|A forged component in production at Bharat Forge America. |
For at least half a dozen years , becoming a global forging supplier to the worldwide automotive industry has been the great vision of B.N. Kalyani, chairman and managing director of India’s Bharat Forge Ltd. To that end, he and the company that was established in 1961, in the industrial city of Pune in western India, have expanded operations at home and acquired several forging operations in Europe and North America over the last four years. They also have formed a joint venture with FAW Corp., China’s largest automotive supplier group, named FAW Bharat Forge.
So, who is B.N. Kalyani? And what is Bharat Forge Ltd? Kalyani, an engineer by education, has built Bharat Forge into India’s largest forger, which supplies nearly half of the market demand in that country. With the recent acquisitions, BFL officials believe they have become the second-largest forging company worldwide, after Germany’s ThyssenKrupp.
|Bharat Forge Ltd. chairman and managing director B.N. Kalanyi watches operations at the group’s plant in Pune, India. |
Kalyani also is chairman of the $ 2.1-billion Kalyani Group, parent of BFL, with additional businesses in steel and steel products, and in automotive components.
In North America, Kalyani saw an opportunity when Federal Forge, an automotive forging producer in Lansing, MI, filed for protection under Chapter 11 of the U.S. Bankruptcy Code in February 2004. He set up Bharat Forge America Inc. to acquire the 170,000-ft2 facility. And, he sought out Anil Hingwe to serve as president and CEO. Hingwe came to the U.S. from India in 1969 (he was born and grew up in Pune.) He earned a Ph.D. in metallurgy from Michigan State University and eventually began a career in the American forging industry that has spanned more than 30 years.
A requirement of BFL to acquire Federal Forge was the renegotiation of the existing UAW contract, to allow changes toward making the facility’s operations profitable. That was accomplished and Federal Forge was acquired for $10.84 million in June 2005, and immediately began operating as Federal Forge America (BFA).
“Our purchase of Federal Forge provides us a strategic presence in North America,” said Kalyani, when he announced that the acquisition was official. “Bharat Forge America can now take advantage of the technical capabilities, customer relationships, and resources of its parent entity in order to provide wider capability and full service to its customers, and to strengthen its own position in the American market,” he added.
Bharat Forge America operates three shifts per day with six mechanical presses rated from 2,500 to 6,000 tons. The six presses are arranged in individual lines with induction heaters, rolling machines, trim presses, and controlled cooling. The rolling machines produce the pre-forms needed for the presses.
The operations are housed in a 170,000-ft2 plant and produce a variety of forged automotive components, such as control arms, links, steering knuckles, connecting rods, and various other parts mainly for the light truck and SUV markets. Other markets served include the heavy truck, oil and gas, defense, and agricultural equipment sectors.
The plant currently employs 175 people, both salaried and hourly, about the same staffing level that was in effect at the time of acquisition.
More on BFL
In 1988, BFL began investing in state-of-the-art equipment and production lines for its plant at Pune, resulting in what the company believes is the world’s largest single forging operation. The plant includes several fully automated forging and machining lines.
Along with the investment in technology came an upgrade of manpower. Traditionally, Bharat Forge, like other Indian firms, had employed a poorly educated workforce, often virtually indistinguishable from farm labor. It began the process of replacing them with the sort of educated workers who would be able to make the most of the new forging technology.
Using a combination of attractive severance packages and attrition, the company replaced a third of its 1,800-person workforce. As a result, company officials say, a mostly blue-collar shop floor became a largely white-collar crew. Today, Bharat Forge employs about 4,000 people, but 80% of them are college graduates and a third are engineers.
“These are extremely bright, fast, and hardworking people. They have good values,” Kalyani said in published reports. “We needed computing and analytical skills which the bluecollar guys just didn’t have. For the company this was a cultural change. We replaced muscle power with brain power.”
When India’s economy was liberalized in 1991, its potentially vast domestic market attracted several auto companies. Toyota, Hyundai, and Ford began manufacturing cars in India and sourcing parts from Indian suppliers. Bharat Forge’s high-tech plant was there to meet the need, but in 1996, a sharp downturn in the domestic market forced it to look outward more aggressively.
At that time, several factors permitted BFL to participate in the fiercely competitive global market. The industry was fragmented worldwide, and that meant that the few big players weren’t able to shut out the smaller players. Global auto companies were spread out across the world, which made them open to sourcing parts from an array of suppliers. Finally, in a capital-intensive and highly competitive industry, automakers concluded that outsourcing to reliable, highquality suppliers made more sense rather than investing their own resources.
As a result of this trend, between 1997 and 2007 Bharat Forge was able to grow its exports more than fifteen fold, from $12 million to $188 million.
In the process of meeting the outsourcing opportunities offered by automotive OEMs and their Tier 1 suppliers, BFL developed what became the largest single-location commercial forging facility in the world. It also began expanding its involvement in the value chain, from raw forgings to machined components, and even to providing subassemblies.
In addition to adopting sophisticated forging equipment, Bharat Forge built up a strong capability in design and engineering, including a full-fledged product testing and validation facility that gives Bharat Forge a full-service supply capability, from product conceptualization to designing, to manufacturing, product testing, and validation.
