With a Small Car, India Takes Big Step Onto Global Stage
A row of shiny compact cars in cherry red and pale gray recently rolled off an assembly line near Bombay. Made from scratch in India, the cars were bound for Britain, where they would be sold under the Rover brand name.
Ten years ago, nobody would have believed this was possible. Indian cars, like many other Indian manufactured products, were so low quality that they could barely satisfy local consumers, let alone buyers abroad.
Now, MG Rover Group Ltd. is aiming to import 20,000 cars a year from India's Tata conglomerate, a century-old industrial empire. The deal illuminates an arresting change in the world's second-most-populous country. Its vast manufacturing sector, long sluggish and inefficient, is becoming a new global force. By seizing upon economic reforms and tapping the country's cheap labor and engineering talent, top manufacturers are taking the nation's economy beyond its well-known strengths in technology and back-office outsourcing.
India's Ranbaxy Laboratories Ltd. is becoming one of the generic-drug industry's fastest-growing players. An Indian auto-parts company, Bharat Forge Ltd., gobbled up a German firm to become the world's second-largest forging concern. The Tata group's own Tata Iron & Steel Co. has become one of the world's lowest-cost producers, selling specialty steel to Toyota Motor Corp., Hyundai Motor Co. and other multinationals.
Before India's dramatic economic opening began, local companies needed government approval to engage in virtually any element of business in what was known as the "License Raj." High tariffs kept out foreign goods. In steel, for example, import duties were as high as 80%. Large areas of the economy, from insurance to telecommunications, were the sole preserve of government-run monopolies.
It took a financial crisis in 1991, when India's foreign-exchange reserves dipped to a dangerously low level, for the government to admit the system was literally bankrupt. Since then, the government has slashed tariffs and removed restrictions on many imports. It has stopped requiring companies to seek approval to enter a new business, expand or engage in foreign-exchange transactions.
The changes brought a flood of local and international competition. That was a big challenge for Tata Sons Ltd., the parent company of a conglomerate founded in 1868 by traders originally from Persia. The group spread its reach over the next century and a half into every corner of the Indian economy, from tea to tourism, steel to software. The Tata group founded the country's first steel and airline companies, funded its premier institute for science and even supported the struggle for independence from Britain.
When Ratan Tata, now 66, became chairman of the parent company in 1991, he took over an unwieldy group of more than 80 companies that lacked even a common logo to tie them together. Trained as an architect at Cornell University, Mr. Tata says he knew he had to radically restructure -- or flounder in the ensuing competition.
"We needed to shed the flab of protection," says Mr. Tata, from the group's Bombay headquarters where portraits of his forebears line the boardroom walls.
Mr. Tata eliminated tens of thousands of jobs and rolled back benefits at one of his companies where children of longtime employees were virtually guaranteed work. To encourage innovation, he departed from his firm's rigid hierarchy to pose cost-cutting and design challenges to a reservoir of talented young engineers.
It paid off. Last year, the stock prices of two major companies in the conglomerate -- Tata Motors Ltd. and Tata Iron & Steel Co. -- both tripled in value.
Many Indian groups failed to make the transformation, and Tata, along with most other Indian manufacturers, still face obstacles to compete in the top tier globally. They're pushing the government to improve India's old power and transportation infrastructure. They're lobbying for policy changes to reduce red tape, cut taxes and relax labor laws. Tata executives acknowledge their group needs to become more aggressive in recruiting talent and developing new ventures.
Before India's economic reforms, cost-cutting was barely on the radar screen at the Tata group's truck-making arm, now called Tata Motors. Demand for the vehicles surpassed supply, so the company took for granted that almost everything that came off the production lines would be bought. There was little thought of increasing capacity because the government set a ceiling on the number of vehicles the company could manufacture. Salaries weren't tied to performance, company officials say. Any change came from the top down.
When economic liberalization arrived, Mr. Tata saw a chance to expand into automobiles. But friends warned he would be in over his head if he decided to build his own car just as international auto giants such as Ford Motor Co. and Hyundai Motor Co. were entering the market, he says. These companies had deeper pockets and greater experience in cars and competitive environments.
Instead of backing off, Mr. Tata devised an ambitious expansion plan, drawing on the breadth of engineering talent at Tata Motors to leap into the car business. The company's technical prowess reflects an important advantage for India: a deep reservoir of home-grown engineering muscle that goes well beyond software.
