Airbus, the world’s biggest commercial aircraft maker is evaluating an Indian aircraft assembly line, its second such unit outside
Europe after China, as the company seeks to reduce its production costs by at least 20-30% and serve the Indian market better.
arnataka and Tamil Nadu are two states being considered by Airbus for the Final Assembly Line (FAL), which will include around 2,600 metre long runway and facilities for painting, tests and final delivery of the plane. Depending on specific requirements and other costs, Airbus may have to invest around $600 million in establishing the facility in India and employ anywhere between 600 and 1,000 people across various processes.
The new assembly line, expected to be established within 3-4 years, will help in growing India’s commercial aviation supplier market from around $1.5 billion to almost $3.8 billion by 2014, providing more opportunities for the local aviation companies, including QuEST and Dynamatic. Chief executive Tom Enders said last month that his company will need to have production facilities in the US, China and India in order to remain competitive. Airbus, which is set to roll roll out its first China-made A320 from its assembly line in Tianjin, is seeking to reduce its production costs and globalise its manufacturing by establishing such units outside Europe.
The company has three aircraft assembly units in France, Germany and China. “We currently do complex assembly sourcing from India, very similar to what we started doing in China few years ago. We believe what we did in China can be repeated here,” said Airbus head industrial cooperation projects, Dwarakanath Srinivasan.
When the FAL is established by Airbus in India, it will have a capacity of ‘Rate 4’, which is a production capacity of four planes in a month.
“Airbus aims to have Rate 4 capacity for producing A320 in China, and India should be no different,” the person added. “An Indian assembly line will be at least 20-30% cheaper than a similar unit in Germany or France because of much lower labour costs,” he said.
Rising operational costs and pressure on profitability are reasons for Airbus to establish manufacturing units in locations such as China and India. “Most of the cost incurred by Airbus is in Euros, but most of its products are priced using dollars. Depreciation of the dollar against the euro has a negative impact on profitability of the Airbus,” said Madusudanan Ramani, an analyst at research firm Frost & Sullivan. “It is estimated that every 10 cents of a rise translates into a one billion euro rise in cost of production in Europe,” he added. Airbus’ parent company EADS, which procured services and products worth over $138 million in 2007, recently said that it will increase sourcing from India 10-fold over the next ten years. An aircraft assembly line will help India’s domestic aviation engineering companies such as QuEST to gain more business as Airbus will bring its top tier suppliers to the country for serving the manufacturing unit.
Recent News From The Company:-
“We are already set to double our manufacturing revenues from around $8 million last year to $16 million by March 2010. If an assembly line comes up, it will mean a lot more business for us and many others,” said Bejoy George, vice president and chief marketing officer of QuEST.
”
QuEST, which has acquired a 300 acre plot in a special economic zone (SEZ) in Belgaum for establishing its manufacturing facilities, hopes to gain more business from Airbus’ primary suppliers who may have to set up units in India when the FAL comes up. Airbus on its part, has been asking its suppliers to increase sourcing from India to help build the required ecosystem for setting up an assembly line”.
“Many of our partners including OEMs are already sourcing from companies such as QuEST and Dynamatic. We are asking them to look at India more than before,” said Mr. Srinivasan.
However, Airbus’ plan to expanding its production centers outside Europe is expected to face strong resistance from political lobbyists in the region.
“Airbus might have to cut its production of aircraft from some of its existing facilities in Europe. It might face pressure from some European governments, its biggest shareholders not to cut jobs especially in the recessionary times,” said Mr. Ramani.
Automobile Components And Spares
The Indian automobile companies rarely build the parts they use for automobile components and spares industry in India not only caters to Indian automobile manufacturing companies but also exports its products abroad. The approximate monetary value of Indian automobile components exports in 2006 manufacturing their vehicles. Automobile components and spares like interior trim panels, radios, and seats are some of the product examples that are manufactured elsewhere and brought to the main assembly plant for final fitments. Majority of Indian vehicle companies (like their global counterparts) manufacture automobiles that have approximately 65% external supplier made parts.
Indian Automobile Parts Scenario
The Indian automobile components and spares industry is highly disorganized and fragmented. Approximately 400 companies belong to the Original Equipment Manufacturers (OEM) category. Other companies (about 10,000 of them) operate in the unorganized sector. These low tier companies manufacture relatively unsophisticated car parts.