Kalyani and BFL next began working to acquire other forging operations. The first acquisitions came in 2004, when BFL acquired Carl Dan Peddinghaus GmbH & Co. KG (CDP), one of the largest German forging companies, with plants in Ennepetal and Daun; and CDP Aluminiumtechnik, now known as Bharat Forge Aluminiumtechnik. The latter provided an entry into the aluminum components market.
The Federal Forge acquisition followed in 2005. Also in 2005, BFL acquired Imatra Kilsta AB, in Sweden, along with its wholly owned subsidiary Scottish Stampings in Scotland, which together were known as the Imatra Forging Group. Imatra had been Europe’s largest manufacturer of front axles.
The most recent activity, the aforementioned joint venture with FAW Corp. in China, commenced production in April 2006. This venture with FAW (formerly First Automotive Works), gives BFL access to the Chinese market, which is estimated to be four times larger than the Indian market.
At present, BFL owns 10 plants — three in India, three in Germany, and one each in Sweden, Scotland, and the U.S. — and it has the significant stake in the joint venture in China. The acquisitions strategy is an implementation of what the company calls its “dual-shore supply model.” By following this model, BFL can supply all components to a customer from two plants, one in a low-cost country and one closer to the customer.
With the acquisition of the Imatra Group, BFL achieved the capability to produce all its core products in at least two locations worldwide, and thereby improve its customer support.
Following the acquisitions, BFL’s customer list includes most of the world’s major auto and truck makers and Tier I suppliers: General Motors, Ford, BMW, Audi, Volkswagen, Toyota, Scania, Iveco, ArvinMeritor, Detroit Diesel, ZF Lemforder, Wuxi Diesel-FAW, Guangxi Yuchai, Honda, Renault, Volvo, Caterpillar, and Cummins, among others.
Investments in Lansing
Since the acquisition of Federal Forge, BFL has made considerable investments in the Bharat Forge America facility to upgrade the plant environment, to add robots and automation, and to improve process simulation capabilities. Forging interviewed BFA CEO Anil Hingwe recently, to learn about these new investments. According to Hingwe, “The big thing has been adding additional robotics and process controls. This is a big investment in the future of the company.”
For BFA to be competitive, he explains, the company must reduce its labor costs. It aims to do that by adding robots, not to reduce the workforce, but to create more capacity with the same workforce. Its key supplier in this investment program has been Fanuc.
Other investments have been made in tool-room equipment and machining capability, and in secondary equipment, such as shot blast cleaning, magnetic particle inspection, and eddy-current testing. The objectives of each of these investments has been both to update existing capabilities and to expand them.
BFA also made an upgrade in its process simulation capability by purchasing a sophisticated forging process simulation program. Now, all new jobs are planned and set up using this capability.
The facilities upgrade included a $500,000 investment to build a new employee locker room. “This is important to building morale among our employees,” according to Hingwe. The projects also included a new entrance area, “because that’s where employees first form the impression of where they work every day. We take that very seriously,” he adds.
BFA realizes that there’s no tangible way to measure the results of such investments, but Hingwe firmly believes that they are very important to the success of the operation. And, the company plans more investments in automation, increased press capacities, better controls on presses, and improved heating equipment.
Training efforts have been ramped up since Federal Forge became Bharat Forge America. As could be expected, much of the training has focused on maintenance and process control topics. “In the maintenance area, we are training in hydraulics, electronic controls, PLC controls, and so on,” Hingwe explains. “We now have supervisors in the workforce who have a great deal of experience in robotics, and they are able to work with our new robotics systems.
How does BFA provide the expanded training? “We have invested money to send employees to local community college programs,” Hingwe answers. “We also have hired experts from universities to work with us and, in some cases, they have become our permanent employees.”
People are recognized as the key to the success of BFA. “We have very cooperative working relationships with our union employees, and we have invested in staff that has a wealth of knowledge in the forging industry,” says Hingwe.
In its service to the automotive industry, BFA works hard to meet customer requirements. Hingwe points out that 80% of the material processed in the plant is based on microalloyed steels. “We have tailored material specifications to suit individual customer’s mechanical-property requirements, and to achieve cost reduction.” BFA works closely with its steel suppliers to develop the needed micro-alloyed steel grades, including proprietary specifications.
Hingwe adds that the company faces competition from other materials, such as from ductile-iron castings, and BFA engineers have come up with innovative designs and alternative grades of steel to answer such challenges. The current practice is to study every new job that comes to Bharat Forge America via process simulation. In addition to its in-house process simulation capability, BFA can call on the parent company’s design engineering offices, particularly those in Germany.
BFA America performs its own process engineering and tooling design in-house, including designing and machining the tools. “Right now we are producing many suspension components. The company has a big position in suspension and wheel-end components, such as knuckles. All of these components are rated as safety critical,” according to Hingwe.
He adds, “Over the last two years, we have launched over 30 new products. For the future, our drive will be also to produce engine components for most passenger cars, and for diesel engines.”