There was just this sense of weariness, or perhaps calm acceptance, in Peter Laier’s voice while responding to a question on the challenges of operating in today’s VUCA world.
“Yeah, this VUCA thing has been a buzzword for some years,” the Member of the ZF Board of Management told Mobility Outlook during a recent media roundtable. Laier heads the German auto supplier’s commercial vehicle solutions as well as its industrial technology divisions while being responsible for the India region.
VUCA, the well-known acronym for volatility, uncertainty, complexity and ambiguity has had the world on its toes for the last few years especially in the period following the COVID outbreak in 2019. The levels of uncertainty continue to persist with the Russian invasion of Ukraine, which now has the potential to break into something even more catastrophic with the rumoured plot to assassinate Vladimir Putin, the Russian President.
While conceding that VUCA was here to stay, Laier added that “if you look a little bit more on global developments while taking two steps back”, India was the lone bright spark in the horizon and would play an increasingly important role in the global economy.
India Promises Plenty
“With India’s population and growth ambitions, it is clear that a company like us wants to engage further to not only participate in this growth but to support it with our technologies and products,” he added. Laier, who joined the ZF Board in January this year, reiterated that being a global setup, the company has always had an interest to look for further growth opportunities. It was in this context that India was playing “a major role for us”. The reasons, he added, were not hard to fathom.
One, India is “maybe one of the regions, or the region, with significant growth in GDP” and showing optimistic projections in the near- to mid-term. In addition, there is this “industry transformation” happening — a clear reference to the move to electric mobility and options beyond the internal combustion engine — based on which ZF was seeing significant growth opportunities.
“We are, therefore, investing heavily in our structures here so that we are able to support engineering and manufacturing. In addition, we have identified India as a very important hub to serve other locations,” continued Laier.
Supporting Global Projects
ZF is clearly keen on using its engineering centres in India and “the very skilled workforce” available here to support global projects. It also wants to leverage the country’s strengths as a manufacturing and sourcing base to support development of “competitive products” to other markets in the world.
This is where the ZF tech centre in Hyderabad will play a big role going forward and, as Laier said, the company has a clear plan to “develop our activities further in that direction”. Eventually, the idea is to give “full project developments and responsibilities to our India R&D centres” as part of the goal to make “even better use of the skills of the people which we have in there”.
Laier was particularly pleased with the fact that there were “very good examples” in different areas on the passenger car side, where the company was already developing technologies on safety at its engineering centre.
Likewise, when it came to commercial vehicles, there were interesting initiatives underway on the “brake and steering side”. Beyond automotive, wind energy was another domain where there would be “specific adaptations to the Indian market’s needs”.
As Laier summed up, “When it comes to supply chains, India is for us a very important region for two reasons. One, we see skills and competitiveness in production. Two, we see stability in India which tells us that it can be a reliable hub to supply engineering know-how and products to the world.”
Big Investments
He made it clear that ZF would strengthen its engineering and manufacturing footprint in India so that it emerges as a strong hub for R&D and sourcing. The company has earmarked €200 million investments of which a part will go into building a new plant in Chennai, investing further in R&D as well as test facilities since it was “very important for us to have a local testing opportunity and serve our customers locally”.
Industry observers say that while India will doubtless play a big role for ZF, the biggest challenge lies in the fact that the company will have to cope with challenges back home in Europe, where the recession has already kicked in. By the end of the day, this is its most important market and the company will have its work cut out in keeping an eye on Europe and giving a push to emerging markets like India.
The Hyderabad tech centre will clearly play a big role in the coming years. It kicked off operations in 2017 and was the backend for a lot of engineering work initially. Over the years, with more and more projects in its kitty, it has taken the global lead for a host of new initiatives.
The ZF leadership team, in an earlier interaction, had told this writer that all this was possible thanks to the talent available in India to be able to work on the latest technologies. The centre was able to support projects for all locations and customers worldwide.
The biggest growth area for ZF was in software, which was needed for all the different technologies it is offering, be it e-mobility, autonomous driving, active and passive safety, integrated safety as well as in other areas like design, simulation, electronics and so on.
Tapping Talent In Hyderabad
The tech centre had joined hands with the International Institute of Information Technology Hyderabad to use its expertise in solving problems in autonomous driving and fundamental research. It was also trying to work with other leading institutions in Hyderabad and tap the talent in the city for the future.
There are over 3,000 engineers at the ZF tech centre and the idea is to drive more innovation. This is where collaboration with academia becomes critical. There is also work happening with start-ups “in a small way” to do some proof-of-concept ideas.
Right now, there are only four unicorns in Telangana but places such as Khammam and Warangal are seeing a lot of traction for start-ups. “For a State that is barely eight years old, we have done very well and I am confident that a lot more can be done going forward,” a ZF India executive had added.
ZF also has tech centres in Chennai, Bengaluru and Pune though the biggest one serving all its businesses is in Hyderabad, which therefore has a leading position. From the company’s point of view, the model can be compared to a main manufacturing facility in one location with assembly centres close to the customer. The focus is, therefore, just on one location rather than spread itself thin by having 20 across the country.
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