In the 1950s, India's first prime minister, Jawaharlal Nehru, made technical education a priority, starting an elite cadre of universities that together form the Indian Institute of Technology. Hundreds of lesser-known engineering schools also serve as magnets for young people in a culture that views mathematical and scientific expertise as a prerequisite for economic advancement.
India's Car
Mr. Tata and his team put engineers at all levels to work on designing the small passenger car that would become the Indica. (The name combines "India" and "Car.") One team designed the Indica's parts. Another division developed the conveyors for the assembly line. Yet another group built the machines to stamp the parts, and another churned out the software.
Tata Motors developed the Indica for $350 million. An equivalent project in the U.S. or Europe would have cost at least three times as much, says V. Sumantran, a 16-year veteran of General Motors Corp., who now heads Tata Motors' car business. A good part of the savings are in salaries. Indian engineers typically earn a small fraction of the pay that their counterparts in the U.S. do.
In 1998, after about three years in development, the Indica hit the market. Customers complained about poor suspension, air-conditioning and, above all, after-sales service, company officials say. His employees' initial response, Mr. Tata recalls, was: " 'We haven't done anything wrong.' "
But the company's management took the problems seriously. It invited customers into the factory to talk about their experiences and deployed 500 engineers to talk to buyers.
In 2001, three years after the first Indica rolled off the assembly lines, Tata Motors launched the next-generation car. The new version quickly became one of the biggest sellers in the small-car segment in India. In the year ending in March 2002, Tata Motors sold 64,000 Indicas, an increase of 46% from the same period a year earlier. More recently, Tata Motors recorded sales of $1.9 billion from April to December 2003, an increase of 49% over the same period a year earlier, according to its latest quarterly results.
Getting the Indica on track was only half of the battle. When the company launched the car, an industrial slump in India hit demand for trucks. Tata Motors began posting huge losses, prompting Mr. Tata to turn his attention to cost-cutting.
Mr. Tata bypassed senior managers and backed an effort to ask young engineers how they'd cut costs. One Tata Motors engineer remembers the company's executive director summoning him and a group of colleagues to breakfast and presenting a challenge: Within the next 72 hours, find ways to save 20% on costs. "We were incredulous," says engineer Atul Renavikar.
They returned with proposals to cut costs in every part of the business, says Ravi Kant, executive director of Tata Motors. In the ensuing months, they found savings in the cost of personnel, finance, inventory and materials that would reduce costs by more than $200 million over a three-year period.
Indian labor laws make it very difficult to lay off workers, requiring large companies to obtain government permission to do so. So Tata Motors launched an early-retirement program, offering employees 45 years of age and older a portion of their salaries until they turned 60. The work force has fallen to 22,000, from 36,000 in the late 1990s, the company says.
In 2002, Tata Motors found an eager buyer for the Indica in MG Rover, which was seeking to add a small car to its stable of vehicles. MG Rover looked first in China but signed a deal on the Indica because of its low cost and high quality, according to an official from Rover's parent company.
As he was reshaping Tata Motors, Mr. Tata was also recasting Tata Iron & Steel Co. The 97-year-old company, a major force in the industrialization of India, used to make steel at a price and volume set by the government. The company had evolved over the century into a social service agency of sorts. It provided the 700,000 inhabitants of Jamshedpur -- its corporate headquarters in eastern India -- with heavily subsidized hospitals, schools and utilities.
Company employees -- who made up a quarter of the city's population -- enjoyed other unusual perks. Tata Steel virtually guaranteed jobs to the children of employees who had served for at least 25 years, making it hard for the firm to recruit talent and control the size of its staff.
'Dead in the Water'
By 1992, consultants were telling Tata Steel executives that the company was "essentially dead in the water," says its current managing director, B. Muthuraman. They pointed to the new government policy reducing tariffs, arguing that the company lacked the size, marketing experience and product mix to compete with foreign companies sure to enter the market. (Today average tariffs on steel are 20%, compared with as high as 80% before the reforms.)
But Mr. Tata and senior managers say they knew they had an unusual resource at their disposal: Jamshedpur's vast reserves of high-grade iron ore. So they concluded they could compete if they scaled up, modernized and diversified. Drawing, as Tata Motors did, on the depth of its engineering talent, Tata Steel rapidly refurbished old mills and designed and built a new one. It got the new mill on line in just 26 months, a half-year quicker than its Japanese advisers believed possible. The company also developed new lightweight steels to tap into a growing demand in Asia's automotive and electronics industries.
