By Jayashree Mendes
It was in early 2013 that Atlas Copco India inaugurated its new plant at Chakan, Pune. This is the company’s third plant in Maharashtra, besides Dapodi in Pune and one in Nashik. Spread across 23 acres with a built-up area of 19,000m2, the plot contains a manufacturing plant, an administrative building, workshop, and areas for R&D activities. The new facility has been constructed with an investment of `100 crore and has six production lines for compressors, three each for use in general industry and construction sector, and make customised variants of 40 products.
The localisation in these products will vary from 40-80% depending on the product.
The visit to the Chakan plant also coincided with the visit of Norbert Paprocki, president (portable energy division), Atlas Copco’s Construction Technique Business, to India. A veteran with Atlas Copco for 32 years, Paprocki was here to seek out ways to expand the business for the company.
The Chakan plant is the production facility for industrial compressors from 5kW to 90kW and portable compressors from 145cfm to 1,350cfm. The factory has been built in accordance with Atlas Copco’s globally accepted sustainable building standard and in line with LEED (Leadership in Energy & Environmental Design) best practices. It was recently certified by IGBC (Indian Green Building Council) as gold rated green factory building, says Filip Vandenberghe, managing director, Atlas Copco India.
The factory consumes significantly less energy compared to other buildings of the same size. It has been designed using energy efficiency architecture, natural sky-lighting and ventilation, rain water harvesting and water re-cycling, and has been known to use eco-friendly building materials that provide a clean, healthy and safe workplace for employees. For harmony with nature, every detail of the factory is in line with the green building norms. The company has paid extra attention to energy-efficient design and technology to limit environmental impact and to reduce the use of energy and natural resources during the construction phase, as well as future plant operation.
Last month, the company also announced its plans to continue its focus on power generation. The new QAX range of portable generators will soon begin production at Chakan. Nico Delvaux, business area president, Atlas Copco Construction Technique said that the QAX range is more than an engine and alternator put together.
The manufacturing plant at Chakan uses the lean manufacturing technique. Lean manufacturing gives priority to simple, small, and continuous improvement such as changing the placement of a tool, or putting two workstations closer together. Small improvements lead to a higher level of efficiency throughout the whole system. The factory has a supermarket that follows just-in-time and so only those parts of the machines that will be produced make their way into the kits.
The rest of the parts are stocked at a warehouse. The machines are made to order. Once the company has logged an order, the manager relates the same to the production department to build the machine. Paprocki says, “Our job is to shorten the gap between the time the order is placed to delivery. In terms of lead time, if it’s a small machine it could be a couple of days but a bigger machine takes a couple of weeks.”
Since most machines are customised, Atlas Copco prefers not to stock machines that no one will buy. Ask and we shall build, is the motto.
Norbert Paprocki, president (portable energy division) Atlas Copco’s Construction Technique, speaks about how the company functions in India
You often pay a visit to India. What goals do you have in mind this time?
My job is to expand the company. I have worked with the company in many different divisions. Two year ago, I was asked to take over as president of the portable energy division. Besides selling equipment, we also try to give life to our equipment. Our customers use the products for three to five years and then we try to buy back the machines and we refurbish them and then sell them in the market. The portable energy division alone is roughly €1 billion.
Although the Indian construction and mining sector is seeing a lull, we have a few segments that give us about 80-90% of our business.
How is Atlas Copco looking at the rental business in India?
Conducting business by hiring equipment instead of buying is a global trend and India is not unique. If we compare India with other countries, they are much more rental focused. Outside of India, about 60% of our equipment works on the rental model. Considering the fluctuations in the US market, rental is a huge opportunity for equipment makers. In India, this is mostly unorganised. Atlas Copco is one of the small players in the organised rental business in India. We recently extended this facility to our portable energy business.
The rental business varies from country to country. I am guessing that in India people like to own the equipment instead of hiring them. The Latin part of Europe also follows a similar policy, while contractors in the US prefer to rent the equipment when they need them instead of buying outright.
There is another interesting point to note here. In most developed markets, the company renting out the equipment will leave the equipment at the work site for the contractor to operate it. In India the competence of people managing the equipment is not very high; here the contractors expect the company to supply an operator with the machine which means manning a fleet of operators as well.
How do you manage the logistics of the equipment?
It’s a good question. Over 20 years, I have been a regular visitor to China and India. I have seen the evolution in both these countries and have noted the growth in infrastructure facilities too. Not to mention the traffic. Moving goods from one state to another in India is a challenge. It’s important to have a strong and reliable supply chain. We have selected two big companies and are working with them to ensure delivery on time. We pay more attention in India to logistics than in any other place.
We have several warehouses across the country, and are opening more. In terms of manufacturing and warehousing, there are times we transport the machines to the warehouses and other times we store spare parts to reduce the gaps in the supply for our customers.
Tell us something about your R&D in India.
Research for innovative equipment in India is based in Chakan. We have a 400-member R&D team in Hinjewadi (Pune). It’s our global design centre for engineering. Many years ago we had decided that since we have a high level of engineering in India we should hire our own people for the world in India. There is a separate team here for design and manufacture for the Indian market. We don’t localise the products made for the European and US market. We listen to our customers’ requirements and then manufacture.
We try to use local components for manufacturing in India. The next step for the Indian factory is to export machines and technology and we will start with Africa and the Middle East.
How is Atlas Copco taking care of the sustainability factor?
That is a day-to-day task. Every single operation has targets set to create energy efficient products and this has been extended to water consumption, electricity, cooling and logistics. We constantly try to improve the way we move goods from one state to another.
If we make parts in China and fly them in to India it means emission. So we look at buying local components which means cheaper priced equipment. Across Europe, every time we design a product it’s a challenge to make it more fuel efficient so we look at fuel, electricity, weight and if we want to make it light then we use less metal.
At a time when the market is seeing a lull, how do you motivate your people?
I always tell my people that if you want to stay at the top position, then start thinking you’re number two. One needs to challenge oneself constantly. If you start to think that you are the cream of the crop then it makes you arrogant and someone will come along and topple you.
There are a lot of factors driving changes in the compressors market. When we sell, we first look at the mining industry and then the construction industry. If a country invests in infrastructure and construction, then we follow that market diligently. We fight to get market share. It’s easier to acquire market share when the market is going up because everyone is easygoing.
But when the market is down, everyone is fighting to get orders to feed the factory. All this is also linked to politics, elections, and a slowdown. However, not all countries are going to elections at the same time. China is a little slow this year and also was last year. India has seen a laggard last quarter.
What does Atlas Copco bring to the Indian market?
When we decide to go into a country or a market, it’s because we don’t have a presence there. Taking Atlas Copco to a new market is a long drawn process for us. So when we acquire customers, it’s the beginning of a new relationship sometimes spanning 25 years.
We believe that companies should be able to call us up even after five or 10 years to get spare parts. When we get into a country, it’s with our own people. We learn from our own products but also from the competition.