Car Grave-Yard of
World ?
---------------------------------
BACKGROUND :
Countries all around the World, are in the process of
phasing out Petrol-Diesel vehicles and switching over to Electric vehicles
Here
are the target dates ( for change-over ) set , for some of the countries :
· UK……………….
2040
· Scotland……..
2032
· France………..
2040
· Norway……….
2025
· Austria……….
2025
· Netherlands.
2030
· China……….
2030
· Finland…….
2030
· India……….
2030
Now an electric vehicle has only 20 parts against 2000 parts in a Petrol-Diesel
vehicle
With switch-over to EV , following parts will be no
longer needed :
Engine – Transmission – Brake – Clutch – Levers – Fuel
Injection system – Exhaust System – Lead Acid Battery – Pedals – Dashboard
Instruments – some Wiring etc
These parts will get replaced by :
Lithium-ion Battery – Electric Motors – Sensors –
Electronics – Computers etc
================================
IMPLICATIONS :
·
Thousands
of companies manufacturing components for Petrol – Diesel vehicles , will go
out of business .
·
These
include , Foundries , Forge-Shops , Machine Shops , Fabrication Shops ,
Sub-Assembly Shops , Electroplating Shops, Heat Treatment Shops , Wiring
Harness Units etc
·
Currently
, Indian Auto Component industry employs some 25
million people ( directly and indirectly ) and contributes 7 % of
our GDP
·
These
Auto Component manufacturers are worried ! Over the next 10 – 20 years,
no one will need to buy these current components .
·
A
few hundred Auto Component manufacturers will , no doubt , switch over to
manufacture of components required by Electric Vehicles but that is only 20
parts ( as against 2000 parts required currently ) .
What will / can , thousands of the rest do to survive ?
===================================
MY SUGESTION :
·
In
order to survive, they need to ask themselves ( ala Ted Levitt’s seminal essay
, “ Marketing Myopia “ ) :
·
“ What
business are we in ?
Instead of
considering ourselves as being in the business of “ Auto Components Suppliers “ to vehicle manufacturers,
could we think of being in the business of
CAR GRAVE-YARDS of the WORLD ? “
=====================================
WHY THINK SO ?
·
World Scenario :
# Car
population ( 2010 )………………………………………………….. 1 Billion
# Car
population ( 2017 ) ……………………………………………………2 Billion
# Cars
manufactured in 2011………………………………………………. 80 Million
#
Manufacturing Target for 2035 ………………………………………. 127 Million
·
India Scenario :
·
#
Vehicle Population ( 2016 )……………………………………………. . 230 Million
#
Vehicle Population ( 2037 )……………………………………………….. 500 Million
#
Passenger Vehicles produced in 2016-17………………………… 3.7
Million
#
Total Vehicles produced in 2016-17…………………………………… 25.3 Million
HOW MANY NON-EV
GET SCRAPPED NOW EACH YEAR ?
·
USA
………………………………… 15 million
·
Europe…………………………..
9 million
·
Japan…………………………….. 6 million
·
China……………………… …….. 6 million
·
Developed
Countries……….. 30 million ( generating 27 million tons of scrap )
·
India………………………………..
4 million
( Transport
Ministry wants to scrap immediately , some 28 million petrol-diesel vehicles
which are older than 15 years , for which proposed tax exemptions are :
#
Rs 30,000 for passenger vehicles / Rs 150,000 for Commercial vehicles )
( Source : http://events.steelmintgroup.com/scrap-recycling-in-india-rise-of-a-new-phase-of-steelmaking/
)
====================================
THIS IS ABOUT
TO ACCLERATE :
·
But
, if entire World wants to switch over to Electric Vehicles in nest 20 years,
then the number of Petrol – Diesel vehicles to be scrapped could well be 200 Million per year !
Of this ,
India should target to capture a 25 % market share , at 50 million vehicles per
year ( inclusive of scrapping of our own old vehicles )
( Current population + new Petrol-Diesel Vehicles that will continue to get
manufactured
in next 20 years )
·
In
India alone, that figure could be as high as 20 Million per year for next 20
years ( - as compared to current level of 4
million ) !
=================================
WHERE IS THE
OPPORTUNITY HERE ?
