Family businesses reluctant to use new manufacturing technologies: report

New Delhi: Most family-owned businesses are conservative in adopting advanced technologies such as additive manufacturing, advanced robotics, and industrial Internet of things, even though they are familiar with these trends, a survey found.

“More than 50% of family owned businesses do not plan to adopt advanced manufacturing within the next three years, in comparison to both Indian and foreign corporations where less than a quarter plan not to adopt in the three years’ time frame,” according to the survey conducted by industry lobby group Federation of Indian Chambers of Commerce and Industry (Ficci) and Tata Strategic Management Group.

Only 10% of respondents of the survey are completely unfamiliar with such trends. Hardly any family-owned businesses have considered adopting advanced manufacturing trends on their own shop floors, it said. This conservative approach is also reflected in the time horizon for adoption.

The survey covered business leaders of more than 50 leading engineering companies in India, with the respondent sample chosen to reflect the diversity of the engineering industry.

Manufacturing is one of the key sectors of the Indian economy, contributing almost 18% of the gross value added and providing employment to about 12% of the Indian workforce. Under the National Manufacturing Policy, the government had set an ambitious target of increasing the contribution of manufacturing from the current level of 15% to 25% of gross domestic product (GDP) by 2022.

In recent years, however, growth of the manufacturing sector in India has been subdued with its contribution to total GDP having declined.

The survey reported that almost 70% of the respondents consider productivity improvement and quality consistency as the most important advantage while reducing production downtime was rated high by over 40% of the respondents, signifying leadership concern at not being able to sweat assets to their maximum potential. Forty percent of the respondents identified providing first time right servicing of customers assets as the most important advantage.

Advanced manufacturing will be the future trend, posits the survey, highlighting three areas of additive manufacturing, advanced robotics, and industrial Internet of Things which will drive manufacturing growth.

Additive manufacturing is commonly referred to as 3D printing, and is done by printing layers of material based on digital models. Advanced robotics use enhanced senses, dexterity, and intelligence to automate tasks or work alongside humans while the industrial Internet of Things uses a network of sensors and actuators for data collection, monitoring, decision making and process optimization over internet infrastructure.

While more than 85% of respondents are aware of advanced manufacturing including IIOT, advanced robotics and additive manufacturing, it is estimated that close to 90% of the industry would have adopted advanced manufacturing by 2020, the FICCI-TSMG survey reported.

However, only one in 10 respondents currently indicated that they have already adopted one of the advanced manufacturing trends.

The industry’s perception of challenges inhibiting the adoption of advanced manufacturing trends is predicated on multiple grounds, the biggest among them being difficulty in quantifying the return on investments upon adoption.

“The industrial internet of things definitely enhances ability of companies to receive real time information about plant equipment thereby reducing downtime and improving productivity. However, companies need to ensure that they build a solid business case and check feasibility before adoption,” said Jehangir Ardeshir, Group CEO, Forbes Marshall Pvt. Ltd.

Non-availability of trained personnel, incompatibility with the companies’ existing set-up, and limitations of the existing technology are also challenges inhibiting adoption.