29 Jul

The manufacturing industry is the second highest employer in India after agriculture. It is the third highest contributor to GDP after services and agriculture. So, it would not be an exaggeration to say that manufacturing has evolved significantly and will be a key influencer in India’s growth in the years to come. 

Among all sectors manufacturing has the potential to employ and engage with a workforce comprising all skills and educational backgrounds. For any manufacturing entity to have efficient operations it would require a skilled workforce at the bottom of the pyramid, who are agile in continuously upgrading their skills, producing the product “First time right” and producing within the expected TAKT (Time Allocated for Completion of Task). The entity would need a good engineering cadre at the supervisory level and support from other functions such as supply chain management, quality assurance, human resource function, IT, finance, marketing, sales, et al.   Essentially manufacturing has the potential to provide ample employment opportunities for talent at all skill levels, who in turn can express themselves and contribute to the success of the sector. 

Global scenario favours rapid growth of India’s manufacturing sector

China has been the beacon of manufacturing in the past 2 decades. Almost all the manufacturing behemoths across sectors from different countries have established their production set up in China. The abundance of workforce, labour cost arbitrage and conducive environment have made China an attractive destination for manufacturing all these years. 

However, due to supply chain disruptions during Covid, diminishing cost arbitrage and the perceived authoritarian role of the government, China is a less attractive option for manufacturing. Many European and American manufacturing companies are scouting for alternate destinations to set up their manufacturing base. Some of the East Asian economies like Thailand, Vietnam, and Indonesia are becoming attractive destinations for manufacturing. But among all these counties, the vast availability of quality manpower and availability of top-quality engineering workforce gives India a very distinct edge.

India’s demographic dividend cusped with the global scenario makes India a sought-after place for manufacturing activities in the coming century.

What are the manufacturing sectors to watch out for?

While every manufacturing sector presents its own opportunities and challenges, a few listed below appear to be very attractive. 

1. Infrastructure (Steel, Cement, Coal, Energy) – All governments in the last two decades have consistently focussed on infrastructure growth. This sector not only aids the growth of other sectors but also gives much-needed employment to the workforce at the bottom of the pyramid. Most likely, the focus and investment in the infrastructure sector will continue in the coming decades as well.
2. Auto/Auto ancillaries: India is steadily marching towards an EV ecosystem thanks to the enormous thrust towards EVs and focussed action plans from governments and private sectors alike. It would not be an exaggeration to foresee India becoming the first major economy with more than 30% of its vehicles running on electricity.  With new tech and a good manufacturing base, India is expected to be a beehive of EV activities.
3. Aerospace: Because of its sophistication in engineering and criticality in application, aerospace is very distinct. But it draws a significant amount of buoyancy from other manufacturing sectors like auto and engineering. With auto and engineering having already established their base in India, it would be very conducive for the aerospace industry to launch its operations in India. The government is also making a lot of investments both in civilian and defence aviation and aerospace sectors.
4. Textile/Apparel Industry: The young demographic profile, high disposable income, and nuclear families are transforming urban India  from a conventional “savings” society into a “consuming” society. This transformation should contribute to the growth of the fashion and apparel industry.

In addition to the industries listed above, manufacturing sectors like pharma, white goods, and FMCG have immense potential to grow and generate employment.

While there is no doubt about the viability of manufacturing in India, its potential and rapid expansion with global exposure are expected to present its own set of challenges. It is therefore very critical and important for professionals in the manufacturing sector to understand the dynamics of this VUCA (Volatility, uncertainty, complexity and ambiguity) world and adapt to its fast-changing requirements.

The scenarios and solutions presented below are modelled on the automotive industry. But we firmly believe it largely holds true for other manufacturing sectors also, especially since the automotive industry encapsulates many manufacturing segments

Based on the nature of skill sets and business demand, the workforce in a typical manufacturing entity can be grouped into 2 broad categories:

Horizontal Skill type – Deployable across sectors

In this  category of skill sets,  the functional skill set of an employee can be horizontally utilised across industrial sectors. Barring a few exceptions, to a large extent an employee can move from one sector to another and perform well. Some examples are supply chain management, procurement, finance, human resource, payroll processing, sales, marketing, quality assurance etc. For example an accountant can move from Automotive to Electronics and a HR person from FMCG to Pharmaceuticals.

