by many from Bihar whom I meet often, Nitish Kumar government has been working hard to improve the road, power, school and health sectors. Nitish government has also made kidnap trade slump and has also taken some tough decisions, for example, one to sack 15,000 primary and secondary school teachers with fake degrees and certificates. Some other achievement regarding encouraging clean administration is also is a good beginning.

However, I wish Nitish would have taken up some fast track projects to increase the employment of the locals that he keeps on promising to Biharis to eliminate their humiliations in far flung states where they migrate for finding their livings. Will he consider concentrating on just two sectors- food processing and tourism? Can he select few of the smartest and efficient officers for getting industries related to sugar, potatoes, licchis, and mangoes? Many a time it appears his hard work is not giving visible results as he lacks the right cabinet ministers and officers to assist him. I wish he focuses on it. He can certainly succeed but not only by vote-bank related political moves.

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Future Cars: Necessity and Innovation

Posted on January 3, 2009 by indra

2008 perhaps saw the biggest rise and fall of the stock market indexes as well as crude oil price. A priority for changing the source of energy of automobiles from fossil fuels to alternative fuels appeared to becoming a necessity. Hybrids also got a major push. I wonder if the companies will continue to push for the innovative endeavours when the crude oil has tumbled down to a low never expected and same is the case of gasoline price.

GM, the mightiest of yester years and with perhaps maximum expenditure on R&D in auto sector world over even while facing a fear of bankruptcy still pins hope on Chevy Volt to salvage the situation. Interestingly, the GM chairman drove in this hybrid to plead for the bailout second time with lawmakers in US after getting a bitter press for using expensive private jet first time. Unlike a conventional hybrid Volt uses its engine as a generator for its lithium-ion batteries and is plugged in for recharging GM is investing $1 billion or more in the Chevrolet Volt, a plug-in hybrid, as a big long-term bet. According to GM, the car, which is scheduled to arrive in showrooms in late 2010 two years from now, will be able to travel 40 miles on a charge, but it will also have a small gas engine to extend the range to as much as 640 miles using both the battery and gasoline (the 1.4 liter, four-cylinder engine is intended to run a generator that will power the car and recharge the batteries once they are depleted). It may cost about $40,000.

In the meantime, on Dec. 15, the Chinese battery maker turned car company, BYD Auto went ahead of General Motors, Toyota, and Nissan by introducing in Shenzhen the first mass-produced plug-in hybrid. BYD’s new car, with a $22,000 price tag (about the same as many Chinese-made mid-sized cars), can run for up to 60 miles on a battery charged from an ordinary electricity outlet.

Toyota had been the pioneer in hybrid car with its large scaled produced Prius. Toyota has sold over one million hybrid cars across the world. It has gone further integrating solar panels in its cars of future. According to the latest report, Toyota motors of Japan that posted its loss first time in last 70 year is secretly developing a vehicle that will be powered solely by solar energy in an effort to turn around its struggling business with a futuristic ecological car. The solar car is part of efforts by Japan’s top automaker to grow during hard times.

Tesla Roadster is another innovative product, an all electric car with the aim of proving that electric cars do not have to be slow pokes. It can accelerate to 100kms per hour in four seconds and can be recharged from a wall socket.

But where are the mass produced hydrogen fuel-cell cars that have been promised for a decade. The Economist called it ‘the car of the perpetual future’. In Las Vegas in January 2008, Rick Wagoner, the CEO of GM unveiled the Cadillac Provoq, a new hydrogen fuel-cell concept car with a drivetrain emitting only water vapour, a 300-mile range and a top speed of 160kph (100mph), but again with no promise for the date of commercial introduction as usual. Interestingly, a decade earlier, in 1998, Mr Wagoner’s predecessor, Jack Smith, told the Detroit auto show that GM had a plan to produce a production-ready fuel-cell vehicle “by 2004 or sooner”. Ford also saw fuel-cell cars as being a viable alternative to petrol cars.

