December 5, 2005Economy

Deming is the new CMM

Chennai shows the way for India’s manufacturing sector

This is an archived blog post from The Acorn.

The Washington Post’s Sebastian Mallaby projects Chennai (together with China, Mexico and Thailand) as the next big threat for America’s car industry. Mallaby echoes Reuben Abraham’s point that despite shoddy infrastructure, the process of economic reform has led to the emergence of some globally competitive firms.

But the main force behind the next globalization wave comes from something different. Until the reforms of the 1990s, India had good engineers but lousy manufacturing because high tariff walls made its firms complacent. But the opening of India’s economy has forced its manufacturers to reinvent themselves.

Chennai’s auto-components firms have done this almost manically. Ten years ago, their brakes and valves were crummy enough to scare away the international car majors that considered manufacturing in India. Today, you can’t spend an hour with any of the components firms without hearing about the international quality certifications they’ve amassed; the Deming Prize, awarded for manufacturing excellence by a Japanese committee, has acquired talismanic status. Much as Chennai’s government leaders look to China, the city’s business leaders pepper their conversation with Japanese management lingo.

The results are dramatic. The TVS Group, the largest of India’s auto-components firms, now exports around a third of its output — proof that it meets international standards. The rival Rane Group reports that it has reduced defects from 10,000 parts per million to 250 and that 28 percent of its engine valves are now exported. One of the TVS companies, Sundram Fasteners, has won a General Motors Supplier of the Year” award five times, and it supplies 100 percent of GMs radiator caps. [WP]Chief Minister Jayalalithaa’s leadership comes in for praise too.

Although her Bollywood career was based on eye-fluttering and dance, (Jayalalithaa) makes California’s governator look like, well, a girlie man. [WP]

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