Market Demands Will Drive Technology Requirements

Market Demands Will Drive Technology Requirements

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Eaton, the $ 20.9 bn (2015 sales) global power management company, has been at the forefront of innovation and technology development aimed at offering efficient, sustainable, safe and reliable transportation solutions. In a freewheeling interview at the New Delhi Auto Expo last month, Krishnakumar (KK) Srinivasan, President – Asia Pacific, Vehicle Group, Eaton said although pressed with various challenges currently, the Indian market is "the" market of the future, and the company is well positioned to take advantage of that.

President – Asia Pacific, Vehicle Group, Eaton. He joined Eaton in 2009 and held the position of Managing Director – India, Vehicle Group before moving to China to take on the PAC role, where he is responsible for managing Eaton's overall Vehicle Group's business, accountable for sales, operations, strategic plans, growth initiatives, supply chain, and for developing a high performance culture in the organisation.

In his career spanning 29 years, he has held various leadership positions in multiple functions. Prior to joining Eaton, Srinivasan was President of Endress + Hauser Flowtec India and COO at INA Bearings India. After completing his bachelor's degree from the College of Engineering, Pune, he got an MBA degree from the University of Pune and a post graduate diploma in export management from Indian Institute of Export Management, Bangalore.

ATR _ How has Eaton coped with the current market situation, both from an Indian as well as APAC perspective?

KK _ Market conditions are becoming tougher, especially with the China slowdown. China has decided to move from an investment-driven economy to a consumption-drive economy. They are now opening up the market saying they'll produce as the consumers buy. This completely changes the way they were pushing the economy earlier. As a result, volumes have come down in China, and it is likely to continue that way for some time. The likely GDP growth of 4-5 % is now being called the "new normal".

The good part though is the fact that our presence and products in the Chinese market give us a huge opportunity to grow our market share, and also offer technical solutions to our customers, thereby increasing our base. That has been our focus in China.

In India, fortunately the market has been good for us in the last couple of years. It has, and will continue to improve in the years to come. I personally feel we need to outgrow the market, and for us that would mean growing three to four times the growth of the market. We have done that in the past, and I'm hopeful of our continued growth in the years to come. While markets would remain tough, we would have to find ways to outgrow them.

The Indian government's decision to bypass BS V emission norms to move to BS VI by 2020 – do you see this as a challenge for Eaton and the industry at large?

I certainly think this would be a challenge. It's not going to be easy to scale up the right quality of technologies and fuel required to meet BS VI emission norms, and would call for huge investments. Having said that, I think this is necessary considering the environmental concerns that we currently face. I believe it isn't impossible to achieve the targets set. It calls for a focussed drive, and I see no major harm in skipping BS V norms.

We have already started receiving enquiries and demands for fuel vapour products, for instance. Customers have been asking us for CO2 reduction technologies such as superchargers. Demands from the market will drive the requirement for technologies, and requirement for technologies will drive companies like us to offer solutions to the customers.

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We are essentially staring at two challenges – time and cost. While companies would need enough time to test out their technologies before rolling them out, how do you think the industry would take to the cost increase?

It's a very interesting dynamic, and I fully agree with your point. While these technologies are being forced into the country due to the emission norms change, one of the good things for companies like us is that we have follow-through products, which means we have products that have been time tested elsewhere in the globe for these regulations. We have products that can be adapted faster. Having said that, I don't want to undermine the efforts required to integrate these products and do the right engineering to meet the desired results. We can pass on the product knowledge to our customers and work with them to find timely solutions.

We've always been focussed on partnering our customers right from the drawing board stage, work with them with the right technology and products we have in our basket, give them solutions that will enhance the performance or improve upon the regulations and fuel efficiency requirement; thereby, making it easier for them to adapt technologies faster.

From the cost perspective, unless we have economies of scale, technologies will remain costly. Of course at some point of time, we have to localise and that will bring down cost. We will continue to look at such avenues. Let's look at materials for example: when we move from one material to another, in our effort to reduce cost, we also need to ensure that we don't sacrifice on any of the deliverables or end requirements. There is a constant demand from our customers to be more and more competitive.

Once we move to BS VI emission norms, India would no longer be considered an emerging market. Which means the strategy vis-à-vis other India-like markets would need to be rewritten. Right?

