The Indian operations of Johnson Matthey have played a big role in lowering vehicular emissions, says Taarun Dalaya.
The deliberate tradition of remaining low-key that followed JM’s founder Percival Norton Johnson since 1817, who, joined by George Matthey, later became the official gold assayer and refiner for the Bank of England, could soon come to an end. Recently, JM was voted as “Britain’s second most admired company”, after Tesco, in a poll conducted by Management Today and Mercer Human Resource Consulting and this development could bring it undesirably into the limelight.
JM, in two years, moved from the 35th place to number two. It is one of the largest secondary refiners of precious metal and diversified enough to provide expertise in using platinum to make anti-cancer medicines, emission-reducing catalysts besides the bus and truck diesel filters that it also makes. Globally, JM holds one-third of the market share for catalysts.
India’s legislative measures mandating adherence to European emission standards, called the Euro norms, encouraged JM to enter the Indian market initially through imports. It established automotive manufacturing operations in 1999 near Delhi in Okhla with Maruti Udyog becoming its initial customer. Realising that it needed to relocate to Haryana to be closer to Maruti and also benefit from lower sales tax, JMI commissioned a facility in Manesar in 2000.
JMI has been at the forefront of providing solutions where the technology requirement really has more to do with the higher conversion of hydrocarbons into carbon dioxide and water. Every increased stage in the emission norm means achieving greater reduction of harmful pollutants. JM’s knowledge, and hence the transfer of its knowhow to JMI, of the chemistry of every platinum group metal (known as PGM) namely, ruthenium, rhodium, palladium, iridium, and platinum, is far-reaching.
“Our competitive edge lies in our expertise of precision coating processes where we are able to guarantee, within certain tolerances, the precious metal content onto what are honeycomb shaped substrates,” JMI’s managing director Alok Khetan told Autocar Professional. “The more variance you have on the precious metal, for instance if 10 grams of a precious metal is supposed to be applied but instead only eight grams is put, the customer loses. So our precious metal coating process is such that it provides very good or low tolerance to the amount of variation that can be there for the amount of PGM that can be applied on the substrate,” he says.
##### COST FACTOR
The key is to make sure that the metal is all accounted for because its cost is very high compared to the rest of the processes. Hence JMI ensures that, first, everything is on the part, and second, if there is something not on the part then that is 100 percent recycled. This emanates from its philosophy that anything it loses in the process of coating will also be a loss to the customer. Every part of the process of coating at JMI is contained on the shopfloor, recycled and adequate security measures are in place to prevent pilferage.
“No drop of water can go out unless we say that it can go into our effluent treatment plant. We believe this is one of our unique selling points and as a result we are able to give our customer higher returns where he gets a bulk of his metal back through recycling”, he says. JMI’s knowhow revolves all around the chemistry of how one can make precious metals most effective for conversion without actually increasing their loading (amount).
The more precious metals put at times will get better conversion but it cannot be done beyond a limit because of limits in surface area and also due to the cost element. So the leading edge of the technology is basically based on the axiom that less is more – how you can use less and convert more. JMI’s principal in the UK, says Khetan, has been doing a lot of research on how to use cheaper metals. Platinum today is about $1300 per troy ounce which is almost twice the cost of gold.
JMI’s primary metals for coating the substrate is platinum and rhodium but these days it has been using a lot of palladium whose cost is around $350 per troy ounce as compared to the cost of platinum. Rhodium on the other hand is about 4-5 times the cost of platinum. JMI imports its raw material from its principal that in turn gets its metals mainly from South Africa, a bit from Russia, Zimbabwe and the US. Khetan says that cost is becoming a matter of concern. OEMs in India are demanding around 3-4 percent price reductions on finished parts and JMI is not untouched. On the contrary, given that it uses expensive metals, it has a lot of responsibility on its shoulders.
