It’s not just a car!!!

“It’s not just a car, it’s a caaaaar” goes the TV commercial for Nissan Sunny in India.  A drive from Chennai city towards Oragadam the place where this CAAAAR is manufactured in India throws quite a few pleasant surprises for an outsider.  Like getting to see tall residential projects by big Mumbai names like Hiranandanis and still further down of Godrejs in such off city places or stumbling upon a  Korean restaurant or for that matter  a Japanese snack/food/essentials joint in a remote place which has nothing to do with Korea or Japan.  Or is it?  For the locals these are not of any surprise though. We are in India’s car manufacturing hub in Chennai which now houses production facilities of big names like Ford, Hyundai, Renault-Nissan, Benz,..

It’s amazing to see what one car production facility can do to the area, the whole city, the state and its people.  And here we are talking of not just one but quite a few.  Car manufacturing while it generates direct jobs in 1000’s for the skilled factory workers,  engineers, middle level supervisors and managers it generates another few thousand indirect jobs.  Right from security people manning the gates, drivers / assistants/cleaners for the containers which ferry raw material inside and finished cars to the ports, catering people who have the onus of providing food to the workers in thousands, sundry contract labour for carrying out the odd jobs, in-house but outsourced maintenance workers/engineers, tailors who supply uniforms to the 1000’s of workers..,…  Also as Car production happens always in clusters, around it you have the whole campus of ancillary units which produce the various parts and so employ again a few thousands.    I also realized as I saw in Chennai, companies have a separate subsidiary to take care of the spare parts for after-market and its logistics. Then the effect spreads to the ecosystem which throws up things like the eateries – Korean/ Japanese,.. which I mentioned before to take care of the needs of the 100’s of expat Korean/ Japanese/ French/ American/ German staff who sweat it out in Chennai ( literally )as part of the production units of their respective companies.   Smart entrepreneurs start working around the needs of these expats and build highly profitable businesses just ‘catering’ to the needs of the expats may it be groceries/ food items/ their language newspapers/magazines and the works.  ( Heard ‘Saravana Bhavan’ will have a Japanese joint shortly to add to its list- wonder what will be the name though – ‘Sarazu’ may be??? ) While it does all this as far as jobs are concerned, Car production (unlike a chemical factory or pharma factory) doesn’t pollute the environment!

A huge IT park while it generates 1000’s of white collared jobs, it doesn’t do much to elevate the overall economy.  (It does elevate the cost of living as young things try to dispose their sudden rush of income in ingenious ways)  Unlike its southern counterparts AP and Karnataka which pursued an IT led growth and are now stuttering, TN derives its growth from a combination of Manufacturing, IT services and Agriculture.  It’s really unfortunate that though Karnataka houses the production facility of a global car giant like Toyota, it still couldn’t make ‘Bidadi’ where Toyota car is produced in India, a car hub by aggressively pitching for other car manufacturers.  ( Bidadi is now a tourist attraction thanks to Swami Nityananda!!!) It’s another matter that Toyota set up its facility in Bangalore due to reasons relating to history and not economics or geography.  It’s JV partner in India for a long time the Kirloskars were Bangalore based.  In the case of Andhra while Chandrababu Naidu, it’s erstwhile energetic Chief Minister was keen on getting the F1 track in AP and to get many of the IT majors set up base in Hyderabad,was not pursuing (or I don’t recall) any car manufacturer to put up a factory there!

Some may say that it’s not easy to set up car production anywhere and it needs an ecosystem of auto component suppliers, skilled workers, supply of engineers, access to ports, and continuous supply of electricity,…,..  Well it’s a question of whether the egg comes 1st or the chicken!  In today’s world if you order the egg 1st, it comes 1st and if you order the chicken 1st, you get the chicken 1st!!  So it’s up to the state to put the ecosystem in place and pitch for investments or get the investments and build the ecosystem around.  ‘Gurgaon’ before Maruti was well, just a ‘Gaon’!!!

The effect of these in the economy of Tamil Nadu is quite visible.  It is the 2nd largest economy among the states in India and it is the 2nd industrialized state in India.  It also leads the urbanization (44%) in India.

Soon it will be the turn of Gujarat to enjoy the benefits as it starts providing stiff competition to Chennai in becoming the next preferred car manufacturing hub in India.    Thanks to the Tata Nano unit in ‘Sanand,  we hear that already many car manufacturers have planned to put their units around ‘Sanand’. As Chennai battles its woes without power, there are opportunities for other states to get the car manufacturing pie as India with its advantages of low-cost skilled labour, domestic growth, ancillary base,…,… is poised to become one of world’s largest car manufacturing base in the next 2 decades.

