Carraro India looks beyond ag

Having got into the construction equipment driveline business at the beginning of 2008, the company is using the slowdown to set the stage for new launches.

Autocar Pro News DeskBy Autocar Pro News Desk calendar 06 Dec 2008 Views icon7785 Views Share - Share to Facebook Share to Twitter Share to LinkedIn Share to Whatsapp
Carraro India looks beyond ag
Focused till 2007 on axles and transaxles for agricultural tractors, mainly for local customers but also for global brands in this market, Carraro India entered the construction equipment business at the beginning of this year, its 10th in the country.

Its immediate focus here is on drivelines for backhoe loaders and hydraulic drives for crawler equipment, though axles for soil compactors will be added in future.

“All the manufacturers in the backhoe segment except JCB are our customers,” director (sales and business development) S Viswanath declares. Asked whether he sees any scope of breaking into JCB, he replies: “They are the biggest, no doubt, but we are with everybody else.” That includes Caterpillar, L&T Case, and Terex Vectra, and Viswanath says he will shortly be talking to Ashok Leyland, which recently signed a joint venture with John Deere.

The company has started supplying its TLB Synchro Shuttle hydraulic transmission to L&T Case and Terex Vectra, and is ready to produce the first prototype drive axles for Caterpillar this month. These will be in the market by the second half of next year. Carraro India also exports Synchro Shuttle transmissions up to 130 hp, and skid steer final drives, to the US. “This is a pilot batch of our European product which we have localised here in India. Even if the product is the same but we just change the manufacturing location, we do all the necessary tests to validate it all over again,” Luigino Ricetto, country head for the Carraro Group, explains.

The company has also begun producing hydraulic planetary drives in a range from 30,000 Nm up to 55,000 Nm capacity for crawler equipment such as hydraulic excavators. Globally, the Carraro Group has a very large range from 5,000 Nm all the way up to 2,000 kNm that find application in very large applications like mining shovels.

“Thanks to our capability to produce planetary gearboxes, we can also provide solutions for emerging businesses such as yaw and pitch drives for windmill applications,” Viswanath says, indicating that this may happen in the second quarter of 2009. Sister company O&K Antriebstechnik in Hattingen, Germany, makes planetary gearboxes that regulate the yaw (orientation of the nacelle) and pitch (blade angle).

Viswanath expects Carraro India’s business to break down between agricultural and construction equipment at 40 percent each, and planetary drives at 20 percent, more or less in line with its global business.

Carraro Technologies, the engineering centre opened in Pune two years ago, today has 48 engineers supporting the engineering team in Campodarsego and connected to the four other engineering centres, in Italy, Germany, and Argentina.

It is looking to shift to a bigger location in Pune to accommodate an increase in the number of engineers that will be dedicated to supporting each of Carraro’s business divisions. According to Ricetto it already has engineers dedicated to supporting Agritalia in the design of frames and complete tractors, and O&K in the development of drives.

“A new hydraulic transmission we have begun exporting to the US was engineered completely in India, with support from the other engineering centres. This is a sophisticated version of a base transmission we produce in Italy, with added features like an automatic parking brake, and was developed with new castings designed by our engineering centre here in 3D,” Ricetto says.

New capacity

The company has just completed a recent expansion at its Ranjangaon plant outside Pune that will allow it reorganise its existing assembly line for small tractor transmissions to handle growing volumes, and adds two new lines, one for its TLB transmissions with a capacity of 120 per day in two shifts, and another for axles for backhoe loaders.

With new capacity coming onstream just when the bottom seems to have fallen out of the market, how exactly does Carraro India view its immediate prospects? “We have actually grown compared to last year. Till now there has been no negative impact because of the fact that we shifted some production out from Europe to India and are now also servicing the export market,” says Viswanath.