But another question is also quite pertinent. Why can’t a car get 50 miles per gallon? All new cars in Europe average 43mpg, or in Japan, the average hits 50mpg. The United States is stuck at 25mpg in its considerably larger and more powerful cars, trucks and SUVs. According to Don Hillebrand, a former Chrysler engineer and now director of transportation research for Argonne National Labs, “Auto companies can deliver it within a year.” The quickest way to make a car more fuel-efficient is to make it smaller, lighter and equip it with some high-tech (a.k.a. costly) propulsion system like a plug-in gas-electric system.

It will be interesting to learn of an exercise Ford just went through. It ran a computer simulation on what would happen to the mileage of a Ford Focus small car if you built it entirely out of lightweight aluminum. Losing the steel allowed the Focus to drop 1,000 pounds-30 percent of its body weight. That enabled Ford to outfit it with a tiny one-liter engine, half the size of its old engine, but far more fuel efficient because of new technology. Interestingly, the small motor goes just as fast as the big one because the car is so much lighter. The result: fuel economy on this fabulous Focus went from 35mpg to 50mpg. However, the cost of an all-aluminum car could top $50,000. GM hosts a live chat about the potential for a 100 mpg car.

And in India while M&M has its ‘micro-hybrid’, all the car manufacturers will start putting a ‘Fuel Efficiency’ sticker on all new cars after January 1, 2009 that will provide the car’s optimum fuel economy in a combined (city and highway) cycle certified by Bureau of Energy efficiency. I still wonder if Tata Motors’ Nano, waiting to get into market soon will be really fuel efficient and safe enough to enter the markets of developed countries.

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Sudden Slowdown in Indian Auto Sector

Posted on January 2, 2009 by indra

The slowdown in Indian auto sector-both for OEMs as well as auto component manufacturers, has been sudden and so is worrying for the country. Domestic sales are going down because of credit squeeze by banks financing it. Interest on loans and so EMIs has gone up. Banks are too cautious and reluctant. Banks have been tightening credit standards. Interest rates on car loans hover at around 14% to 18%, up from 10% to 12% not long ago. I wonder why the interest rate in India is so much high as against the rates charged by the banks in developed countries. Is it because of the lack of the operational efficiency or the greed to make too high profit? It has made customers to go either in saving mode or the waiting mode (window shopping) for better price.

Tata Motors and Ashok Leyland have cut production by closing for few days every month. Exports have reduced. Even Hyundai India that exports maximum number of cars has cut a shift, from three to two.

Every day one or the other news appears about the reduced sales of some companies. Is it the aftereffects of US meltdown that has made US Big Threes vulnerable towards bankruptcy? Can Bush bailout save the American auto sector? Will the managements of Detroit Three restructure enough for survival and growth? Will the new products in pipeline such as hybrid Chevy Volt save GM? How much time will it take for recovery of the economy? Auto industry in Europe, Japan, and even in China is in problem. Toyota for the first time has posted loss.

Drastic reductions in production of vehicles in US and even in Japan have shrunk India’s exports of auto components too. While the manufacturers might not have resorted to layoffs of workmen, the situation remains grim and it is difficult to predict what are in store if the global slowdown continues?

Everything was going fine. India’s auto component manufacturers had come out of the cocoon scaling up production, designing and manufacturing to the world class standard, and getting some brand name through TQM, Six sigma, TPM, Deming prizes and ISO certification. Some of the manufacturers were going in top gear with acquisitions in Western countries and export to almost all the big auto OEMs of the world.

Until a year ago, India was the fastest-growing automotive market in the world. Today the $33.3 billion Indian auto industry has slumped to an eight-year low. In keeping with Toyota’s global practice, the companies are resorting to training sessions during plant holidays to ensure that the workforce is not idle. Some may go to work on corporate social responsibility projects.
Slowdown has also slowed the companies’ investment plans to expand capacities. The company such as Nissan-Renault has decided to go slow on Greenfield projects in Chennai.