PASSING ON SAVINGS
The company is trying to pass on savings through what is called “precious metal thrifting” where the normal use of platinum is moving on to cheaper metals like palladium. He believes that in FY 2006-07 as well as in the current year, JMI would be the leading value saving vendor to Maruti Udyog. Simply put, it has achieved this by improved technology where it has been able to give its customer the same effect from the product with a better mix of precious metals.
JMI can be categorised either as a Tier-2 or Tier-3 supplier depending on whether its customer is what is known as a canner or a complete exhaust system supplier who also engages in the process of canning. But because of the value of the product and the technical involvement required from OEMs, the company interacts with vehicle makers in the capacity of a Tier-1 manufacturer and also participates in most vendor conferences.
Absence of latest canning technology can hinder companies such as JMI from enlarging business as was experienced in the case of Maruti’s SX4 where the technology required for the vehicle is not yet in India. Catalytic converters are being imported for which JM is a supplier of catalysts. Canning is dependent on two factors – technology and numbers. JMI is adept at making catalysts in smaller numbers but to make tooling for canning economically viable, a particular volume is required.
##### HOST OF CUSTOMERS
JMI does enjoy a first-mover advantage in India. Besides Maruti, other car and two-wheeler makers that use its catalysts are GM, Fiat, Ford, M& M, Mahindra-Renault, TVS etc. JMI has a capacity to make two million catalysts, each, for four-wheeler and two-wheeler applications and is using half this capacity for both segments. Metallic substrates are mainly used for two-wheeler applications where vibrations are more while cordurite-based substrates are used for cars.
JM’s main competitor is BASF which recently acquired US-based Engelhard Corporation and whose diversified business includes catalysts. Competition is expected to intensify as other manufacturers have already set up shop or are looking at entering the Indian market. For instance, Umicore Automotive Catalysts of Belgium, which acquired Delphi’s catalyst business, is understood to be interested in manufacturing in the country while Mitsui Kinzoku Components India of Japan has begun a catalyst-making facility in Bawal, Haryana, to cater to Hero Honda’s needs which were earlier being met through imports from Thailand. JMI has been working on enlarging its domestic business and is in touch with new entrants like Volkswagen as well as established manufacturers like Honda and Toyota.
EXPORTS TO EUROPE
The company has just begun exporting to JM’s European operations – cost, capacity and customer have been the main drivers. “Customers now want products to be made out of India and China”, Khetan says. Enhancement of supplies to its principal will depend on canning and on the locations. Delphi is the only catalyst manufacturer which does its own canning and JMI does not intend to follow that course.
Khetan is confident that the company will sustain its leadership position through customer satisfaction – in quality and delivery – and by continuing its focus on value addition. “We treat our business with customers as a partnership and not as a buyer-seller relationship. The very nature of our product drives a closer relationship with our customer as we need to work together in developing the right emission-reducing solutions”, he says.
While it follows several best practices such as lean manufacturing, etc., Khetan says that JM and JMI are very sensitive to environment, health and safety (EHS) standards. "EHS is my top priority. And now we are adding another S to that -- sustainability. The employee must go back the way he came in the morning”, he says.
The company follows several audits on these three areas and also provides training to its employees whose average age is in the early 20s. Since they engage in a lot of “pick and place” activity within the shopfloor, good ergonomics of a worker is considered important and their youth benefits the company. But JMI knows that once age catches up, then ergonomics will become an issue and so it prepares workers to keep fit. Yoga is something that could be introduced, says Khetan.
The company is engaged on a technology solution suitable for Euro IV heavy duty diesel norms that will come into affect from 2010 and will require an emission control device in contrast to the engine management systems being followed. Tata Motors and Ashok Leyland are working in this area and, Khetan reveals, are in touch with JMI to develop the most appropriate solution for the after treatment device which will be required. JMI is also involved in a retrofit programme in Pune where 20 municipal transport buses will be fitted with devices to reduce diesel engine pollutants. This is a demonstration project.
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