‘Pricing discussions between OEMs & suppliers is an on-going process’

Copy of Uniparts4

Uniparts is an Indian based global manufacturer of engineered systems and solutions. The Group is a leading supplier of systems and components for the off highway market and operate out of 8 locations in 3 countries with its products reaching over 25 countries worldwide.

Herbert Coenen

Herbert Coenen

Herbert Coenen, Executive Director – Uniparts India Limited told Sandeep Menezes that spending on infrastructure development, combined with development in the industrial and mining sectors is expected to generate large-scale demand for construction equipment from India.

 

 

Excerpts from the interview:

 

As a major supplier for precision machined parts for the construction market across India, how do you foresee the industry growing in next few years?

We are a key player in precision machined parts in North America focussed on serving the mobile construction equipment market. Looking at the impetus the government is putting on infrastructure projects including those of construction will be key drivers in improving the demand of PMP market going forward. Spending on infrastructure development, combined with development in the industrial and mining sectors, is expected to generate large-scale demand for construction equipment from India.

In past few months, the mobile equipment market was under huge stress resulting in OEMs pressuring suppliers to reduce prices while maintaining quality. Comment.

Pricing discussions between OEMs and suppliers is an on-going process. The OEMs continue to nudge their suppliers to consistently deliver quality at reduced prices. In the short term, this puts pricing pressure on the suppliers, but in the medium to long term, helps suppliers to improve their overall manufacturing processes and efficiencies and strengthens the business relationship with its OEM customers.

Many OEMs prefer importing from abroad rather than local manufacturing citing local component vendors and suppliers can’t match their high quality expectations. Comment.

Uniparts India caters to the OEMs for off-highway vehicles in the agriculture, construction, forestry and mining sectors. Our key clients are leading global companies such as John Deere, TAFE, GKN Walterscheid. Uniparts has successfully penetrated key markets across the globe and we supply products to 25 countries. We can proudly attribute this to our ability to customize to customer specifications and requirements, as well as our track record of consistent delivery of quality and cost-effective products and solutions through our strategic alignment with our key customers’ goals and specifications over the years. John Deere and GKN and are some of the customers with whom we have had relationships for over 10 years. This, in fact, is a clear example of how we have consistently adhered to quality requirements and performance standards of our customers.

The new government wants to encourage local manufacturing through its ‘Make in India’ campaign. Do you have any policy suggestion to encourage local manufacturing?

We think the government is taking adequate steps to boost the industrial sector and we hope to see some positive and encouraging initiatives which shall also boost the Indian economy. We believe steps in the direction of skill development to improve employability of the Indian workforce, labour reforms and overall improvement in business environment will help to encourage local manufacturing. The timely implementation of GST will positively impact supply chain and logistics and will improve the overall efficiency of various manufacturing businesses.

Locally manufactured engineering products have been exported to East Asia, Africa and Middle-East. But EU and North America remain tough export markets due to their high quality norms. Comment.

North America and Europe have been key markets for us for the past many years. Our continued and expanding presence in these markets clearly indicate that we are meeting quality norms and required service levels of our global OEM customers.

The OEM customers in this industry have unique requirements and preferences and seek integrated solutions across various levels of the OHV component value chain. To grow with our OEM customers in developed markets, we have evolved from being a component supplier to providing end-to-end solutions ranging from product conceptualization, design, prototyping, testing, development and assembly to customized packaging and delivery, thus becoming an integral part of some of our major customers’ global supply chains. Further, Uniparts has set-up its global service delivery model, which includes establishing warehouses in US and Germany to ensure timely delivery of critical components to our OEM customers.

What is Uniparts’ future growth, expansion plans in India? Going forward, does the company intend to focus on any existing business segment or foray into new areas?

As part of our growth strategy, we are committed to continuing to diversify our product offerings, customer base and geographic footprint and minimizing our exposure to individual market and segment.

We have in the past relied on inorganic growth as a key part of our growth strategy including our strategy of examining opportunities for forward integration, expanding into complementary product verticals, new customer acquisition and exploring newer markets where we do not currently have a presence.

 

We have been and will continue to explore opportunities for forward integration, including selectively evaluating targets for strategic acquisitions and investments, in order to strengthen our position as an integrated, full system solutions provider for the agriculture and CFM sectors. Through this objective we seek to strengthen our product platform and customer portfolio.

 

Our strategy is to acquire businesses with high growth potential, along with their existing customer relationships and product and process competencies, and to integrate and grow their businesses through enhanced quality and delivery parameters, engineering support, integration of IT systems and ERP platforms with manufacturing support from India, coupled with our management know-how and experience. In particular, we intend to explore opportunities in Europe, which would give us a manufacturing base in the continent, as well as opportunities in the U.S. to complement our existing business. We may also seek to expand our international warehousing and distribution operations, based on demand and delivery logistics in various geographies, to fuel our growth going forward. We believe that we have been successful in acquiring and integrating overseas assets and ventures in the past and will continue to benefit from such initiatives, thereby expanding our product portfolio, market share, customer base and geographical footprint.

 

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