PremiumNEW DELHI: Flex, one of world’s largest contract manufacturers, has a strong business pipeline in India—the company runs three manufacturing sites around Chennai and employs 18,000 people. Revathi Advaithi, CEO, Flex, thinks India does bring a lot to the table when it comes to make in India. However, there is still some distance to cover before India can become a manufacturing exports hub.
Excerpts from an interview.
Given the second wave, how do you view the recovery in the global economy?
It has been an interesting 12 months. But when you see the economic and financial waves, like in 2008, I would say that the pandemic from an economic perspective wasn’t as bad for companies like us. Many critical areas of manufacturing had to keep running. The recovery has been much stronger than what we would have expected. The US GDP is supposed to be strong. The recovery has been driven by pent-up demand in many areas. There has been an explosion in consumer electronics, whether it is home products or laptops or the build-out of data centre infrastructure.
5G rollout continues at a decent speed; the automotive business with electric vehicles and autonomous continues at a breakneck speed; the health business, globally, is going through an interesting phase. Driven by these macros, the growth could be positive and strong through next year. All this is offset by the semiconductor shortage we are seeing globally.
Flex’s percentage of net sales from the US is up in 2020 while it has decreased from Asian countries. Does this underline the ongoing supply-chain realignment?
Yes, absolutely. Our percentage sales have changed from parts of Asia to the US. This is driven by people not wanting to have the risk associated with tariffs, pandemic and shipping concerns. Particularly, we see this in certain sectors like consumer goods. People don’t want to make it far away from where their customers are using it. However, electronics manufacturing is still so dependent on Asia, the percent movement here is small. In sectors like medical, the movement started couple of years ago. Companies didn’t want a risky supply-chain for medical supplies.
The India business had shrunk in 2020. Why is that?
When I joined Flex two years ago, we rationalised our portfolio. We did not have the infrastructure and the financial position to deal with short product lifecycle businesses . India saw the effect of it. We are now focused on products that are more resilient. Our pipeline in India is very strong at this point in time.
What does India bring to the table for Flex?
India brings Indian manufacturing capability for domestic consumption. India continues to be one of the largest growth economies. Being able to manufacture for India in India is of huge importance to our customers.
Do you see India as a potential export hub, going ahead?
India has made progress. Over the last few years, the bureaucracy has come down. There has been an effort to support businesses, particularly, support multinational businesses. But to be a global exporting economy, the most important thing is to make sure you have world class labour that can drive productivity and efficiency that organisations need.
That comes with building hubs where you can find great labour and train them. India still has work to do here. If you have a productive workforce, you can make products at the right price point. Then, you become an export economy. Second, the entire supply-chain has to be built. Today, that will take some time.
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