Indian component makers see rising interest from US

[OhioChick]

Source: Economic Times India

23 Aug, 2008, 0238 hrs IST,Sachin Dave, ET Bureau

MUMBAI: When US automobile sales skid, the wheels of fortune turned in favour of the Indian auto component industry. America’s loss-laden auto makers and their OEM component suppliers are already looking towards low-cost component manufacturers in India and China for a bail-out. And at the same time, Indian auto component makers have turned their eagle eyes on possible preys in the US.

Mark Warnsman, an auto analyst with Calyon Securities told ET: “It has been a long standing practice for American OEMs to buy components from China, India and Mexico whenever their margins are under pressure.” This time around, OEMs are learnt to be advising their component manufacturers to also cut corners innovatively like paring weights of components, etc. without compromising on quality. “And India is an ideal destination.” Warnsman expects US companies, in their bid to trespass competition, to join hands with counterparts in India and China by starting up plants or signing up joint ventures.

Indeed, requests for quotation (RFQs), a measure of the interest of American firms to do business with Indian companies, are already on the upswing. “There is a 100% increase in RFQs,” says Ashok Taneja, chief executive officer of Sriram Pistons and Rings, a supplier to GM and Ford. Gurgaon-based automobile lighting systems maker Lumax is negotiating a significant deal with Chrysler. “It’s a huge opportunity. The big three — GM, Ford and Chrysler are focusing more on outsourcing to India to pare costs. We are hoping that the deal with Chrysler would come through,” says the company’s chairman DK Jain.

Current trends indicate global autocomp outsourcing from the US will reach $25 billion by 2015. India, China and Mexico would benefit the most from this. Currently, India’s exports to the US account for $3.5 billion with a potential to reach $15-20 billion by 2015. Says Yezdi Nagporewalla, national industry director, industrial markets at KPMG, “Ideally players like GM, Ford and Chrysler depend on two to three vendors for a particular component, what is now happening is the quantity of the outsourcing, especially to India and China has increased.” Needless to say, Taneja and Jain want a share of this business. It usually takes anywhere between six to eighteen months to close a deal. Of course, there are others who perceive this as an opportunity to get a better foothold in the US market by acquiring companies there or by tying up strategic partnerships. Margin pressures have put many American and even South American component makers on the block.






Read more: http://economictimes.indiatimes.com/News/News_By_Industry/Auto/Auto_Components/Indian_component_makers_see_rising_interest_from_US/articleshow/3395026.cms

[thunder rising]

1. And that's why there should be NO Government bailout.

[DainBramaged]

2. I am POSITIVE there will be clauses to maintain American parts suppliers

India has a shitty manufacturing sector, which is why "Made In India" is unknown around the US.

[ihavenobias]

3. K & R

[Waiting For Everyman]

4. A symptom of the disease

[DainBramaged]

5. Do you think EVERYTHING put into a Toyota is made in Japan?

It ain't made here pal.

[nashville_brook]

7. topic of discussion recently was that a Camry is more "made in US" than a Mustang...

that the Mustang doesn't even meet the requirements anymore for "made in US." don't know how true this is -- was just watercooler talk.

[xchrom]

6. recommend -- the auto industry figures out the fewer

amrican workers -- the fewer cars sold.