Manufacturing

Why does it matter?

Mohit Law
Mechanical Engineering, IITK
mlaw@iitk.ac.in

TA202A – Manufacturing Processes II

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What kind of a company is this?

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Apple is also precision manufacturing company

• Apple’s market value: ~1 trillion USD

• Apple makes excellent products that people want, but also because it’s a
precision manufacturing company, and manufacturing is a value multiplier

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Why manufacturing?

• Look around you

– Everything is manufactured

• Manufacturing has become an increasingly complex activity

– Needs engineers, managers, technicians, policy makers and politicians

• Manufacturing adds value

• Manufacturing has a multiplier effect

– Every job added in the manufacturing sector has a multiplier effect

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Manufacturing, value added (% of GDP)

Germany: ~21%

~29%

~15%

Singapore: ~21%

World bank data 2018

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Manufacturing multiplier effect

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 Source: economicmiodelling.com

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 Source: economicmiodelling.com

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https://qz.com/1330738/against-modis-claims-theres-been-no-growth-in-indias-job-market/

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Manufacturing, like everything else, has changed

• Labour intensive low cost

manufacturing has changed to

become more capital intensive

• Maruti Suzuki (right): 7,000

workers and 1,100 robots work in

tandem at their Manesar plant

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Demographic dividend or nightmare?

• India has ~640 million people under the age of 25

• Projected median age of 29 in 2020

• By 2028, India needs to create ~343.5 million jobs for just

those who pass through our education system

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Numbers, they matter.

• We have about 259.5 million students between Class 1 to

Class 12.

• Another 34 million students are pursuing higher education.

(~3000 engineering colleges producing ~15 L engineers a year)

• Add another 50 million who are unemployed or under

employed.

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The Chinese Dragon

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Job creation in China

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The Chinese Factory

• In 1990 China produced less than 3% of global manufacturing output by value; its
share now is nearly a quarter. (India was similarly poised in the 1990s)

• Share of imported components in China’s total exports has fallen from a peak of
60% in the mid-1990s to around 35% today (World bank data)

– This is partly because China boasts clusters of efficient suppliers that others
will struggle to replicate. These are supported by skilled trained manpower
and investment in R&D.

• India still imports about ~70% of all its defense equipment and all other major
machineries. Why?

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The Indian …

or

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Job creation in India

Thousand

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Real and imagined

One real, the other mythical.

But the mythical is more real,
and the real is still being
imagined.

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Why the gaps?

• Total Indian expenditure on Engineering & technology related R&D in 2005 – 06:

~2.5 Billion USD

• Manufacturing related Industry + Govt. expenditure on R&D in 2009-10: ~4 Billion

USD (food products, textile, leather, paper, pharma, metals, automotive, computer

hardware, machinery, rubber, paper, etc.)

• Recall, Apple’s manufacturing and capital expenditure in 2013-14 was: ~10.5 Billion

USD

Source: data.gov.in

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 Where are
the jobs?

Source: Navigating the Labyrinth. Perspectives on

India’s Higher Education

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Manufacturing employment: perspectives

• ~10.3 million manufacturing enterprises in India, employing ~30 million

people

• Between 2005 – 2013, India added only ~5 million jobs in manufacturing

– that of the 5 million increase in employment, close to 3 million arose in establishments
that did not hire any workers

• Number of workers in livestock farming increased by ~10 million in the

same period (2005 – 2013)

Source: 6th Economic Census

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 Who will transform manufacturing and how?

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