Posted by: Pradeep | September 15, 2008

Nano project : before we lose it, learn this

We are seeing lots of debate and unnecessary noise on Nano project in Singur of West Bengal in India.

One need to understand that the Nano is not just one more industrial project but a project that has attracted global attention. It has been hailed at its launch as a revolution in the motoring world. Why has the Nano attracted so much attention? Could no other car maker in the world make a small car? The answer is that no other car maker in the world has so far come up with a car with comparable specifications, including technical, at the magical price of Rs 1,00,000 (about USD 2,000) offered by Tata Motors. The lower costs of production in this part of the world and the economy of projected scale have certainly been helpful to the Tatas, but these benefits could have been utilised by other car makers as well.     

This raises the question: How have the Tatas accomplished such a task? Pursuing this question a fascinating story unfolds that reminds one of Henry Ford’s Model T that was built exactly one hundred years ago (September 1908). Ford wanted to make a car for the multitude, not for the elite, with the best material and the best design that the technology of his time could devise, and he wanted to make it, above all, at a price that was affordable. This is the example that Ratan Tata has followed with determination. When he announced the price of his car in an interview to the ‘Financial Times’ during the Geneva Motor Show, his colleagues were ‘aghast’, but he had set his goal. This goal was pursued relentlessly, keeping an eye on the costs all the way, without compromising on engineering and style. 

Girish Wagh, the young Indian engineer who led the team at Pune, emphasised in an interview how important teamwork was in realising the dream. The ‘cost-down’ effort was carried out at the design and development phase to make the Nano cost-effective. Several design innovations were made and patents filed. This teamwork extended beyond the core team. An important managerial strategy that was used meant involving many vendors in the effort to reduce costs. This strategy was both financial (longterm agreements) and technological. Vendors were challenged to design components innovatively that would meet the requirements of the company and yet keep the costs low. Following the phenomenal response to the Nano at the Auto Expo 2008, many vendors expressed their sense of accomplishment. Some admitted that there was initial scepticism about the possibility of making such a car but added that the sheer determination of Ratan Tata increased their confidence. One of them said that it was the ultimate challenge for the entire manufacturing and engineering industry. It wasn’t about making low-cost components, but about being able to design the products. These stakeholders sunk not just immense costs but also put their faith in the Singur plant. If these facts about the Nano are kept in mind, it becomes easy to understand why it is important for the Tatas to maintain the integral nature of their plant. While the interests of the farmers need to be protected, a symbol of industrial India needs to be protected too. The time has come to consider national costs.

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