The glass is 1/2 full
OPTIMISTIC ABOUT INDIA'S PROSPECTS, A FRENCH GLASS COMPANY LAUNCHES A PROJECT TO INCREASE THE CAPACITY OF ITS MANUFACTURING PLANT.
BY KELLEY HUNSBERGER PHOTO BY RAFAEL WOLLMAN
Rodolfo Civile, Independent Project Manager, San José dos Campos, Brazil
INDIA is on the verge of a breakthrough, offering a wealth of opportunities for businesses willing to take the plunge.
“Many people think of India only in clichés: the Taj Mahal, women wearing brightly colored saris, elephants lumbering through the streets and chaotic traffic,” says Rodolfo Civile, an independent project manager for Saint-Gobain, based in San José dos Campos, Brazil.
Like many of the world's top companies, Saint-Gobain, a Fortune 500 materials manufacturer and distributor based in Courbevoie, France, looked beyond the clichés and saw the potential.
India is home to a sophisticated software industry, produces three times more movies a year than Hollywood, has a booming medical tourism industry, and is one of the largest suppliers of doctors and Ph.D.s in the world.
The growing economy, ever-increasing consumer population and low-cost but highly educated labor force make India one of the most attractive locations for companies to set up shop. The country is second in the world only to China in direct investments from foreign companies, according to A.T. Kearney's 2005 Foreign Direct Investment Confidence Index. The report was constructed using data gathered from the world's 1,000 largest companies.
In November 2003, Saint-Gobain launched the $105 million Chennai II Float project as a complement to its existing glass plant. Completed in November 2005, the new plant produces 33 percent more tons of glass per day than its older counterpart.
Saint-Gobain's presence in India began in 1996, when it acquired a major stake in Grindwell Norton Ltd., one of the country's leading manufacturers. In 2000, the company opened a plant in Chennai to manufacture float glass—perfectly flat, clear glass made by melting raw materials such as sand, limestone and iron oxide. The plant produced 600 tons of glass per day. By 2003, the company decided to increase its production capacity and launched the project to build a new, state-of-the-art production line.
The challenge was to build the new plant without halting production at the existing one. “Glass production is a continuous process, and stopping it may damage the furnace,” says Mr. Civile, who led the project. That kind of damage could result in $15 million in repairs that could drag on for six months. Interrupting production also could mean a drop in the company's market share and profits.
Building—and Keeping—a Team
India is a poor country–25 percent of the population lives below the poverty line, according to a 2006 report by the BBC. And half of the nearly 1.1 billion citizens earn less than $2 a day, making the cost of labor-intensive activities less expensive than in Western countries. More than 5,000 people worked on the construction site.
The rapid growth of the Indian economy means competition for qualified workers can be fierce, however. Even after contracting workers, keeping them on board requires motivation. This is especially true in the case of engineers and technicians. Working for a multinational company on a substantial project is often a career boost, though, and Saint-Gobain project leaders were able to use this as an incentive.
As much as India has progressed in the modern business world, project manager Rodolfo Civile says the country still presents challenges:
ELECTRICITY. It's an expensive and unreliable consumable in India. To have complete consumption autonomy and ensure continuous production, Saint-Gobain decided to add an eight-megawatt generator to its existing six-megawatt one.
WATER. It's an insufficient resource in South India, and harvesting rain during monsoon season—June to September—is a customary practice. Saint-Gobain collected water in a large 50,000-cubic-meter capacity tank, securing enough to meet the its needs for six months.
INFRASTRUCTURE. Ports and roads are not easily traveled and this often leads to hold-ups in deliveries. Accidents on the roads with trucks carrying equipment also are frequent. Extra time had to be built into the schedule to account for these delays.
EQUIPMENT COSTS. The operational cost of equipment—like cranes and material handling devices—often far exceeds the cost of labor, especially when compared to Western countries.
In addition to recruiting skilled professionals who had been working in the existing plant, the company brought in a team from its headquarters in France to ensure the project would follow proper processes. “The Saint-Gobain Chennai II Float project was a truly global effort, with project managers, team members and resources coming from around the world,” Mr. Civile says. “In all, 14 nationalities—from Australia to Zimbabwe—were represented.”
Bringing together these different cultures, however, made a brief transition period necessary. He credits the company's global presence and extensive executive training with facilitating the adjustment.
“Often, a Brazilian can be found managing a unit in France or a French project manager will work in China,” Mr. Civile says. “For multinational organizations, it is a necessity to understand the particulars of each country and to spread that experience and knowledge to executives.”
Haste Makes Waste
As in many Asian countries, companies conducting projects in India must build a longer timeframe into the schedule for market research, calls for tenders and proposal reviews. Finding potential subcontractors and suppliers also takes time. No decision should be rushed, Mr. Civile says.
Almost 150 subcontractors were hired for the Saint-Gobain glass project. To ensure requests and specifications were clear, project leaders created lists of priorities and milestones for critical activities such as electric and mechanical work. At least one engineer was assigned to each of these areas to check on the planning and quality of work.
Negotiations also take time and are considered an art form in India. “It is tradition to inflate the prices in the beginning and give increasing discounts during the negotiation period,” Mr. Civile says. “Prices can be slashed by 15, 25 or even 40 percent from the original price if the purchasing team is given proper time to bargain—it's all part of the game. Saint-Gobain planned for this negotiating period, and as a result was able to acquire better quality equipment.”
India's culture is one of the oldest in the world—and many of the country's traditions still affect the way work gets done. Prior to starting any activity, it is traditional to perform a puja, a Hindu ritual to pray or show respect to a god or a spirit. “For a project as large as the Saint-Gobain glass plant, hundreds of pujas were performed for activities such as the start of civil work, the first pouring of concrete or the first electrical installation,” Mr. Civile says.
A puja also marked the plant's completion in November 2005. Although the project was behind schedule by 20 days due to a delay in the testing period, it was still considered a success. “Twenty days [late] in a timeframe of two years, in India, was considered by Saint-Gobain top management as an excellent result,” Mr. Civile says. Today, the plant produces 800 tons per day of quality float glass for the automotive and construction industries. PM
PM NETWORK | SEPTEMBER 2006 | WWW.PMI.ORG