While I mentioned about the so many benefits a Car production unit brings to the economy, I must not forget the effect it brings to the pride of people associated with it as well.  Most of the car plants in Chennai while they produce for India are also big time exporters of the finished cars not only to developing countries but also to developed nations.  So much so that while I was in Hyundai the gentleman I met proudly said “if you see an i20 anywhere in the world, it would have rolled out of the Chennai factory!!!”   And somebody else said “Chennai is the Detroit of Asia”!

So Chief Ministers, if you want to pursue hi growth in your state, go after a car manufacturer!

Because “its not just a car, it’s a caaaaaaaaaaar!!!

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19 thoughts on “It’s not just a car!!!

  1. Gujarat may still be able to pip Tamil Nadu on infrastructure development, but an important aspect here is servicing that infrastructure– and that is skilled labour — Tamil nadu has a natural supply of that — so in the long run Tamil Nadu could hold the edge.

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  2. Nirmalya Biswas says:

    Anand: superb I think you have hit bull’s eye with this one. Because finally recognition, growth and real development will actually come from manufacturing and not services. I think this blog somehow should reach mamtadi who made the biggest blunder of her political career by letting go of the Tata Nano project.

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  3. Nice article. Tamil Nadu has been in the forefront of automotive industry for decades … since TVS Group set up factories which are world class. Another important fact that has been highlighted is the supply of skilled labour. Many years ago.. I was on a flight from Ahmedabad to Bangalore and for some reason the flight was empty. I began chatting with a passenger sitting next to me. He intoiduced himself as a textile business man from Ahemdabad… After a few minutes he asked.. who is paying for your flight….? I replied that my company pays as I am travelling on business. He remarked.. I am travelling on business too… my own , I have studied up to 12th but I do this trip for collecting money from my creditors in Bangalore and beyond.. The final remark he said still stays with me.. ” you have wasted four years by studying engineering……..” I This is the attitude of a Gujarati towards engineering!

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    • Ramesh, thanks for the feedback. I have a feeling what that gentleman meant was – if you studied Engg and worked for somebody rather than doing some thing of your own – you’ve wasted your time !! This is what I suspect.

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  4. sandeep says:

    Dear Anand
    i remember the same Maharashtra the “hub” of automobile manufaturers Like Tatas, Bajaj, Firodias especially in scooter era. shame on Maharashtrian politicians
    who could not get the time from signing the swiss bank account opening forms and just let go these industries to other states. I 100% agree with you one autmobile industry gives opportunity for not only jobs but it also creates lot of other
    business units which mulitplies the job opportunities and also generates incomes for local muncipalities in terms of taxes/octroi. Once pimpri chinchwad Mahanagar palika used to be the richest due to their collection of taxes.

    I feel, need some visisonary industrialist who can run this state.

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  5. don says:

    your observations are to the spot … but by your own yardstick of observations traditionally chennai has had a strong engg. back ground unlike bengaluru which always been on the fore front of science and research …. decades before the IT revolution took place educational institues like tata institute of research and companies like texas instruments and others have had their shops set up in bengaluru and not in chennai, mumbai and other cities with sea ports [with bad roads plaguing our country this is a very important aspect] … so measuring other cities by the strengths of ur favorite city might not be a correct way forward …. and its not like other states like maharashtra, andhra and tamil nadu did not try to woo software industry … the answer is that they simply couldnt … atleast not in the volumes that bengaluru did and that too with such ease… azim premji shifted out of mumbai and based in bengaluru for no small reason …. funny that all this was achieved when karnataka govt. had a series incompetent chief ministers for over two decades [krishna might be a small exception] … your observation that only car manufacturing industry spawns supporting ecosystem is not very true …. visit electronic city and its new suburbs beforing making such immature statements … and finally but not the least … i always believed bengaluru has had such a strong scientific foundation due to the efforts of M. Vsheweshwaria – the dewan of mysore close to 175 years ago – master engg. who not only laid the blue print for future ITI and other academic platforms but amoung many engg. marvels also built the now famously contentious KRS dam on kaveri river ….

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    • Hi Don ( Like that name ! ), Thanks for those comments and views. My idea was not really to run down “A” state or say that “IT or science ” is of no relevance. The central point of my blog post was for a state to get a balanced growth cutting across all strata, mfg activity is must. And that Car mfg, provides that since it is still labour intensive. This is true even today for a highly advanced economy like Japan. I’ve been to Bengaluru many times and have been enamoured by the Infoysys’, Wipros,.. and the impact they have made on the society. That being said, they play a large role in providing jobs for the engineering youth in India today. However, if a state can strike the right balance of Mfg economy, knowledge economy and agriculture, it can see a very balanced overall growth cutting across social and economic strata. By the way I like many places in Karnataka incl B’lore, Mysore, M’lore, Coorg,..
      Thanks for those views and when you have the time, do read my other posts on other subjects as well. Would love to hear your feedback.

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