Mumbai: It is a curious place, the General Electric (GE) multi-modal plant in the Chakan industrial belt in Pune, some 150km from the city of Mumbai.

Once inside, there are golf carts to get around. Which is a good thing considering that the facility is spread over 67 acres, or roughly 51 football fields put together. It has also taken some big bucks to build this expanse: GE spent close to 1,000 crore to get it up and running. Or at least a good part of it, which the company calls Phase 1. (Phase 2 is on its way and should take a couple of years more and some more money). But it is the name of the facility which is most illuminating; multi-modal, it is called.

Now, a traditional plant is a place where a particular product is made. Raw materials enter from one end, blue collar workers get on with it on the lines, using either their hands or machines or both, and the final product lands on the opposite end. It is then packed and ready to be shipped. Simple. A slightly advanced plant is where a few products can be made, with a few robots thrown in for automation. The process remains the same, except that the workers work in shifts, each shift assigned to a particular product.

A multi-modal plant is all of the above and much more. And at the very heart of the concept is a facility that runs in real time. For the $148.6 billion manufacturing conglomerate, the plant in Chakan is the first of its kind in the world where GE can make products for its various businesses, from oil and gas to aviation, power, renewables and transportation, for India and the rest of the world.

For years, India has been a complex market for capital-intensive, heavy-equipment manufacturers where multinational companies have often grappled with the question, is the market ready? Is there enough domestic demand to justify investments in plants, to manufacture products for each of their various businesses? GE believes a multi-modal plant is the answer.

In Chakan, on the factory floor, the scale of the idea and execution shows. The long, almost rectangular shed is clearly marked for various divisions. On the left are workers toiling away on giant locomotive engine turbochargers.

Close by, another set of workers are putting together a turbine for GE’s wind-energy business. Right in the centre is a 3D printer. Eventually, GE hopes to have 3D printers that can print metal products (this one does plastic and is being tried out). Additive manufacturing is the future, GE believes. There’s another corner, on the right, where almost 300 critical parts for GE’s aviation business are being manufactured.

The key is that at any point in time, manufacturing can be changed in tune with what’s in demand. With the same set of people—every worker on the floor, 25% of them women, have been trained to work on products for at least two different business verticals. The machines which enable them to work must only be programmed for the job.

And after a while (Phase 2) that process, too, will be automated. All machines will be connected to the cloud, where concepts and specifications can be remotely fed; they can then churn out the product from the raw material.

Localizing big time

Needless to say, the man responsible for getting it all done is pleased with the effort. Banmali Agrawala, GE’s president and CEO for South Asia, says that it is only a matter of time before it all comes together.

“So everything will be interconnected," he says. “And we will be able to do data mining from the shop floor itself. A seamless process, from concept to manufacturing to supply chain."

It has taken GE four-plus years and many attempts to crack the Indian market to get here. It was during the time of John Flannery, Agrawala’s predecessor, who said that if GE had to win in India, it needed to localize. Big time. “John was convinced," says Agrawala. “And that then built up to, okay if we need to localize then what? How and where? And that’s where we soon realized that if it is going to be one product factory, then it doesn’t make sense."

It wasn’t like the plan sailed through right away. That rarely happens. Agrawala is quick to admit that his biggest challenge in getting the idea through was internal. “Cutting through the GE way I would say," he says. “It was not easy considering that we were doing it for the first time. And to convince people that you will be able to do it in this fashion, it took some doing."

And then there was another problem. A multi-modal facility is at least 20% more expensive than a single product factory. The idea was predicated on the assumption that the factory would serve both the domestic market and exports.

“At least half of what is produced here will go to the domestic market," says Agrawala. “And I have got to make sure that there is enough domestic business that keeps coming through. And (there are days when) I feel good about it and there are days when I don’t feel good about it. I have to ensure that I am simply not dependent on the exports market. If there is no domestic market, then it demolishes the case."

