Tata Technologies set to enter China
Tata Technologies has made inroads into key automotive markets like the USA and the European Union which, incidentally, are the top two markets in terms of business. However, the 24-year-old company is yet to set up a base in China, the world’s largest automobile market.
Betting big on Cambric
While a China entry will be a promising move, Tata Technologies is betting on the move that it made in April 2013, when it acquired Cambric, a US-based engineering services company. With Cambric, it gains access to clients and engineering resources that will help it grow in the construction and heavy equipment sector. Before the Cambric buyout, less than 5 percent of Tata Technologies’ annual revenue came from customers in that sector. “What this will do is the same thing that Vehicle Program and Development (VPD) group has done but in the construction sector,” says McGoldrick. The acquisition gives Tata Technologies access also to powertrain engineering and technology, “which is a highly desirable and scarce skillset”. Cambric brings a team of 450 engineers with it. Even though over 90 percent of Cambric’s business comes from heavy construction equipment OEMs, Tata Technologies’ automotive business also stands to benefit as well. “Given the skills they have in powertrain, especially in engine design, there is real cross-selling opportunities back into automotive,” says Harris.
Pride in constant innovation
Tata Technologies claims that there’s a bit of its contribution in almost all cars. One a lighter note, Harris says he’d like to stick a ‘Tata Technologies inside’ sticker in all the cars to which the company has contributed. It is the constant innovation, inevitable to remain competitive, that McGoldrick is proud of. He says, “We are working on a model 2015-year vehicle. They (the OEM) have always done it in a particular way using particular materials. One of our engineers said ‘I think we can do this with aluminium’. They got back and we worked together. Part of that vehicle, when it comes out in model year 2015, will be in aluminium because our people have been able to do it.”
Advantage in Asia
Tata Technologies’ automotive business is also set to get some tailwind in the emerging markets of ASEAN, especially Thailand where it has a tech centre. Interestingly, it was not set up to tap the market but to offset potential risks in the Indian centre. “We looked at it as an extension of delivery capability. When some of our customers asked ‘What would you do if something happens in India?’, we began to investigate and found very good engineers in Thailand. So we considered setting up a design centre to design cars and vehicles not for Asia but for North America, Europe. Also, we then asked if the centre can support even India?” says McGoldrick. The answer was yes. The presence in Thailand will also help as part-owner Tata Motors has a presence through a JV here. While non-disclosure agreements stopped both McGoldrick and Harris from disclosing names of the customers or models where Tata Technologies has made key contributions, the company now counts itself in the league of some leading design and engineering solutions providers like Magna Steyr and Pininfarina. The company says it worked on 11 different vehicle programmes over a 12-month period. With such confidence, it hopes to touch the billion-dollar mark in sales by 2017 or so. By then, employee strength is expected to be about 17,000-20,000-strong. “The CAGR required for us to become a billion- dollar company is just north of 23-24 percent. I don’t expect automotive will be diminished in our organic growth. We may take some inorganic steps but expect automotive to grow as fast as industrial machinery or aerospace,” asserts Harris. “This company would not mean all things to all people,” is what Tata Group’s former chairman Ratan Tata had said about Tata Technologies, underlining its focus in niche areas. With its planned moves, the team’s focus will be to realise that statement in business.
INTERVIEW WITH PATRICK McGOLDRICK, CEO & MD, AND WARREN HARRIS, CHIEF OPERATING OFFICER, TATA TECHNOLOGIES
You first displayed the electric vehicle concept eMO last year, and its commercial version this year. How do you plan to take that forward?
McGoldrick: In 2008, when there was a global economic downturn, we brought the Nano over to Detroit and showed it to the customers saying it is possible to frugally engineer. We looked at pressures that automotive companies have — like regulatory carbon footprint issues. Electric vehicles were so expensive, people didn’t buy. We wanted to showcase a car that was street legal, one that could go 150 miles per gallon and at 160kph, something that was affordable. That was a technology demonstrator. The commercial side of that, the emo-C, is to demonstrate our packaging skills. You can produce something that is relatively small but with a large interior volume as well. At the end of the day, if someone is carrying goods — that’s all they care about. We did that and it’s again just a demonstrator. Will that be a production car? That’s something we’ll have to see.
Have any OEMs expressed any interest?
Harris: The whole programme was intended to expose the capability of not just in electric vehicles but in terms of packaging, low-cost manufacturing, in terms of our ability to be able to extend to and support organisations that want to develop disruptive products. In terms of the frugal engineering that was applied, the ability to be able to build a car at a price-point in the electric vehicle’s price that is some 60 percent of what other OEMS have done. That, I think, is tremendous given what we’ve done in battery technology and package, in terms of low carbon footprint in the manufacturing that we used — all of those things have driven interests from various OEMs. Whether the vehicle sees the light of day in its entirety, I doubt. But certainly there are components that may well be used.
Where are the activities driven from the Global Engineering Centre?
McGoldrick: We have come up with the Global Engineering Centre that has interested a lot of our customers because in the old days it was offshore. In GEC, we have created a technology, a process where a work can be done globally. It is the ability for everybody to work together — teams of people globally, all working together. We have had some amazing success.
Do you think the exclusivity of India as a frugal engineering base is perhaps getting diluted somewhere?
McGoldrick: There are places in the world because they have a need and certain capabilities come out. Certainly India and frugal engineering come to mind when you see the Ace. As far as the Nano, it has been more a success in terms of being able to create it, maybe not in the commercial success as one would have liked. You look at something like the Ace. An OEM would have probably never made an Ace unless it was an India-based thing. So too for China which will come up very big in electric, very big in non-polluting vehicles because it has those kind of pressures. Eastern Europe has its own pressures. India will stay competitive in frugal engineering and it’s important to be there.
Harris: To reinforce that, I’d like to say that the capabilities in India concerning frugal engineering are truly unique. India is a country that is growing up with limited resources, so the low-cost mindset is part of Indian engineering and DNA. That doesn’t exist anywhere else. Even in Eastern Europe, if you go to a Romanian delivery centre, it’s just a low-cost version of a German centre. They approach the challenge in a very similar way. It’s the way that has benefited from a great education system. But they don’t challenge convention the way India challenges. I think that’s truly unique. There will be pockets of frugal engineering capability that will be built up around the world but it will be some years before the capability here will be truly challenged.
What would be the post-retirement plan for a passionate engineer like you?
McGoldrick: I’m passionate about this company and what it has done. The Hinjewadi campus just had its 10th anniversary. This is a Tata Group company that is concerned with helping manufacturers make better products. We started with 150 people, five centres and we now have, together with Cambric, almost 7,000 people worldwide. I can sit on a plane and see the stringers (stiffening parts in the wings) in the (A) 380 that was done by our people. And any advice or help, I am willing. I’m happy to bring it to this level with everybody else as a team.
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