In these  functions, the emphasis is on functional expertise over product-specific expertise. Any resource with deep functional expertise can move horizontally across different industry segments. Knowledge and experience gained in one sector are considered an asset and much appreciated. However, the only caveat would be there is a perceived notion about the maturity of one industry by the other. Therefore, it may be relatively easy to move from a sector  perceived to be more mature, than the other way around. But these are not rigid barriers. There are ample cases where professionals have moved horizontally across the sectors. It comes down to the ability of an individual to navigate horizontally across sectors.

While the opportunity for professionals with this type of skill set  is vast, it also brings in an equal amount of competition, since employees of different sectors can vie for similar roles. Due to the intense competition the best-in-class will thrive and grow 

In the manufacturing context, the workforce in the horizontal skill type is mainly represented by mid to senior management levels. 

Adaptability required by members of the horizontal skill set category

• Problem-solving mindset to assess the situation and disaggregate the problem into smaller nuggets, so that the issue can be objectively addressed.
• A system-oriented mindset to identify gaps in the process; dispassionately identify industry best practice solutions and frame a road map for system correction.
• Consultative approach to carrying all stakeholders together; define new KPIs, and new process map as required to better the process.
• Adoption of data mining and data analytics; ability to seamlessly coordinate and work with data scientists to get deep insights from transactional information.

To summarize, with horizontal skill sets individuals should have the ability to see the big picture and have medium to long-term strategic planning skills, without getting lost/ distracted in intricate details.

Vertical Skill type: Deployable within sectors

This category of skill sets is one where the functional skill set of an employee is very niche and specific to the sector where he/she is employed. Applicability of what she does in her current profile would be very remotely relevant to another sector.

Typical examples include people working on the shop floor of an automotive setup – assembly, welding, and body shop operations; professionals working in product development, testing, and evaluation in the automotive sector; quality inspectors certifying the quality of the final product, etc.

This type of skill set requires a very significant amount of time and effort to gain expertise. With time, experience, and exposure, the skill level becomes sharper. As a consequence, there is always a premium for such experience and expertise.  However, on the flip side, the longer an employee’s career lasts in these  niche fields, the harder it becomes to migrate to other functions. It would be very painful, difficult and not effective to ‘unlearn’ and ‘relearn’ skills required for new functionalities.  As a result,  one must be very cautious before deciding to stay committed to functionalities beyond a point. And once he/she spends 4-5 years of their career in these functions, they should build on this to capitalise and strive towards gaining deeper expertise (rather than exploring alternate career options).

Unlike people with horizontal skill sets, employees with vertical skill sets may be found across all levels.  For example, both, production executives producing the actual product on the shop floor or product specialists working on specific product development belong to this type of skill set.

Professionals with vertical skill sets need to have a very critical and specific eye for detail. With a minimal margin of error between the “best” and the “rest”, the key is to ensure top-quality, high-precision details. So, the bottom line is attention to detail, not just the volume of information.

Adaptability required by members of the vertical skill set category

Some of the major traits expected from professionals who fall under this skill set include:

• Well-engineered system to absorb and maintain all process-related information. 
• Data analytics competencies to analyse and draw insights on production, quality, procurement and other processes critical information.
• Nimble and agile outlook with a relentless and continuous focus on process information. This ensures that processes have the lowest variance or highest compliance to the standards at 6 Sigma levels.

Overall, the essence of success for employees falling under this skill set is high accuracy and highly efficient execution of a pre-defined strategy/ road map for success.

Capture the upside of India’s manufacturing success with skilling and adaptability 

The opportunity for the Indian manufacturing sector to succeed is limitless. So, it is up to professionals to strategize and execute a personal roadmap to profit from the upcoming manufacturing boom.

A good start to executing this strategy and achieving success would be by  relating to the skills categorisation explained above and aligning oneself to develop the most optimal skill levels accordingly. With these simple steps, everyone can become future-ready.

Adarsh Ramaswamy is the Director at Sambuddha Management Consulting Pvt Ltd.