Ashwin Tombat

The Tata Motors European Technology Centre, UK, is engaged in developing in-house technologies that are innovative, cost-effective, and efficient. A detailed report on its activities

As the outsourcing revolution gathers pace, more companies, particularly in developing countries, are outsourcing not only manufacturing and services, but also research and development activities, as a way to reduce costs and improve their competitiveness. However, outsourcing is not always quite the panacea it seems: Tata Motors' experience has proved that the development of in-house technical skills is not only more cost-effective than outsourcing, but also has longer term benefits for the company.

Technical engineering, research and development are crucial for creating world-class quality products. While Tata Motors has been undertaking much of this work at its Engineering Research Centre (ERC) in Pune, and through Group company, Tata Technologies; for high technology, critical areas like vehicle engineering, programme delivery and powertrain engineering, the company has been relying on expensive outsourced skills. External consultancies would not provide the company the in-house capability it desired and what was needed was a way of facilitating technology and knowledge transfer from 'best-in-class' European engineers on an ongoing basis.

A potential solution to all these issues was for Tata Motors to establish its own technical engineering centre in Europe. In September 2005, Tata Motors European Technology Centre plc (TMETC) was incorporated in the UK. TMETC is headed by Dr Clive Hickman, former managing director of the highly respected 100-year-old automotive engineering and design consultancy, Ricardo UK Ltd. Dr Hickman has a wealth of experience in the automotive industry and has led numerous vehicle development programmes for the major car manufacturers in Europe and the US.

High potential
Hickman is quite candid about the fact that he considers India a very vibrant country, and feels that the potential of Tata Motors' engineers far exceeds any other company he has ever worked with. "If we can transfer technology and knowledge from Europe into the company," he says, "Tata Motors can become an unstoppable force."

Indica is a classic example of why Tata Motors needs an advanced engineering technical centre. Tata Motors invested a lot of money on European consulting companies to fine tune products wherever gaps in knowledge or expertise were felt. "While we gained a lot of 'know-how' from this process," Hickman points out, "we didn't gain much 'know-why'." So, every time there was a major gap, the company needed to go back to the consulting partner.

TMETC will now not only enable the transfer of knowledge but also of understanding on an ongoing basis. However, this is unlikely to be a quick or a painless process: engineers will need the opportunity to experiment and to make mistakes, to be supported to find solutions to these mistakes and learn from them.

One of the first projects that TMETC will contribute to is a programme of craftsmanship for the new Indica project: to ensure consistency of product quality and that every car that rolls off the production line is exactly the same as the previous one. This will be followed by the new crossover vehicle, the X2, due for launch in mid-2008.

The making of a world-class car
But isn't Indica a world-class car, already? "We have to put this into perspective," Hickman explains. "This is the first indigenous car made in India. Compare it with an international bestseller like the Volkswagen Golf, which went through five generations of evolution to get to where it is today." Hickman is convinced that it will take Indica just three generations to become competitive with the Golf, which is probably the best in its class in Europe. "But remember," he says, "by the time we have three generations, Golf will be on its sixth or seventh generation.

Currently, TMETC is focusing on establishing teams that will work in collaboration with Indian engineers on various aspects of product development. To ensure that the technical centre doesn't become either UK-centric or India-centric, and also to facilitate effective transfer of knowledge and skills, all project teams will comprise European and Indian engineers.

Tata companies are already working with the world's foremost automakers. So how is TMETC different from Incat or Tata Technologies (TTL)? The main difference is in how the company operates. Incat's expertise is in logistics and IT - its engineers are contracted to work for Ford, GM or other clients, and are directed and guided by the client's project team. TMETC, on the other hand, takes on projects for Tata companies. It also undertakes engineering development work which is supported by TTL, much the same way TTL supports ERC work in Pune. TMETC will develop the concept and direct the programme, while TTL will take the concept to production design. Hickman is hopeful that the TMETC-TTL union will win its first joint third party contract soon.

