It was in November last year that Henkel and RLE International had announced their decision to form a strategic ‘mobility alliance’ to drive automotive innovation, expand value creation opportunities and become a premier design-in engineering solution provider for the mobility industry. The mobility future offers myriad opportunities, and the two organisations saw clear synergies to further their business objectives. It has special relevance for this market, as India is the hub for this alliance.
Six months since that announcement was made, we caught up with three senior executives from the two companies for a detailed understanding of what is in store in the years to come – Shilip Kumar, Country President – India, Henkel Adhesives Technologies India (C); Vijay Machigad, Managing Director, RLE India (L) and PK Verma, Regional Steering Unit Manager – IMEA, Acoustic & Structural, Henkel Adhesives Technologies India (R).
The automotive industry is in a flux, with several regulations – be it to ensure cleaner environment, efficient propulsion or enhanced safety – being closer to implementation. Over the next five years or so, safety and emission norms will continue to get more stringent, crash norms will further evolve, demand for lightweighting will continue to increase, and electronics would become all pervasive. Focussed on bringing solutions to the table, this is an opportune time for Henkel, which has been making investments in these areas for the past few years.
Traditionally, the company has been offering solutions across the three broad areas of adhesives, sealants and functional coatings. With the growth of electronics content in vehicles, the company has now ventured into thermal interface materials (TIM) – the fourth operational area of Henkel’s business. The importance of thermal interface materials would further increase with electric mobility, especially batteries. Henkel has been developing solutions on these four areas to mirror the megatrends in the global automotive industry, and this has resulted in the company’s business doing quite well over the last few years, both globally as well as in India.
Purely from performance point of view, the company reported sales of € 19.9 bn in 2018, with organic sales growth upwards of 2.4 % and adjusted operating profit (EBIT) of € 3,496 mn.
Henkel has a strong parentage in Germany as well as operations all over the world, but Kumar said the company realised early enough that India has special requirements. As a result, Henkel put up an innovation centre in India five years back. The global tool box is good, but there was a need to constantly tweak and develop solutions for the Indian market based on customer expectations and requirements. The innovation centre for materials in Pune, apart from catering to the automotive industry, also focusses on other industries. A team of chemists and engineers bring together work on wet chemistry and application development to develop the ‘right’ solutions for the customer, said Kumar.
Henkel has adopted a ‘glocal’ approach to innovation. Be it epoxy chemistry, urethane chemistry, acrylic chemistry or silicone chemistry, the company is looking at utilising and optimising it for applications in India. The innovation centre, in fact, is developing products not just for the Indian market but also for world markets. At this stage, we asked if the Pune innovation centre has matured enough to become a strategic hub for the company for a certain kind of chemistry. Kumar responded in the affirmative, saying in the next phase of growth, he is looking at developing India into a global competence centre.
Currently, Henkel is doing a lot of raw material qualification work in India – much faster and cheaper as compared to anywhere in the world. He is, however, aware that cost arbitrage alone can’t be India’s USP. There’s increased competition – artificial intelligence being one – and the Pune centre would need to add value to the processes that no other centre in the world possesses.
The coming together of Henkel and RLE, and the fact that India would be its hub, was based on extensive deliberations around the available talent pool, economics, market size and potential. As a first move in that direction, the company decided to base the mobility alliance hub in Pune, in close proximity to the Henkel innovation centre. The hub houses common teams, getting the best of materials science on the one side and engineering on the other, to form high impact solutions for the customer, said Kumar.
Sharing the RLE perspective on the subject, Machigad said India has been a major player in supporting global projects for German, Chinese, UK and American OEMs. Focussed on delivering complex engineering, RLE has acquired knowledge and capabilities to successfully accomplish global projects sitting in Bangalore, Chennai or Pune. Typically, most OEMs prefer not to outsource complex work. Most of them have their own engineering services arms, and the only work outsourced is drawing creations, which Machigad said is the lowest rung of the value chain. From an ecosystem perspective, it hasn’t been easy for RLE to penetrate into this market but its strategy has been to be one level above the OEMs’ engineering services department or division.
The alliance with Henkel is expected to improve that significantly – developing solutions for problems OEMs aren’t able to find answers to. It envisages not just creating new opportunities for both organisations collectively, but also creating solutions that could benefit their existing customers.
Among others, the alliance now brings in knowledge about new materials – steel to aluminium, aluminium to new composites – and about new techniques of joining different materials. The alliance allows both partners to take new material, have details of their properties and use their engineering knowledge to simulate real life crash, NVH and acoustics through a virtual environment, so as to prove that the solutions really work, explained Machigad.
Commenting on the alliance, Verma said it has allowed innovation across the value chain, from knowledge to processes to systems and solution.
Post announcement of the alliance, the companies organised roadshows globally, and to some extent in India as well. Building of the team has already started across the world, but primarily in India because this is going to be the hub for the alliance. Kumar reiterated that Henkel RLE is not a legal entity; it’s an alliance, where employees would either belong to Henkel or RLE. Currently, around 20-25 people are undergoing extensive training primarily in Europe as well as the United States. Clearly the engineers are getting deeper insights into material science, and vice-versa.
The alliance has started work on projects across the world, including the three big markets of North America, Europe and China. Through these projects, the alliance is looking at creating solutions that provide better mobility for the wold. In the process, the alliance will generate IPs of its own and over a period of time, it will create both a database of solutions as well as a lot of new material cards with various Henkel structural materials – cards that did not exist in the past.
TEXT: Deepangshu Dev Sarmah