But he admits that the procession of adversities in 2008 have hurt Carraro. “First, the inflation — the commodity prices were very high, and our products are a good 80 percent steel. We had to manage increases in the price of steel in January, February, April, July, August, and September. So the first six or seven months we only fought inflation, trying to manage it from the supply side, and by effecting savings. Then the dollar appreciated and the oil prices shot up, followed by this financial crisis. All of this in the last four months.”

Ricetto reckons the first six months of 2009 will be no better. “We’ve grown till date because we have increased our range of customers. For sure, after the slowdown in sales of earthmoving machines and agriculture due to the difficulty of borrowing, we expected that our market must decline. At the moment we have only a few signals. For the first time, for example, the budget does not have the confidence of the previous years,” he says.

As for the road ahead, Viswanath is cautious about going by any forecasts, which he calls a hazardous exercise. “We do get some figures, but do those figures have any value? It’s very difficult to say really. Our customers give us their projections, but we don’t know whether there is any meaning in those. They themselves are groping in the dark. So we are basically using this period to build up our internal efficiencies.”

Balaji Gopalan, Asia-Pacific HR director for Carraro’s entire India and China operations, says the competence and versatility of its operations staff are a strength that will serve the company particularly well in this difficult time by drastically reducing its new product introduction lifecycle from concept to commissioning.

This is not an easy task at the best of times considering that there are eight programmes ongoing at any point of time, and each could have up to four variants. “We first started localising our TLB at end-2006, and in less than 12 months we had all the vendors developed and components validated, so that the launch in January 2008 was virtually flawless. And by April we were at full blast,” he says.

Motivated workforce

This is the second economic downturn Carraro India has seen in its 10 years, he points out, adding that it has never thought of layoffs, and is not looking at any now. “We see this as an opportunity to improve our efficiency, for multiskilling and redeployment of our employees into other functions that need focus.”

In this endeavour it has been helped by “good reciprocation” from its highly participative workforce. To avoid closures its employees engage in lots of team-based activities, such as Six Sigma and 5S projects, which provide “opportunities everybody uses to bring to the table some value-add from their side”.

“The union is absolutely co-operative, and gave us their unconditional support when we hammered out our recent wage agreement. It’s a very beautiful situation,” Gopalan says, pointing to the “very high degree of tranquility at the plant despite the turmoil outside”.

The attrition rate is negligible; in fact, the company has not sacked a single blue-collar worker to this day, and he himself has not issued a single warning or chargesheet. “This is a model factory in all of Carraro worldwide,” he says. At a recent function the union organised at short notice in celebration of the new wage agreement, Gopalan and Mario Sgobbi, vice-president (global HR) for the Carraro Group, were presented silver plaques by Nitin Bandal, president of the Carraro India Employees Union, honouring them for “good management practices”.

Ricetto’s perspective the downturn has provided some welcome breathing space that allows a smoother introduction of a number of new products “without the terrible pressure of demand we had last year as a result of having to ramp up to huge volumes in a short time.”

Now it can go ahead, having had enough time to test the products and procedures, to guarantee good quality. “One of our goals here in India was in the past, and remains today, to release product as we would from any of our plants in Europe. This is the reason why people appreciate our products and are confident in us,” he says.

“As you know, the economy has waves. Okay, at this time the market wave is negative instead of positive. But it is one wave, and we have passed many of these waves during the long history of the company. Every 10 years we have had one big wave. After that the question is to be ready when the market starts. When it will start this time we don’t know — that’s difficult to predict. But for sure, we need to be ready, with variants, with new applications, with new ideas to improve the performance of our products.”

Carraro is an Indian company with European shareholders, Ricetto insists — one that has believed in the country, invested with a long-term perspective, one that will stay with the country in its growth. “If you take a short-term view you might say we’ve made a mistake, because now our investment is not productive and so on. But that’s not what we are about. So here we are, building products that meet the requirements of this market, and ready in every way to follow where our customers need us.

The market situation isn’t nice like it was one year ago, but for sure this is only an economic wave and not the end of the world.”
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