The Chinese auto component manufacturers are adding fuel to the fire through dumping, particularly for India’s auto component manufacturers. A large number of smaller companies are resorting to layoff and even shut down. Big manufacturers, such as Tata Motors, Bajaj Auto, Ashok Leyland, Mahindra and Mahindra, TVS Motors and Ford Motor India, find it cheaper to switch over to the Chinese imports. Instead of helping the small manufacturers, many are already sourcing important components from China and reaping the benefits of globalization. The government assumes that some tax concessions are good enough for revival or to face the Chinese competition. It is unfortunate that the government and the manufacturers associations such ACMA, SIAM or CII have no strategy to make India’s small manufacturers competitive. According to the Automotive Component Manufacturers’ Association, auto component imports from China have risen by 130% in the past two years and now constitute more than 15% of the total components imported from other countries from 1.5% in 2003-04. The value of auto component imports from China stood at Rs 2,200 crore in 2007-08. Uncertainty of orders flow from US and European carmakers in trouble is also worrying the auto component manufacturers. Some good news from some OEMs in Europe such as one from German auto major, Volkswagen AG may give hope, but such news are rare.

I don’t know if the people in general realize the consequences of the slowdown. Every truck sold creates employment for 5 persons on average. Even a car provides employment, the higher end ones more. Can one tell me the number of persons in India employed as drivers, cleaners, and motor mechanics?

To keep the auto sector booming, Indian banks, most in public sector must keep the credit flowing to the genuine customers of vehicles, cars, trucks or tractors who are capable of paying back. The banks must cut down their operational costs to keep the interest rates similar to one by MNCs using IT and other technologies.

Auto manufacturers must work drastically on disruptive cost innovations along with R&D for fuel efficiency improvements and other product upgradations. Let Nano be a guiding philosophy for pricing, and not the Western pricing methodologies.

The government must be proactive in helping the manufacturing sectors through better infrastructure, government R&D facilities, and rational tax structures. I still think that the luxury cars of higher prices including Hybrid ones must have lesser tax burdens. The amount of tax collected on these cars at higher rates can’t provide any employment even if the government invests the amount for the purpose. However, each of these cars sold will need a driver or two and some more to maintain.

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India 2008-The Year That Was

Posted on January 1, 2009 by indra

The year 2008 had been volatile with India emerging high as well as seeing some low. I have here some 10 events of 2008 that gave me a lot of hope and happiness, though some even very personal.

1.Indo US Civil Nuclear Deal: Finally after almost three years or more of hard work that saw many worrying moments, on October 9 President George W Bush signed the Indo-US nuclear cooperation agreement it into a law after the approval of US lawmakers. In some what exceptional way, the International Atomic Energy Agency (IAEA) approved nuclear safeguards agreement with India, and then on September 6, 45-member Nuclear Suppliers Group approved Indo-US civil nuclear deal. Naturally the credit of the Deal must go to the perseverance and shrewd political moves of Man Mohan Singh. And I hope by now India would have arranged sufficient of uranium fuels to run its existing nuclear plants that were starving for the fuel at the optimum of efficiency.

2.Unique Indian Innovation: Ratan Tata unveiled the world’s cheapest car, the Rs 1-lakh Nano, at the ninth Auto Expo in Delhi on January 10 and got the accolades from the auto experts from all over the globe. Tata Motors went for the speediest possible implementation for productionizing Nano at Singur, West Bengal. However, on October 3, Tata Motors had to pull out the Rs 1-lakh Nano project from Singur. Rattan Tata told the West Bengal CM, Buddhadev Bhattacharya with a heavy heart that the situation at the factory site in Singur not suitable for further work, owing to the agitation led by Trinamool Congress leader, Mamata Banerjee who had become the villain to sabotage this great national project that could have become a pride for India. On October 7, indomitable Ratan Tata signed agreement with Gujarat CM Narendra Modi to set up the Nano car manufacturing plant in Sanand, 30 km from Ahmedabad. India will have to wait till 2009 end to get Nanos in number. Singur became a part of failed India and its politicians. With the global meltdown, particularly affecting the auto industry world over, people will still wait for Nano, if it proves itself as necessity in every family.

