3/21/16 9:00 AM
By John Cameron
As China's wages increase and PMI ratings drop rapidly, companies with international holdings are beginning to look at options outside of the former manufacturing giant. Neighboring nation, India, meanwhile, has achieved the fastest growing rates since 2005. In addition, Indian Prime Minister, Narendra Modi's, February announcement of a campaign to create 100 million new jobs in the country by 2022 has led manufacturers to set their sights on manufacturing in India.
In the past, the Indian population of more than a billion people has attracted companies around the world as a location to outsource their technology and customer services, but not for manufacturing. Investors in the industry found that bureaucratic delays, old-fashioned labor rules and inadequate infrastructure were major obstacles. The new “Make in India” campaign promises labor reforms, investment incentives, a skilled and educated workforce, and infrastructure updates. The effort includes a goal of increasing the manufacturing percentage of India’s GDP from 17% to 25%.
India's interest in bringing more manufacturing into the country crosses many industrial sectors, including: autos and auto components, aviation, biotechnology, chemicals, construction, machinery for defense, food processing and the oil and gas industry.
Anticipating the strengthening of India's manufacturing market, GE opened Phase I of a flexible multi-modal factory at Chakan in Pune (South India) in February. The plant covers 67 acres and will produce different products for multiple verticals utilizing shared infrastructure/equipment/people all in the same building. 1,500 workers will operate in an area the size of 38 football fields.
GE's investment is $200 million and the aim is twofold for the new facility: first, to harmonize its various operations, and second, to gain economies of scale and a better use of its capital. The CEO of the facility looks forward to being able to quickly adjust production with demand while using the same people and factory floor. Half of the output will remain in India and half will be exported.
The Pune factory is state-of-the art with digitally interlinked equipment, supply chains, distribution networks, and servicing groups. It has been described as an “intelligent ecosystem, or superplant.” The real-time connected system should allow GE to optimize production and communications for decision-making. The factory includes advanced 3D printing and laser inspection technologies. Products to be fabricated range from aircraft engine parts to locomotive components, wind turbines and water treatment units.
A superplant like GE's brings users and manufacturing locations together to visualize solutions to manage capacity and material bottlenecks, to synchronize the workflow, protect against uncertainty and variability, and to optimize alternatives for on-time deliveries with high profit margins.