Schwing Stetter: Getting Seasoned To Business Cycles

V.G. Sakthikumar
Mr. V.G. Sakthikumar, MD, Schwing Stetter India.
Ever since starting its operation in 1999, Schwing Stetter India has looked to leverage its brand among concrete equipment manufacturers in India amidst challenges. Now, the company looks forward to increasingly acclimatize itself to the present volatile and rapidly changing demand requirements. P.P. Basistha managed to have a recent insight of the company's ongoing and unfolding business game plan for the Indian construction sector.

The sweltering muggy heat of Chennai in mid of May obviously is not the weather for one to be cosy with. However, the air conditioning of Mr. V.G. Sakthikumar, MD, Schwing Stetter India, Sales and Services Pvt Ltd office at corporate headquarter in Chennai is moderate. So are the air conditioning of other front offices housing, sales and marketing, service and training centers as well, that has been kept balanced with the ambient temperature of the factory shop floors. The reason, a senior corporate communication official of the company says, is to keep the personnel comfortably adjusted in both the places as they have to frequently move between their offices and shop floors for regular production inspections. The business strategy of the German concrete equipment manufacturing major in India also seems to be similar to get its act balanced with the ongoing demand volatility of the market and prepare itself for future.

Points out Mr. Sakthikumar, "on a much positive note, rapid mechanization of Indian construction sector has moved the demand curve north. However, the challenge has been the cycles of demand, although consistent between 1999-2003. 2011-2014 but challenging as the cycles turned out to be extremely volatile to drive business viably. However, being confident about the firm demand fundamentals of the Indian construction sector, we did not refrain from carrying out channelized investments, as part of our mid- and long-term business strategy, despite the market remaining subdued, so as to build up our brand and altogether avoid brand substitution among our existing customers. Much in contrast to the approach of our competitors," says Mr. Kumar. Capital investment of Rupees 65 crore was carried out for setting up of a fabrication plant at Irungattukottai, Sriperumpudur near Schwing's existing plants.The fabrication unit, known as F-75 is dedicated for customising different variants of the boom pump, is spread across 5 acres of land with a facility area of 20,000 sqm. This plant will manufacture the S36 Concrete Boom Pump Model and also a separate placing Boom Pump SPB 25, SPB 35.

The plant complete with fabrication and shot blasting units will also assist cutting-sheet surface preparation-prime coating and painting through lean manufacturing systems, is well likely to keep pricing of the boom pumps further competitive for Schwing Stetter. He adds, "Commissioning of the new plant manufacturing components with high grade steel and specially trained welders from Germany is reflection of our business commitment to roll out quality products as per our international standards, resultantly enabling customers to curtail equipment owning and operating costs."

Batching plant factory

Schwing Stetter has four manufacturing centers in Chennai. The first plant makes light-medium and heavy capacities CP, M1 and H-series concrete batching plants. Transit mixers are manufactured by the second unit. The new boom pump fabrication unit is the third and new plant among the earlier existing plants producing trailer mounted pumps, boom pumps, line pumps, shortcrete pumps. The fifth site houses the training and service centre. Schwing Stetter India is a 100% subsidiary of Schwing Group of companies, an 850-million Euro German Concrete machinery manufacturer. Incorporated in 1998, the company commenced its manufacturing operations in 1999 in India.

Critical Mass & Application Orientation

Taking cognizance of the prevalent demand cycles, the strategy of Schwing Stetter India has been to develop a critical mass for its equipment. However, the challenge has been wide geographical expanse of the country and much too varied application requirements, sharp in contrast with European construction sector. "Our business strategy has been to promote products exclusively by us without any dealership assistance has been instrumental towards understanding the wide market of India across regions and to develop products accordingly. Our direct involvement with our customers has enabled us to understand the emerging changing requirement and develop products. Development of rock valve for trailer mounted concrete pumps followed by development of flat gate valve trailer mounted pumps for low grade concrete and concrete with big aggregates requiring higher pressure for pumping the concrete has been one of our major initiatives to reposition our product line in accordance with the emerging requirements. Our recent endeavors to attain critical mass have been in developing newer variants of concrete pumps, batching plants, transit mixers and shortcrete pumps. The products are well aligned to application along with having lower owning and operating costs," points out Mr. Kumar.

Schwing Stetter New factory

He mentions, "SP 1300 trailer mounted concrete pumps to place concrete at medium heights with lesser power, SP 3000 rock valve trailer mounted concrete pump with 156 bar concrete pressure for high rise projects, H1J concrete batching plants with 1 cum batching capacity for road, bridge and canal construction, and CP 45 batching plants for small and medium and mid level ready mix concrete producers are our some recent new launches. Moreover, introduction of new AM 3SHN, 3cum transit mixers with turbo charged water cooled engine for transportation of concrete in uneven hilly terrain and narrow roads and TSM 20.8, 8 meter boom on truck, foldable with 2 section boom for tunnel size between 5-16 meters are among the other initiatives of Schwing Stetter to expand its business footprint."