Let’s understand this: 170 nations in the GE ecosystem aren’t waiting for Agrawala. The factory in Chakan must manufacture products at a certain cost, quality and within a certain time. If it doesn’t then there’s no order coming through. Then again, if there isn’t enough demand from India, the facility runs the risk of remaining idle.

On paper, a multi-modal facility is a good strategy for nascent markets, where it can take care of short-term demand volatility and shorter product life-span. Something that’s been a perennial problem for heavy equipment manufacturers in India. “The new wave of products will need regional demand," says S.V. Sukumar, head, manufacturing sector, KPMG. “And capital intensive industries will adopt a multi-modal strategy because of the agility and flexibility it provides. That’s because it takes extraordinary effort to sort supply in case there is volatility in demand. I see many organizations embracing this concept."

Sukumar won’t commit on how soon the trend will play out. But he is sure it will, for obvious benefits.

The idea of ‘Make in India’

As things stand today, Agrawla is hopeful. In the backdrop of Prime Minister Narendra Modi’s ‘Make In India’ campaign. But at the same time, he is a bit impatient about where India is headed. Two of India’s large sectors, which are big markets for GE, are in a funk: power generation, and oil and gas. There’s little that’s changed in the year since Modi came to power.

“Wind, we see as a fairly large component of what we are doing," he says. “Locomotives could be really big, with forging and casting units in this part of the country, which could be a big piece. And then, of course, the oil and gas industry. I somehow think that if logic prevails somehow and sense prevails, oil and gas, both exploration and in consequence the downstream industry, has to pick up in the country. 70% of our basins are unexplored."

What Agrawala firmly believes in though, is the idea of ‘Make In India’. Especially in light of the fact that every nation wants firms to localize, but few have the resources to merit it. “Those products that need to adapt themselves to the market," he says. “I think there is no alternative but first to innovate and engineer those for the market, and then make them in the market. From that perspective India is a great place. The ability to innovate, engineer and manufacture, all these three, in one place."

But, is the country ready to, let’s say, manufacture aircraft engines? Not quite.

“Where I kind of differ from the normal course of manufacturing, the low cost, large scale kind of manufacturing, I’m not sure if that’s the competitive advantage India has. To me the advantage is in the engineering, process and intelligent manufacturing.

“Consequently, will this result in more jobs? I don’t have an answer to that. Maybe the supply chain down the line will. It will lead to jobs that are more meaningful than just wrench turning. Quality of the jobs is also important. That’s our view, right or wrong is debatable, but we will see."

But is it cheaper to manufacture in India?

“There is a certain arbitrage in labour, but that’s a shifting target. We don’t question our plant heads on what’s your labour cost. My question is, is the productivity or the time it takes to produce a single unit, and is it the best in the GE universe? We actually have benchmarks to the China, US, Vietnam facility; where do we stand? So it has got to be the most productive and most efficient place. And I think we are close. We need to also have to make a buffer for other inefficiencies in our system. Such as logistics. Cash flow being blocked. We have certain hurdles."

Being real

Now, it will be fair to say that GE has been in India for a long time. And the benefit of being around for long is that GE has had several ambitious targets. Almost all of which it has missed. When GE first came to the nation, as a business, it set a very ambitious target: $2 billion by 2K (Year 2000). It never got there, withdrawing most of its services and back-end work, citing lack of domestic demand. Then, it set another target: $5 billion by 2010. It didn’t get there. Soon after, another target was set, $10 billion by 2015. Needless to say, GE is nowhere near that number.

Agrawala knows that he has his task cut out. Inside GE, he isn’t over-committing, while being cautiously optimistic. “I think my task is to keep it grounded. To be real," he says. “At this point my task is that I don’t hype India up or be too cynical. There are clearly a bunch of opportunities here for us. Let’s make the most of those opportunities. You may almost say that it is an opportunistic approach than a broad brushed strategic approach."

For now, GE seems to have bought into the multi-modal facility idea. And after the India experiment, the firm has committed to set up another plant in Egypt. From the looks of it, this is just the beginning of a larger shift inside the 123-year-old giant—a realization that its main business is manufacturing things and there, it must lead the way.

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