Tata Steel is now one of the five lowest-cost producers of steel in the world, according to World Steel Dynamics, an industry publication in New Jersey. By building more mills and making acquisitions overseas, the company says, it plans to raise production to 15 million tons by 2010 from four million today.
Meanwhile, the company is moving to reduce the financial burden of its century-old social contract with the people of Jamshedpur. A world apart from the poverty and lawlessness of the surrounding countryside, Jamshedpur is a city of tree-lined lanes whose schools, hospitals and even golf courses were built, run and funded by Tata Steel.
The company plans to transfer many civic and social roles over to a separate company and start charging higher rates for its services, according to Niroop Mahanty, the executive who heads Tata's job-reduction program. By March, he says, the company will have spun off the operation of the city's water, sewage, parks and some schools.
In addition, the company no longer guarantees jobs to the children of employees, Mr. Mahanty says.
Managers at Tata Steel have also made huge cuts in the labor force, mostly through an early retirement program -- and say they will reduce the staff further. When Tata Steel began reducing staff, Mr. Mahanty says, the company didn't even know how many employees it had, due to an abundance of company cooks and drivers.
Under the retirement program, the company has reduced its vastly overstaffed work force to below 40,000, from nearly 80,000 in the early 1990s, company executives say. They plan to cut still further to about 20,000 by 2010, according to Mr. Muthuraman, the managing director.
The changes have bought opposition, fierce at times. Mr. Mahanty, the executive who heads Tata's job-reduction program, says 30 workers shouted slogans outside his house, roughed up a security guard and broke some furniture one afternoon. A bodyguard still accompanies him as he makes the rounds in Jamshedpur.
印度登上世界制造业舞台
一辆辆崭新的樱桃红和淡白色的轿车在孟买附近的一条生产线下线，这些完全在印度生产的轿车将被运往英国，贴上Rover的标签销售。
10年前，没有人相信这会成为事实。印度轿车与许多其他印度制造的产品一样曾是质量低下的代名词，甚至连印度当地的消费者都对其不屑一顾，更不用说海外消费者了。