3.Historic Waiver: Union Budget on February 29 announced the biggest-ever loan waiver for farmers in Indian fiscal history at Rs 60,000 crore (perhaps much more) benefitting about 30 million small and marginal farmers. Some have questions. Are the farmers smiling? Will it prove as disincentive for those who regularly return their loans?

4.Indian Automaker Becoming Global Player: Tata Motors on March 26 acquired Jaguar and Land Rover of UK from Ford Motors for $2.3 billion in cash, the largest acquisition by an Indian company in the automobile business. Will Tata Motors succeed where Ford with all its technical strength and deep pocket failed? Perhaps it will be a challenge as well as an opportunity to the Indian entrepreneurial and managerial talent? Ratan Tata has become one of the most visible CEO in global media titles. No one could even dream the height he has reached when he took over from legendary JRD Tata with so many dissenting oldies heading Tata enterprises.

5.Expanding Mobile Market: July saw the addition of mobile users at 9.22 million. Some considered that as record. But now the monthly figure of additions has gone up to 10 million or more. Indians bought 5,000 mobile phones every day of the year total number of mobile phones subscribers in the country reaching to 325 million. And it is not only mobile phones, even the shipments of consumers notebooks grew by 141% during the first quarter of 2008, according to International Data Corporation, India.

6.Maiden Lunar Mission: On November 8, Indian maiden unmanned moon mission, Chandrayaan-I of ISRO entered the lunar orbit. On November 14, Chandrayaan-I sent exploratory stick on the moon. India becomes the fourth nation to mark its presence on the lunar surface. And the scientists and technocrats of ISRO are making the organization globally important and earning revenues too. The Indian Space Research Organisation (ISRO) has successfully conducted the flight acceptance “hot test” of an indigenous Cryogenic Engine. ISRO has already completed the design of Chandayaan-II ISRO is earning about Rs 10 billion (Rs 1,000 crore) annually from its commercial wing. This is expected to grow at 20 percent per year. Can some of the researches and innovations at ISRO be transformed into products in demand world over?

7.A World Class Company: Reliance Petroleum commissioned a second refinery in Jamnagar on December 25. The Rs 25,000-crore refinery, with processing capacity of 580,000 barrels a day, is the sixth largest refinery in the world. Together with the existing Reliance Industries’ refinery, the total capacity of the complex will go up to 1.24 million barrels a day making it the largest in the world at a single location. The refinery, with a Nelson complexity index of 14, is capable of refining low quality crude oil and producing high quality fuels, which will boost its margins.

8.Envious Neighbour 26/11: In multi-location attacks in Mumbai at Chhatrapati Shivaji Terminus, the Taj Mahal Palace & Tower and the Oberoi Trident, and the Orthodox Jewish-owned Nariman House, Pakistani terrorists armed with machine-gun and grenades killed at least 183 people and injured 308. Will the people protests end with the resignations of ministers or the country’s government come out with long-term measures that don’t allow it to happen again? Will the neighbour have its change of heart without any punitive action from India? Will it take a lesson from the exhilarating participation of the people of J&K in its recent assembly election and its message? (Read Prem Shankar Jha’s views. ‘A new way has dawned’.

9.Barrack Obama Win and America: On November 4, Barack Obama, 47, got elected the 44th president of the United States becoming the first African-American to hold the post. Americans proved their liberal and secular depth and took its democracy at its unprecedented height. Will it be a lesson for Indians? Can Indians prioritize their identity as Indian and the interest of India over all other practiced in reality?

10.And a personal event, Krish Arrives: And on September 25, Krish arrived. We became 13 because of the grace of the Almighty whatever may be His name.

So thus ended 2008.

Let 2009 see the end of the global slowdown fast. With so much of talent available, it will be really a sad thing if the people who matter can’t find out an effective and fast solution to overcome the misery of the meltdown.

Wishing A Happy New Year 2009 For All.

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