Success Factors for Heavy Engineering Manufacturing Industry
The article describes the basic requirements to meet success in any heavy engineering manufacturing or EPC industry.
Professionals, who served and serving Industry that we call “Heavy Engineering or Heavy Machinery or Heavy Process Equipment Manufacturing/Fabrication Industry” that exists in India or World-over, know it very well that the whole manufacturing industry will become uncompetitive, if we do not constantly upgrade in all areas of our working / operations. Never the less, the time has come when professionals related to other Industries have started to teach us the methodologies for survival even within our specialized field. This is clear evidence that most of the “Management Consulting Companies” (who themselves are fighting each other for their own survival world over) are trying to prove that highly techno-commercial professionals like us need guidance.
The success of heavy engineering industry lie in deep understanding from the below mentioned important factors–
1. Every “heavy engineering manufacturing unit” in India or worldwide finds its survival from the unique combinations of experiences and skills that it acquires year after years of its operations, its management, its employees, work culture and combinations of many other factors. Therefore, it is difficult to conclude that one set of rules and guidelines can work with all of them to grab huge success for their survival and future business growth. It has been well understood that for any heavy engineering units or EPC companies, strong teamwork in the following areas are basically essential:-
- Design & engineering back up either direct or close tie-up
- Procurement & Subcontracting with efficient system for vendor development and subcontracting
- Manufacturing or construction excellence with built-in system for strong QA/QC controls
- Projects & Planning to meet customer’s expectations for timely delivery.
- Strong mechanism to evaluate self performance, customer handling and satisfaction.
2. As the business involves long lead capital items it is a capital intensive and therefore requires proper risks evaluation & risks mitigation prior to entering into each and every contract.
3. It is relevant here to point out that despite having the above mentioned excellent manufacturing & construction set up, the business can have success only through extremely good marketing and Sales teams for capturing right opportunities for business acquisition at a given time. It is also crucial for any heavy engineering or EPC unit to decide its product/projects mix based on its capabilities:-
- Products/projects still in production/execution but are not profitable.
- Regular Products well accepted in the market and are reasonably profitable for current survival.
- Diversification and future products/projects that must be developed with least investment in infrastructure, good future market and highly profitable in longer run.
4. Most heavy engineering, machinery manufacturing, Equipment fabrication and EPC companies that do not have proper costing/estimation and cost review/cost control system, continue booking loss making orders and loosing profitable business. This ultimately leads to closure of these units. Many examples exist in India and world over even with companies which were technically very strong.
5. Further, the entire marketing activities need to have the necessary framework to cover the following important and crucial areas:-
- Product Mix based on the above considerations of market, opportunity and profitability
- End customers, PMC/EPC and Licensor Approvals
- Projects in oil & gas, Fertilizers & Chemical, Power & Nuclear, Steel, Cement, Mining & other sectors
- Technical tie-ups with reputed international manufacturers for high end equipment.
- Geographies to cover in India and Internationally
- Competitors tracking and monitoring
6. I am fully convinced that Indian companies have all the required capabilities in terms of technically competent, well trained & cheap manpower. However, Government support in infrastructure, necessary ease of doing business norms, low cost capital investment through Indian entrepreneurs, FDI and clear interest by top business houses can make India a “Super Power” in “Heavy Engineering Manufacturing Industry”.
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