When the Chips are Down

The past three years have been something of a roller-coaster ride for the global automobile industry, but with far more in the way of terrifying plummets than thrilling rises.

When the COVID-19 pandemic first hit, demand for new cars slumped so the major manufacturers slashed the number of components they were ordering, anticipating a prolonged period of economic fragility with household budgets stretched too far to consider a new family saloon.

As it turned out, it was barely six months later that sales requests were bouncing back and even exceeding pre-pandemic levels. But a tiny component caused a very big problem – the semiconductor.

A perfect storm of circumstances conspired to decimate supplies and bring large swathes of the auto industry to a halt faster than any red light.

Lockdowns and Disasters

Prolonged lockdowns shut down production lines across every continent while container ships were left stranded. Snowstorms closed chip-making plants in Texas; United States government sanctions meant Huawei was no longer an option; a semi-conductor manufacturing plant in Japan caught on fire; and a drought in Taiwan severely impacted output there.

“Almost every vehicle manufacturer, including two wheelers, was very badly affected,” says Krishnakumar Srinivasan, Managing Director and CEO of Shriram Pistons and Rings – one of India’s biggest component manufacturers.

“These days, every car contains several semiconductors so the shortage has been widely felt. It has impacted almost all our OEMs [original equipment manufacturers].”

Shriram has spent the last 40 years developing India’s biggest range of high-grade pistons, engine valves and cast iron and steel piston rings, exporting its precision parts for cars, tractors, ships, generators and earthmovers to Europe and Asia. It counts Ford, Honda, Maruti Suzuki, TATA Motors, Ashok Leyland, Hero MotoCorp, Bajaj Auto, TVS and Renault among its many clients.

It’s the subcontinent’s largest manufacturer of pistons, pins, rings, and engine valves, with two manufacturing units in Ghaziabad, Uttar Pradesh and one in Pathredi, Rajasthan. Its products are marketed under the brands SPR and USHA.

Although it doesn’t use the microchips itself, its suppliers and customers certainly do, so it didn’t escape the pain.

Future-Focused

But Srinivasan, who was appointed in February 2020 after three years as President of Bharat Forge’s European operations and business strategy, is optimistic that the worst of the disaster is over.

“Things are improving on a daily basis. We feel that production will get back to pre-pandemic levels by the end of this year. Volumes are rising at a tremendous rate from the OEM perspective – we’re already at full capacity.”

It means that he is now able to plot a long-term strategy rather than troubleshooting a short-term crisis.

“Over the next 12 to 18 months, our focus has to be on improving efficiencies through front end automations and driving more digitization. We’ll also be bringing in a lot of sustainability initiatives that will involve solar power and looking at our usage of water and other resources.

“In fact, we’re trying to become almost self-sufficient with regards to our discharge of water.”

As both OEMs and car makers are demanding carbon reductions across the whole manufacturing process, it’s something that has become central to Shiram’s entire business model.

But equally important for Srinivasan is looking after his workforce.

“Improving morale is crucial as we need to retain our key talent. As we move towards digitization and automation, our team needs to adapt to the fast paced advancement in technology. We have to bring efficiency in whatever we do,” he says.

“So we need to make sure we’re effectively communicating all the changes we’re making so people understand that things aren’t simply going to shut down!”

Another motivation tactic he’s utilized is empowering every employee to be creative and never accept that something can’t change.

“I always encourage my team to challenge the status quo, always see if there are ways to do things differently. Every day should be about making improvements in your work so you’re constantly learning,” he says.

“When you learn a new thing, it can change your whole perspective of how you want to work and live.”