现在，陆虎公司(MG Rover Group Ltd.)打算每年从印度具有百年历史的大型工业企业Tata进口20,000辆汽车。陆虎公司的协议充分展现了这个世界人口第二大国发生的巨大变化。印度庞大而臃肿、效率落后的制造业正成为一股新的全球力量。通过实行经济改革、利用廉价劳动力以及工程技术人才，印度大型制造商给印度经济增长插了更有力的翅膀，在此之前，印度被普遍认为在科技和后勤外包方面具有强劲实力。
印度Ranbaxy Laboratories Ltd.正成长为仿制药工业快速崛起的一匹黑马。印度的汽车零部件公司Bharat Forge Ltd.吞掉了一个德国公司，成为世界上第二大汽车零部件制造企业。Tata子公司Tata Iron & Steel Co.成为世界上成本最低的制造商之一，该公司向丰田汽车(Toyota Motor Corp.)等跨国公司销售特种钢材。
印度大刀阔斧的实行经济开放政策以前，当地公司介入任何产业都需要获得政府的批准，即著名的“许可证为王”(License Raj.)制度。高关税将外国商品拒之门外。比如在钢铁行业，进口关税高达80%。大部分经济领域，从保险到电信，都由政府所有的企业垄断经营。
1991年印度一场金融危机让政府不得不承认这一制度实际上已经完全失效，当时印度的外汇储备降至一个危险的水平。此后，印度政府大幅削减了关税并取消了多种进口限制。印度不再要求公司在创立新业务以及扩大或从事外汇交易时向政府提交申请。
这些变化促使本地公司和外国公司大量涌现，展开激烈竞争。这对Tata Sons Ltd.是一个巨大的挑战，该公司是1868年由波斯商人所创建的一个公司的母公司。这家公司在此后一个半世纪扩大了规模，将触角伸到了印度经济的每一个角落，从茶叶到旅游，从钢铁到软件，无所不包。Tata集团创建了该国第一个钢铁和航空公司，创办了最早的科学院，甚至支持了印度脱离英国的独立运动。
现年66岁的兰塔?塔塔(Ratan Tata)在1991年成为母公司的董事长。他掌控著一个由80个公司组成的庞大集团，这个集团如此庞大以致于没有一个统一的标识将各个公司联系在一起。兰塔?塔塔在康乃尔大学(Cornell University)攻读了建筑学专业课程，他说他知道必须对公司进行彻底重组才能在激烈的竞争中生存。
塔塔在位于孟买的集团总部说，“我们（当时）需要去除过多的保障。”在该公司总部会议室的墙上陈列著其先辈的肖像。
塔塔裁减了数万个职位，撤销了一个子公司的福利－－该公司老员工的子女享受工作保证。为鼓励变革，他将公司的僵硬的等级抛在一旁，将降低成本和设计工作交给一些有才华的年轻工程师。
这些措施立竿见影。去年，该集团两大子公司Tata Motors Ltd.和Tata Iron & Steel Co.的股价上涨了两倍。
许多印度公司未能实现转型，Tata与其他大多数印度制造商一样，与国际大公司竞争仍面临著重重困难。他们要求政府改善印度陈旧的电力和交通设施。他们游说政府改变政策－－减少繁文缛节、减税和放宽劳动法。Tata高层人士意识到，他们的集团需要在聘用人才和创建新企业方面迈出更快的步伐。
在印度经济改革前，降低成本从未摆上Tata集团卡车制造子公司Tata Motors的桌面。市场对汽车的需求大于供应，因此公司想当然的认为从生产线上下来的一切产品都会找到买家。该公司也未考虑过扩大产能，因为政府对该公司车辆生产数量设定了一个上限。该公司高层称，当时薪水也没有与工作表现挂钩。
自由经济大潮来临之时，塔塔看到进入汽车产业的机会。他说，当时他的朋友告诫道，在诸如福特汽车(Ford Motor Co.)和现代汽车(Hyundai Motor)等国际汽车巨头进入印度的时候，如果他决定生产自己的汽车，他将会碰的头破血流。这些公司有强大的资金实力，在生产汽车以及竞争方面有著丰富的经验。
塔塔并没有退缩，他设计了一个雄心勃勃的扩张计划，吸引众多Tata Motors的工程技术精英加入到轿车业务中。该公司的雄厚技术实力反映了印度的一个重要优势：印度有一个庞大的土生土长的工程技术队伍，软件人才并不是其唯一所长。
在上个世纪50年代，印度首任总理贾瓦哈拉尔?尼赫鲁(Jawaharlal Nehru)将科技教育列为首要任务，从各个大学中挑选了一些精英骨干组成了印度科技学院(Indian Institute of Technology)。数百所知名度略低的工程院校也吸引了大批年轻人就读，印度那种将数学和科技技能看作经济进步前提的文化氛围起到了潜移默化的作用。
印度轿车
塔塔和他的人马集合了各个层次的工程师，齐心协力设计小型轿车“印度车”(Indica)。（这个名称是英文的印度(India)和汽车(Car)的结合。）一队人马设计印度车的部件，另外一个部门开发组装线的传输带。还有一个部门制造组合汽车部件的机器，另有一部分人开发软件。