Disruptive technologies
One of the biggest strengths TMETC can bring to Tata Motors is its ability to identify and lead the development of disruptive technologies, a strategy which Tata Group Chairman, Ratan Tata, is very keen to pursue. "Disruptive technologies can give us a distinct advantage as our competitors are unable to bring them into market," Hickman explains. "Take transmissions, for example, our competitors have made significant investments in conventional automatic transmissions and this prevents them from doing something completely different. But being new in this field we don't have any investment in automatic transmissions, enabling us to develop innovative, efficient and cost effective technologies that, due to their legacy investment, our competitors will be unable to adopt. It's thinking outside the box."

Hickman is also investigating hydrogen, ethanol, bio-diesel and other alternative fuels, and is working on some ideas. People immediately associate hydrogen with fuel cells, but the internal combustion engine can run on hydrogen itself. The question, therefore, is whether Tata Motors should invest in fuel cells, which are probably 20 years away from production (and have been '20 years away from production' for a long time now), or invest in direct hydrogen combustion.

"We need to look at what's best for the Tata Group, not at what everybody else is doing," Hickman points out. "I think that enriched products, like 30 per cent bio-diesel mixed with conventional diesel, will catch on faster than clear alternatives. Ethanol-enriched gasoline is already being used in Brazil; 10 to 20 per cent hydrogen-enriched gasoline can give significant benefits too," he says.

Taking on the world
Can the Tata Group develop automobiles for international markets? Hickman feels there's no choice; the company has to be globally competitive. "America is still a step away, but if we can achieve the body and trim quality, and still maintain costs, our vehicles will sell very easily in Europe. It's not a million miles away; we can easily raise the bar," he says confidently. The target is to make that leap by the end of 2007 with the new Indica.

Where is TMETC going to be located? That's the 64-crore-rupee question: the ballpark cost for the centre is about £8 million or Rs 64 crore over the next few years. Over five years, it may become a £15 million investment depending on third party and other projects. At present, the staff strength is around 80 people, with a plan to increase this to 500 in the next five years.

TMETC is currently based in temporary accommodation at the University of Warwick, and while the company is investigating a number of options, as yet, no decision has been made regarding the eventual location of the centre.

One of the potential sites is near Coventry, in the West Midlands, but TMETC is not committing itself. They have made an application to the British government for an inward investment grant and the outcome of this will undoubtedly influence the ultimate decision.

"We will ultimately employ over 1,000 people," says Hickman. "I am sure that the Italian, French or Spanish governments would equally be willing to give us a grant if we took our investment to their countries," but he points out, "We would prefer the UK because the language is common."

Already in motion
But work is already underway. The relationship between European and Indian engineers is good, and joint teams are working very closely. "Without those synergies, it would not work at all," says Hickman. A lot of people TMETC recruited in Europe had never been to India and when they came for the first time, it was quite a shock. "By the second trip," he says, "they can see beyond the poverty and spot the opportunity. We don't have a single person who said they weren't going out anymore."

And while the 'Eureka' factor may be still a little way off, the new company has already made a difference. "Following the collapse of Rover in April 2005, Tata Motors were left with over 900 City Rovers sitting in the Pune plant for months. In our first month of operation, one of our homologation specialists took a delegation to the British government and obtained a clearance to import those vehicles. All the cars were pre-sold while they were en-route to the UK. This resulted in an income of about £ 5.4 million (Rs 43.2 crore)," says Hickman proudly.

The road ahead
The challenges ahead are somewhat more formidable. For European, American and Japanese automakers, the big challenge is to maintain and increase their technology base but reduce their costs. The Tata Motors challenge is exactly the opposite; to maintain its cost base but catch up with technology and overtake the competition. "Overall," Hickman says, "we have the advantage." He feels that in the auto industry, production will keep moving to India and China and, as Indian and Chinese companies evolve, there will be a definite change in the world market place. The car companies in existence today will not all still be in business 10 years from now. Some of them will evitably fall by the wayside as new entrants like Tata Motors improve their competitiveness.

People should not underestimate Tata Motors, says Hickman. He points out that just 30 to 40 years ago, Japanese goods were known for poor quality, whereas today, Toyota is widely acknowledged in the global automotive industry as leading the field in terms of product quality and reliability. "I think we are just as intelligent — and we have more autonomy – than the Japanese," he says, "therefore, we can be better than them."

Uploaded on March 14, 2007