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500,000 jobs at India's Detroit by 2015

Last updated on: July 07, 2006 11:18 IST

A recent study conducted by the Confederation of Indian Industry came to the conclusion that the Tamil Nadu auto industry will generate as much as 500,000 fresh jobs in the next 10 years.

The highly manpower intensive TN auto industry currently employs around 80,000 people, which will go up to 580,000 by 2015.

The CII study also found that the auto sector in Tamil Nadu has the potential to increase its sector output by 6-7 times. At present, Tamil Nadu has a 30 per cent share in India's auto components industry and 17-20 per cent share in the vehicle industry.

The study also projects that the size of the auto industry in Tamil Nadu will reach $15-20 billion by 2015.

Thanks to the pressure on sales and margins, the major players will turn to emerging markets like India that offer growth opportunities. Since the emerging markets provide access to low cost manufacturing base, there will be a steady increase in outsourcing activities to reduce costs.

The current productivity in the auto industry in terms of the annual output per employee is a little over Rs12 lakhs (Rs 1.2 million). With the industry expected to register around 8 per cent growth in productivity, the annual output per employee is likely to increase to over Rs 16 lakhs (Rs 1.6 million) by 2010 and Rs 24 lakhs (Rs 2.4 million) by 2015, the CII study said.

On the skill-gaps that exist in the Tamil Nadu's auto industry, the study said that factors like increasing focus on cost competitiveness, product development, exports and global manufacturing and quality practices have been redefining the skill requirements in the industry's core activities which include: sourcing, supply chain management, quality, inventory management, manufacturing, packaging and distribution and sales.

The study said that the recent trends observed in the auto industry are adoption of lean manufacturing practices, quality practices, shifting roles of companies from being assemblers to contract manufacturers, shifting roles of product development - from product testing to design and development, purchase becoming a techno-commercial function, instead of a pure commercial function.

The study identified that in product development, the auto industry needs project management and problem solving skills to identify root causes for design issues. Inadequate process knowledge and system knowledge and the lack of techno commercial orientation are some of the skill gaps identified at the level of purchase executives.

What does the industry need in the changing environment? IT needs operators and technicians with the basic understanding of environmental, safety practices and quality concepts like TQM (total quality management) and Six Sigma. Also in demand are executives with analytical and trouble shooting skills, awareness of latest manufacturing techniques and exposure to cost reduction techniques.

The study found out that there is a lack of emotional intelligence at the executives' level that makes it difficult for them to manage teams.

What is interesting is that the study also emphasised the need to introduce changes in the curriculum of automotive engineering courses. The focus should be more on CNC (computer numerical control) controlled operations, shop floor productivity techniques, expertise and awareness of quality practices like Six Sigma and waste disposal techniques, etc.

According to the CII Study, if the industry performs well, it has the potential to increase its output to $40-45 billion by 2015.

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Shobha Warrier in Chennai