Auto Cluster Research Articles

Operationalisation of an auto cluster project: Indian experience

Small and Medium Enterprises (SMEs) contribute nearly 6% of GDP, more than 35% of national exports and employment for more than 30 million people of India. The SMEs make more than 8,000 different products accounting for 40% of industrial production. However, SMEs are vulnerable to many risks and need support from OEMs, government and other agencies. It has been found that SMEs performed very well in countries such as Italy, Brazil, Europe and many other countries in the world through industrial cluster approach. In the recent past, Indian government is supporting the industries through cluster projects with an objective to enhance the competitiveness of Indian SMEs in particular. In this paper, we present the approach followed in operationalisation of an auto cluster project located in central India. The experience shows that the competition and cooperation are two key elements that drive the successful implementation of cluster projects. We also highlight some of the important issues that SMEs face and suggest suitable cluster interventions required by industry partners, government and educational and research institutes.

Enhancing the competitiveness of SMEs through industrial clusters: The Indian experience

The Indian economy is expected to grow by over 8 per cent per annum until 2020 and can become the second largest in the world, ahead of the United States, by 2050, and the third largest after China and the United States by 2032. The turnaround in manufacturing and other sectors, which has occurred in the face of increased global competition, is due to improved efficiency following the various policy reforms in recent years. Small and medium enterprises (SMEs) constitute 6 per cent of GDP, 34 per cent of national exports and account for the employment of more than 30 million people. SMEs have improved their performance and presence through industrial cluster approaches. In this paper, we present the experiences of three auto clusters in three major locations in India. We also highlight some of the important issues that SMEs face and conclude by suggesting suitable cluster interventions for enhancing competitiveness and sustainability of the SME sector.

Dealing with strategic change: a trio of automotive industry closures in the West Midlands

Abstract This paper looks at the public policy response to dealing with strategic change in the case of a trio of automotive industry closures in the West Midlands, the outcome of restructuring in the auto industry. It shows that what is essentially a reactive response is related to the scale of the closure and the character of the closure. Falling sales and exchange rate volatility, plus production inefficiency, led to Jaguar moving production from Coventry to Castle Bromwich in Birmingham. Neither the scale of job loss at Browns Lane, nor the impact on the supply chain, was as great as it was at Peugeot's Ryton factory when production was moved to a low labour cost location in Slovakia. In the case of MG Rover, its long‐term failure to develop new models, among other factors, saw MG Rover being sold to Nanjing Auto and its machinery shipped to China. A Task Force swung into action to deal with the loss of 6000 jobs and the loss of business to firms in the supply chain. Its budget was bigger than in the case of the other two closures. However, it is not only the difference in public policy response that is of interest, but also the challenge the closures pose for the understanding of structural change. While the classic reasons for closure are to be found in the closures, in the aftermath Ford is continuing to shed its European acquisitions. This questions the process of capital concentration. The loss of production capability to the West Midlands also blows wide the auto cluster in the West Midlands and makes it more likely that we can see a merging filiere developing in the ever‐changing geography of production. Copyright © 2008 John Wiley & Sons, Ltd.

Globalization and restructuring in the auto industry: the impact on the West Midlands automobile cluster

Abstract This paper examines the form of the auto cluster in the West Midlands in the context of the structural changes unfolding in the industry. These include greater pressure on firms to recover costs when technological change has been intensifying, driving up the costs of new model development, increased international sourcing of modular components and a shift of assembly operations towards lower‐cost locations. Add in recent exchange rate volatility and maintaining manufacturing operations, and the West Midlands cluster has become increasingly challenging for firms and policy‐makers, as witnessed by recent plant closures at MG Rover, Jaguar and Peugeot. The paper considers to what extent public policy can assist, suggesting that policy needs to do all it can to retain capacity whilst also helping firms to use their competencies and to apply them in new ways. These will have to be in higher value added activities such as engines and drivetrains, R&D, consultancy and in other sectors such as the growing aeronautics industry. Copyright © 2007 John Wiley & Sons, Ltd.

Restructuring the Automotive Industry in the English West Midlands

This paper investigates the changes taking places in the automotive industry in the English West Midlands. For over a century this region has been the heartland of car production in the UK, but over recent decades the volume side of the trade has been in serious decline, leading to increasing dependence on the luxury side of the industry. The implications are that the supply side of the industry will be forced to move into new technologies if the auto cluster is to prosper in future. Finally, the paper looks at the attempts made by bodies such as Advantage West Midlands and the industry itself to effect change.

Effects of Poor Transportation on Lean Production and Industrial Clustering: Evidence from the Indian Auto Industry

Conventional wisdom suggests that poor transportation systems adversely affect industrial competitiveness by raising the unit cost of freight. This study finds that freight is neither the only nor the most significant cost that poor transportation creates for auto firms in India. Poor transportation also raises the damages incurred in transit, total inventories, and ordering and overhead costs. Worse, it creates external diseconomies by introducing inefficiencies and unreliability in the supply chain, making it difficult for assemblers to implement lean production. These external diseconomies—rather than excessive freight prices or other direct costs—may be the more debilitating impact of poor transportation infrastructure on industrial performance. In India, transportation constraints and the imperatives of lean production are driving assemblers to create auto clusters.