I fully agree with you. This is where the Indian government's "Make in India" drive makes great sense. As we all know, we continue being a low-cost manufacturing base. We shouldn't change this equation too much to remain competitive. If we look at other markets, say a region like the NAFTA has failed to keep costs under control as they moved to improved technology. Their manufacturing strategy didn't run parallel to their technology strategy. So, India will have to be mindful of the fact that in introducing new technologies, it is important to keep a check on costs. At Eaton, most of our strategies revolve around localisation, having the right manufacturing strategy and giving the customers the right technology – all working in unison.

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Can the India model be adopted in mature markets, with say a focus on reverse innovation?

It could, but that will call for a complete cultural change. If we look at the cost itself – employee cost or manufacturing cost – it won't be easy in the advanced countries to alter their current standards. Cost economics will play a decisive role if such a change is desired. If India has to keep its skin in the game, we have to remain cost-competitive.

In the near to mid-term, what kind of trends do you see emerging in the powertrain area?

In our portfolio of products today, we have some very good technologies for valve actuations, for instance. With more and more vehicles getting turbocharged and with exhaust temperatures increasing, we also have a lot of demand for hollow valves. The Indian market hasn't seen hollow valves at all, while in China it is all hollow valves. Then, we have cylinder deactivation as a solution, and the variable valve lift systems to control the lift of the inlet valves. We have superchargers that helps downsize, down-speed an engine, yet delivering the optimum power it requires.

We also have technologies like the Internal Heat Exchangers (IHX) that will improve the efficiency of the air-conditioning systems. We have differential controls, including a completely electronically handled limited slip differential that ensures that the right amount of torque or locking takes place as per the driving conditions. From a CV standpoint, automated manual transmissions (AMT) and self-adjusting clutches would find more acceptance in the future.

How receptive are Indian CV makers to solutions like the AMT?

As of today, they don't see the value of moving to AMTs but like in the western markets, the Indian CV industry will certainly move to AMTs in the future. Currently, efficiency of a CV operation is heavily dependent on how well the driver drives. With AMTs, that will change.

How do you view the potential in the hybrids and electric vehicle space?

We have products in our portfolio that we can offer to the market, but they won't be able to sustain on their own. Subsidies from the government will need to continue for some time. That is because our solution is not independent of the complete system. It is dependent on the battery solution, for example. We are also dependent on the motor generator, because we don't make them. We have tried solutions like ultracapacitors in the past to see if we can provide longevity to the vehicle. In China, we've offered one solution, where the AMT is paired with an electric vehicle.

In the hybrids space, we've been pioneers in parallel hybrid systems. Initially, we did work on series hybrids but realised it doesn't have the longevity in terms of cost and infrastructure that needs to be developed for that. In China, we've been leading the game for hybrid solutions.

Considering the likely demands in the future, what specific technology areas is Eaton working on for a market like India?

The areas of clear focus for us would be to offer solutions for the engine in terms of hollow valves, cylinder deactivation, variable valve lift systems, etc. These are at a very nascent stage in India. Our second focus area would be on differentials, especially on the driveline. We need to make the vehicle driveline capable to meet the demands of various terrains. Third, we need to improve the efficiency of air-conditioning. I'm happy to note that we have the right technology for all these areas.

What is your focus on material research?

At a granular level, we do undertake a lot of research. We are looking at materials that are cheaper and cost-effective, and ones that do not hamper the functionality of our products. In some of our localised products, we have changed materials to suit local demands and availability. The shift density in India is way higher than any other market, and we need to upgrade our materials to be able to handle that kind of shift densities. Our fork or shift mechanisms are completely changed to meet Indian demands. Similarly, clutch life in India is one-fifth the clutch life you get in Europe. People are willing to compromise on the damping properties of the clutch but not on the life of the clutch.

What's your outlook for Eaton's future in India?

I think these are exciting times for the country. The government is doing the right thing by pushing "Make in India", and we want to ensure that we are part of this. We have been growing very well both in the commercial vehicles as well as passenger vehicle segments. The car penetration is very low, and our population is very young – so that gives us a lot of hope. India is the market for the future, and we are well positioned to take advantage of that.

Text: Deepangshu Dev Sarmah

Photo: Bharat Bhushan Upadhyay