·
Car
scrap/recycle yards around the World, just do not have the capacity to scrap /
recycle 200 Million vehicles per year ( - a 7 FOLD jump from current 30 million )
·
In
any case , car scraping / recycling is considered a “ dirty business “ in
developed countries
In developed countries , labour costs are very high (
as much as 20 – 30 times of prevalent labour costs in developing countries ),
making this industry , a “ high cost “ industry
·
That
forces scrap Yards in developed industry to employ high level of expensive /
automatic machineries ( scrappers / crushers / balers / sorters / grinders etc
)
·
As
against this , Indian scrap yards employ simple electric hand-tools and cheap
labour , making them very competitive against scrap yards abroad
IS THERE EVIDENCE TO
SUPPORT THIS THINKING ?
·
Take
the example of ALANG SHIP BREAKING YARD in
Gujarat , with following figures :
#
A small town ( population of 18,464 ) near Bhavanagar , Gujarat
#
Alang Ship breaking yard set up on a 6 mile beach in 1983
#
180 Ship breaking companies employing 40,000 direct workers and 200,000
indirect workers , who work 12 hours per day for Rs 400 per day ( or less ),
as compared with a Semi-Skilled worker in USA getting Rs 11,000 per day ( $
170 per day - $ 850 per week for a 40 hour week )
#
Alang companies generate revenue of Rs 6,000 cr / year and pay tax of Rs
2,000 crore to government
#
Breaks 60 % of World’s “ Ships to be broken “ ( 29 million tons in 2013 )
#
Broken 7,000 ships till date
#
As many as 200 ships lining up for breaking at any given time
#
10 % of all steel consumed by India comes from Steel Scrap from ALANG
#
No doubt working conditions at ALANG are miserable / safety standards are
sadly woeful / labour laws are flouted. All of these need big improvements
#
For the past few years , Shipping Industry has witnessed a downturn,
rendering ALANG under-utilized
====================================
WHAT SHOULD BE
THE NEXT STEP ?
·
Start
a new initiative called “ Break In India “
·
Set
up 100 Alang type “ CAR GRAVE YARDS “
all along the vast Indian coast , as part of already announced Coastal Economic Zones (CEZs), Coastal
Economic Units (CEUs) and Port-Linked Industrial Clusters
Each Car Grave Yard to house 100 Car Braking Units ( total of 10,000 units )
Each unit would have ( mandated ) minimum scrapping capacity of 5,000 vehicles
per year , aggregating 50 million vehicles per year ( our 25 % market share )
·
“
Break In India “ must find meticulous / detailed,
implementation schedule in :
#
EV Road Map ( Policy Document awaiting Cabinet approval )
#
Automotive Mission Plan 2016-26 ( AMP 2026 )
·
Exempt CAR BREAK YARDS from payment of
Corporate Income Tax for next 20 years
·
Encourage existing Auto Components units to set
up such “ Car Break Yards “ by offering to them , free land ( in those CEZ )
and free electricity
·
From world over, encourage “ Cars to be Scrapped “ to get loaded onto “ Ships to be Scrapped “ and brought to these
CEZ .
·
After unloading , those
ships to be re-directed to Alang !
Foreign Ship Owners can make money ( by hauling cars
to India ), even in the last journey !
·
Permit 100 % FDI ( automatic route ) in Car
Breaking Units . This will help bring latest technology, safer working
conditions and high productivity . It will also raise the wage levels
·
There should be no “ Import Duty / Customs Duty
“ on cars imported for breaking
·
GST on sale ( domestic or export ) of salvaged
materials should be only 5 %
======================================
BENEFITS :
·
25
million persons currently employed by Auto Component Industry will be able to
retain their jobs ( - of course , they must agree to be re-trained / re-skilled
, in order to save their jobs )
·
Cost
of our STEEL MANUFACTURING by Indian Steel plants will go down since they will
get 45 Million tons of Steel scrap ( from those 50 million cars ) at very low
input cost
The price of iron and steel has increased from Rs
30,000 per tonne 6 months ago to about Rs 48,000 to Rs 50,000 per tonne today
without any such steep hike in input costs.
·
We
will be able to salvage / recycle metals ( Grey Iron / Steel / Aluminium / Lead
and precious metals such as Nickel – Copper – Cobalt etc )
====================================
I urge our Policy Makers / PM-EAC / NITI Aayog
/ Industry Associations ( ASSOCHAM – FICCI – CII - SIAM – ACMA ) to
consider my suggestion
15 Feb 2018
www.hemenparekh.in
/ blogs
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