He adds, "to make our existing and new products attuned to Indian applications, we have carried out engineering improvisations in the equipments supported from Germany."

However developing and preserving the critical mass with wide array of offerings is not easy. Factors of keeping prices under control for an extremely price sensitive market while retaining quality standards are the key challenges. This is when demand volumes are under pressure due to retrograded off take of units. "Rather than passing on the increasing production costs to our customers, we have absorbed them, yet we restrained from making comprises towards quality through carrying out necessary investments towards improvement of the same. The initiative has helped us to leverage our brand," says Mr. Kumar.

The company has set up a completely new automated shot blasting facility and paint shop for its transit mixer manufacturing facility last year. The transit mixers manufacturing unit is equipped with a complete drum fabrication facility supported by sheet cutting systems, plasma cutting machines and robotic welding facilities along with manual welding. Divided into four production bays, the facility features lean manufacturing by moving the mixer drums on rails for its surface preparation and painting. The production unit is integrated to a mounting bay for the drums onto the chassis. Mr.Kumar informs, "For better equipment integration of the transit mixers with the chassis, we work with chassis manufacturer plants and sometimes integration happens in our plant in Chennai. Schwing Stetter India works with Tata, Ashok Leyland, MAN, AMW, Bharat Benz, Eicher and Mahindra.

The facility has a capacity to produce 10 mixers in a shift. Mr. Kumar claims, "To ensure that the Indian customers should get better services for the mixers, we are fitting Kirloskar and Mahindra slave engines into the mixers. Our new AM 7 SHC2 transit mixer comes with a Mahindra 705 DI engine as an alternative to air cooled engine. The modularized engine can provide higher torque and marginally improved fuel efficiency and thereby reduced cost of revenue."

He mentions further, "To ensure optimum performance, our transit mixers are fitted with drives from ZF and Bonfiglioli. Further, characterizing advanced quality, the design of our mixers with wearing strips enhances the life of the spirals in the drums. The spiral design ensures that lump formation does not take place in the concrete mix."

"Higher product quality for the concrete batching plants, transit mixers, pumps and boom placers is ensured through a fully integrated electronic panels and control producing and testing unit." informs Mr. Kumar. With wide variety concrete requirements and performance levels of the machines, automation of the units is of pivotal importance. The automation systems are fully synchronized with the requirements of the end users. For the transit mixers, the desired level of moisture in the concrete, quantum of pumping required for water for the concrete and hydraulic oil flow for the mixers are governed by the electronic automation systems. The automation systems are also calibrated on the basis of quality of concrete required by the customers. The company has recently supplied customized automation solutions to contractor Afcons for its batching plants using high performance concrete with composition of micro silica and polyurethane. Mr. Kumar says, "To ensure trouble free performance, the automated solutions are tested across 20 to 30 batching cycles." Schwing Stetter India's control systems manufacturing units comprise design-production and quality wing.

Business Viability Measures

Though having presence in five product lines across concreting value chain backed by claims of technically advanced product positioning, generating decent profits is a major task for Schwing Stetter, when actual demand remains subdued. The company projects business to grow at the level of 5 percent during 2014.

Based on the varied requirements of customers, the company provides value added paid services through customized automation control solutions for plants across the product line. The other value oriented services are refurbishment and upgradation of machines by the service centers. The service center located in Chennai undertakes, major and minor repair of the machines, total overhaul including accident repairs. The services are provided beyond the warranty period to the customers. Mr. Sakthikumar points out, "Our service centers are the major arm for upgrading the customers' machines to suit their changing applications." Schwing Stetter has five service centers across the country in Dankuni in West Bengal, Manesar in Haryana, Hyderabad, Ahmedabad, Pune, and Chennai. The company has so far repaired thirty-five machines in its centers. The company is looking forward on sustained viability of its service centers banking on 35,000 units present in the market.

It is also looking to enhance margins by targeting sales for the export market. To offset the ongoing volatility of the domestic market, Schwing Stetter made one third of its sales destined for the export market. However, according to Mr. Kumar, "Targeting the export market has been a new initiative but our facilities in India would remain dedicated for the domestic market."

Minimising cost of production is a major thrust area through adoption of lean manufacturing systems. The company has appointed Porsche consultants from Germany in 2009 to incorporate lean manufacturing systems in all its plants, better just in time inventory managements. Mr. Kumar mentioned, "Unlocking production capacity through our existing infrastructure is a major focus area." The process of implementing the consultants' advice will be completed by the end of this year.

Setting up of a new 100 kwp solar captive solar plant has been a major decision to bring down production costs. The solar plant will supply power to the new fabrication unit at Irungattukottai factory. Thirteen percent of power consumption is met through the captive solar unit.

The slew of measures to upgrade its production and product line is likely to insulate the company from the ongoing demand fluctuations. Further, with utilization of 50% of the production capacity at present, Schwing Stetter is able to meet comfortably the present demand market. However, with strong indications of demand revival on face of restricted production capacity, the company will have to undertake initiatives for scaling up operations. The recommendation of the consultant is likely to be of assistance.
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