Page 66 - Built Expressions - Online Construction Magazine - November 2014 Issue

Cover Feature after-sales service offerings to tap into a market opportunity that could reach $0.5 billion by 2015. • Greater potential for exports. Robust growth is expected in export demand for engineering services and components and aggregates manufactured in India and sold to emerging markets. Three factors are causing this shift: • The availability of cheap, highly skilled engineering and design services in India • High cost competitiveness because of the scale of production in manufacturing basic power train systems, including transmission components and downsized engines • The development of product product manufacturers and vendors solutions, rather than just designs, supply customized components to of ECE with technologies such as to meet the market demand for some OEMs rather than standardized telematics, GPS, electronic control better connectivity and remote offerings. As the industry picks up systems, and real-time remote performance monitoring. pace to grow by four to fve times performance monitoring equipment in the coming decade, OEMs and is at a nascent stage. Suppliers will Challenges to the industry’s suppliers that coordinate to ramp up have to quickly adapt to meet the Growth capacity will be better able to fulfll growing demand from end users. The Indian ECE components and demand. From a regulatory standpoint, greater aggregates industry is on the verge • Planning for spares distribution. The emphasis is being placed on greener of fast growth, but signifcant supply chain for spares distribution vehicles with lower carbon dioxide challenges could prevent players from is often not geared toward providing emissions and better fuel economy. effectively tapping into the market’s a very wide reach or catering to the In addition to the latest technologies, opportunities. These will need to be full potential of spare-parts sales. suppliers will have to incorporate addressed to realize the full potential Moreover, a fresh look at the spare- more technologies compliant with of the components business. parts pricing model could help, Bharat Stage IV emission standards • Fluctuations in OEM demand for especially if it is more in line with and other advanced fuel-effcient components and aggregates. Varying market expectations for specifc technologies. demand from OEMs can have a components. New pricing can help • Stiff margin pressure. Vendors in signifcant impact on components increase the consumption of spares, the domestic ECE industry are often suppliers, which sell most of their which are not being consumed in under stiff margin pressures for an products to OEMs. Because they very high numbers. array of reasons: rely little on after-market sales, their • Gaps in adopting technology. End • Emphasis on price. Indian business is intrinsically linked to the users of construction equipment consumers are more price conscious orders placed by OEMs. Because of in India are demanding more- than global players. Price versus heightened OEM demand between sophisticated products to meet their value is the primary concern for 70 to 2005 and 2011, suppliers invested needs. However, domestic ECE 80 % of Indian in more capacity. But now, demand vendors and suppliers are facing a customers, compared to 40 to 50 % remains low as a result of adverse technology gap between what the of customers in the United States market conditions, and suppliers are market wants and what vendors can and 60 to 70 % in China. suffering from a demand shock. The offer. For instance, the market has • Dependence on imports. Currently, problem is further compounded by already started demanding products 50 to 55 % of components are the fragmented supplier landscape. with enhanced connectivity and imported. This is expected to go Numerous low-sophistication electronic systems. But production down to 25 % by 2017, but high-tech PG 66 Built Expressions Vol: 3 Issue: 11 November 2014