The India Advantage
The Indian automobile spare parts manufacturing sector possess a distinct commercial advantage over its global counterparts. The lure of abundant availability of raw materials, technically skilled workforce and relatively lower labor costs have compelled many foreign companies to invest heavily in India. The country has seen investments equaling 9 billion US dollars in 2006. Most of the automobile spare parts companies are proximate to the main car assembly plant. This helps to lower transportation costs and also have the advantage of a quick turn-around time.
Global Acquisitions
The initial and continued success of larger Indian automobile parts manufacturing companies has emboldened them to buy companies abroad. Indian companies like Amtek Auto, Sona Koyo, Bharat Forge, and Sundaram Fasteners have purchased companies in Western Europe and America. Sundaram Fasteners have taken over branded German automotive part manufacturer CDP GmBH to enable it to tap the highly profitable European car market.
How does the process of car assembly take place?
The body comes in as grey pieces that don't make much sense at first but then they are clamped in fixtures that hold them in the right position and the fixtures is pulled toward a robot that welds the pieces in the right places and voila, it now looks sort of like a car body. This all happens on conveyors that are pulled by motors either in the floor or from an overhead rack in the areas where people need to be underneath fastening parts and tubing. Eventually it gets dipped into a solution that cleans all oil and dirt from the body. Then it goes through an oven that completely dries it before getting painted.
Next up is the line where the wiring and interior is installed using clips and screws. In the meantime a small side line is prepping the engine and transmission to the specifications called for with that particular car. The parts are synchronized by a computer generated sequence number to keep them in order.
When the car body approaches the area where the engine is installed the body is routed to a staging area. The engine assemby is already waiting for the body and the operators use a hoist to push the engine assembly up into place from under the body. They install some bolts to hold it in place and it moves on to where all the engine wires and gas lines are connected.
Next up is the area where they pump in gasoline or diesel and than there is an area where operators actually start the engine and check for leaks, operate the airconditoner to make certain it works and they record the results in a computer monitor system. In various places along the line there are inspectors who check items assigned to them including the color schemes the lights and radio. etc.Every item on the car is checked at least twice and some three times by different people.
Next up is the area where there are rollers in the floor that allow testors to actually "drive the car" while it sits in the station on the rollers. They run through all gears of the transmission and make certaing the engine performs correctly while an electronic monitor is checking the emissions controls. After that the car is actually driven to an area where the wheel alignment is done and from the there the car goes to the shipping area.
Then finally the car is ready for manufacturing and hence reach the customers.
Europe after China, as the company seeks to reduce its production costs by at least 20-30% and serve the Indian market better.
arnataka and Tamil Nadu are two states being considered by Airbus for the Final Assembly Line (FAL), which will include around 2,600 metre long runway and facilities for painting, tests and final delivery of the plane. Depending on specific requirements and other costs, Airbus may have to invest around $600 million in establishing the facility in India and employ anywhere between 600 and 1,000 people across various processes.
The new assembly line, expected to be established within 3-4 years, will help in growing India’s commercial aviation supplier market from around $1.5 billion to almost $3.8 billion by 2014, providing more opportunities for the local aviation companies, including QuEST and Dynamatic. Chief executive Tom Enders said last month that his company will need to have production facilities in the US, China and India in order to remain competitive. Airbus, which is set to roll roll out its first China-made A320 from its assembly line in Tianjin, is seeking to reduce its production costs and globalise its manufacturing by establishing such units outside Europe.
The company has three aircraft assembly units in France, Germany and China. “We currently do complex assembly sourcing from India, very similar to what we started doing in China few years ago. We believe what we did in China can be repeated here,” said Airbus head industrial cooperation projects, Dwarakanath Srinivasan.
When the FAL is established by Airbus in India, it will have a capacity of ‘Rate 4’, which is a production capacity of four planes in a month.
“Airbus aims to have Rate 4 capacity for producing A320 in China, and India should be no different,” the person added. “An Indian assembly line will be at least 20-30% cheaper than a similar unit in Germany or France because of much lower labour costs,” he said.
Rising operational costs and pressure on profitability are reasons for Airbus to establish manufacturing units in locations such as China and India. “Most of the cost incurred by Airbus is in Euros, but most of its products are priced using dollars. Depreciation of the dollar against the euro has a negative impact on profitability of the Airbus,” said Madusudanan Ramani, an analyst at research firm Frost & Sullivan. “It is estimated that every 10 cents of a rise translates into a one billion euro rise in cost of production in Europe,” he added. Airbus’ parent company EADS, which procured services and products worth over $138 million in 2007, recently said that it will increase sourcing from India 10-fold over the next ten years. An aircraft assembly line will help India’s domestic aviation engineering companies such as QuEST to gain more business as Airbus will bring its top tier suppliers to the country for serving the manufacturing unit.