Tata Motors开发印度车花了3.5亿美元。而据在通用汽车公司(General Motors Corp.)工作了16年的 V. Sumantran称，同样一个项目，在美国或欧洲成本至少要高出两倍。Sumantran现在负责Tata Motors的轿车业务。这其中很大一部分成本节约是工资。印度工程师的工资一般只有美国同行的一个零头。
经过大约三年的开发，1999年印度车打入了市场。公司管理人士称，消费者对其低劣的悬挂装置、空调以及最主要的售后服务怨言不断。塔塔回忆称，他的员工最初的反应是：“我们没做错什么。”
但公司管理层一点都不含糊。公司邀请客户来工厂介绍他们的体会，并派了500名工程师同购买者进行交谈。
2001年，也就是第一辆印度车下线后三年，Tata Motors推出了下一代轿车。这款新车迅速成为了印度小型轿车市场销量最好的车之一。截至2002年3月的这一年，Tata Motors卖出了64,000辆印度车，较上年同期增长了46%。根据最新的季度报告，在2003年4月到12月期间，Tata Motors销售额达到了19亿美元，较上年同期增长了49%。
让印度车走上正轨只是战斗的一半。在公司推出此车之际，印度工业低迷打击了卡车的市场需求。Tata Motors开始公布大额亏损，从而促使塔塔关注起成本削减。
塔塔绕过了高级经理人员，支持向年轻工程师咨询成本削减之道。Tata Motors的一位工程师回忆道，公司的执行董事邀他和其他一些同事共进早餐，同时向他们提出一项挑战：在72个小时内寻找到节约20%成本的办法。这位名为Atul Renavikar的工程师说，“我们对此充满怀疑。”
Tata Motors的执行董事拉维?康特(Ravi Kant)说，他们提交了在各个环节削减成本的计划。几个月后，他们发现在人事、财务、存货以及原材料等诸多方面的节约措施将使公司在三年内削减2亿多美元的成本。
印度的劳动法律使公司非常难以裁员，大公司裁员必须获得政府的许可。因此Tata Motors就推出了一个提前退休计划，为45岁以及以上的员工提供部分工资，直到他们年满60。公司称，如此一来，公司员工从1990年代的36,000人减少到了22,000人。
2002年，Tata Motors发现陆虎公司对印度车需求强烈，当时后者正试图在产品种类中增加一款小型车。陆虎母公司的一位管理人士称，该公司一开始在中国努力过，但最终签订了印度车，因为它的成本低而且质量好。
就在重组Tata Motors的同时，塔塔还在重塑Tata Iron & Steel Co.。这家有著97年历史公司是印度工业化的主要力量，它过去按照政府制定的价格和产量生产钢铁。经过一个世纪的发展，该公司变成了某种社会服务机构。它给公司总部所在地贾姆谢德布尔(Jamshedpur)的70万居民提供高额补贴的医院、学校和公用设施等服务。
公司员工占到城市人口的四分之一，他们还享受其他一些特别补助。Tata Steel基本能确保那些工龄在25年以上的员工的子女的就业，这就使公司难以雇到有才干的人并控制员工规模。
“死水微澜”
该公司现任董事总经理B. Muthuraman说，到1992年，咨询人员告诉Tata Steel的管理人员，公司已然是“一潭死水”。他们指的是政府降低关税的新政策，他们称公司缺乏可与必将进入印度的外国公司竞争的规模、营销经验以及产品组合。（今天印度的钢铁平均关税为20%，而改革前的关税高达80%。）
但塔塔和他的高级经理们说，他们知道他们拥有一项任其开发的资源：贾姆谢德布尔巨大的高品级铁矿。因此他们认为，如果他们扩大公司规模，并进行现代化和多样化改造，他们就能参与竞争。
根据行业信息出版组织世界钢铁动态(World Steel Dynamics)的数据，Tata Steel现在是世界成本最低的五家钢铁制造商之一。公司表示，通过建造更多炼钢厂以及海外收购，它计划到2010年将产量从现在的每天400万□提高了1,500万□。
与此同时，公司还在努力削减同贾姆谢德布尔居民达成的长达百年的社会契约。贾姆谢德布尔的周围都是农村，这是一个远离贫穷和违法行为的独立世界，纵横城市的道路两旁绿树成排，这里的学校、医院甚至高尔夫球场都是Tata Steel建造、管理和资助的。
据Tata负责裁员计划的经理Niroop Mahanty说，公司计划将很多城市及社会功能移交给独立的公司并对其服务收取更高费用。他说，到三月份，公司将剥离城市的供水、排污、公园和一些学校等服务。
Mahanty说，此外，公司不再保证员工子女的就业。
Tata Steel的经理人员也被大幅裁减，其中多数是通过提前退休计划下岗，他们表示还将有进一步的裁员。Mahanty说，Tata Steel开始裁员的时候，公司甚至还不知道它到底有多少员工，因为公司养了大量的厨师和司机。
公司管理人士称，根据退休计划，公司已将臃肿的员工队伍缩小至4万以下，而1990年代初期，公司约有8万人。据董事总经理Muthuraman说，公司计划在2010年之前再裁2万人。
改革激起了反抗，甚至一时还较为强烈。负责Tata裁员计划的Mahanty说，一天下午，有30个工人在他的房子外高呼口号，殴打了一名保安还打坏了一些家具。现在，他行走在贾姆谢德布尔时还有一名保镖护从