Recent News From The Company:-
“We are already set to double our manufacturing revenues from around $8 million last year to $16 million by March 2010. If an assembly line comes up, it will mean a lot more business for us and many others,” said Bejoy George, vice president and chief marketing officer of QuEST.
”
QuEST, which has acquired a 300 acre plot in a special economic zone (SEZ) in Belgaum for establishing its manufacturing facilities, hopes to gain more business from Airbus’ primary suppliers who may have to set up units in India when the FAL comes up. Airbus on its part, has been asking its suppliers to increase sourcing from India to help build the required ecosystem for setting up an assembly line”.
“Many of our partners including OEMs are already sourcing from companies such as QuEST and Dynamatic. We are asking them to look at India more than before,” said Mr. Srinivasan.
However, Airbus’ plan to expanding its production centers outside Europe is expected to face strong resistance from political lobbyists in the region.
“Airbus might have to cut its production of aircraft from some of its existing facilities in Europe. It might face pressure from some European governments, its biggest shareholders not to cut jobs especially in the recessionary times,” said Mr. Ramani.
Automobile Components And Spares
The Indian automobile companies rarely build the parts they use for automobile components and spares industry in India not only caters to Indian automobile manufacturing companies but also exports its products abroad. The approximate monetary value of Indian automobile components exports in 2006 manufacturing their vehicles. Automobile components and spares like interior trim panels, radios, and seats are some of the product examples that are manufactured elsewhere and brought to the main assembly plant for final fitments. Majority of Indian vehicle companies (like their global counterparts) manufacture automobiles that have approximately 65% external supplier made parts.
Indian Automobile Parts Scenario
The Indian automobile components and spares industry is highly disorganized and fragmented. Approximately 400 companies belong to the Original Equipment Manufacturers (OEM) category. Other companies (about 10,000 of them) operate in the unorganized sector. These low tier companies manufacture relatively unsophisticated car parts.
The India Advantage
The Indian automobile spare parts manufacturing sector possess a distinct commercial advantage over its global counterparts. The lure of abundant availability of raw materials, technically skilled workforce and relatively lower labor costs have compelled many foreign companies to invest heavily in India. The country has seen investments equaling 9 billion US dollars in 2006. Most of the automobile spare parts companies are proximate to the main car assembly plant. This helps to lower transportation costs and also have the advantage of a quick turn-around time.
Global Acquisitions
The initial and continued success of larger Indian automobile parts manufacturing companies has emboldened them to buy companies abroad. Indian companies like Amtek Auto, Sona Koyo, Bharat Forge, and Sundaram Fasteners have purchased companies in Western Europe and America. Sundaram Fasteners have taken over branded German automotive part manufacturer CDP GmBH to enable it to tap the highly profitable European car market.
How does the process of car assembly take place?
The body comes in as grey pieces that don't make much sense at first but then they are clamped in fixtures that hold them in the right position and the fixtures is pulled toward a robot that welds the pieces in the right places and voila, it now looks sort of like a car body. This all happens on conveyors that are pulled by motors either in the floor or from an overhead rack in the areas where people need to be underneath fastening parts and tubing. Eventually it gets dipped into a solution that cleans all oil and dirt from the body. Then it goes through an oven that completely dries it before getting painted.
Next up is the line where the wiring and interior is installed using clips and screws. In the meantime a small side line is prepping the engine and transmission to the specifications called for with that particular car. The parts are synchronized by a computer generated sequence number to keep them in order.
When the car body approaches the area where the engine is installed the body is routed to a staging area. The engine assemby is already waiting for the body and the operators use a hoist to push the engine assembly up into place from under the body. They install some bolts to hold it in place and it moves on to where all the engine wires and gas lines are connected.
Next up is the area where they pump in gasoline or diesel and than there is an area where operators actually start the engine and check for leaks, operate the airconditoner to make certain it works and they record the results in a computer monitor system. In various places along the line there are inspectors who check items assigned to them including the color schemes the lights and radio. etc.Every item on the car is checked at least twice and some three times by different people.
Next up is the area where there are rollers in the floor that allow testors to actually "drive the car" while it sits in the station on the rollers. They run through all gears of the transmission and make certaing the engine performs correctly while an electronic monitor is checking the emissions controls. After that the car is actually driven to an area where the wheel alignment is done and from the there the car goes to the shipping area.
Then finally the car is ready for manufacturing and hence reach the customers.