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Finite Resources – Professional Engineering, IMechE
21/03/07
Outsourcing activities to Eastern Europe and Asia has been mainly confined to manufacturing. Mention other areas of potential outsourcing such as computer-aided engineering (CAE) work, running finite element analysis for example, and companies tend to be reluctant.
The problem is quality. Bad experiences have left many in the industry reluctant to repeat the encounter. Getting work performed to poor or incorrect standards is not only bad for business, it leaves behind a bitter taste. The savings offered by outsourcing appear somewhat thinner once the cost of rectifying quality problems is factored in.
But one company reckons it has got the problem licked. CAEPRO is an expert in automotive outsourcing. It specializes in outsourcing work such as finite element analysis, computational fluid dynamics and other CAE activities from the UK to its technical centre in India. It promises attractive cost-effective results and claims that the quality of the work produced is second to none. So how has the company been able to infiltrate this proverbial minefield and see its business flourish?
CAEPRO says it has developed second-generation outsourcing, having learned important lessons from previous encounters with Indian firms. CAEPRO’s managing director John Roebuck says: “When I was working with a US automotive consultancy, we outsourced a piece of work to an Indian company and weren’t too impressed by the results. The engineering talent is of a very high quality and standard but it just wasn’t being utilized properly. There was clearly an opportunity here – companies are desperate to reduce costs but it’s a case of finding the right partner to do it with.”
Roebuck’s colleagues have a wealth of experience drawn from many factions of the automotive world, with engineers formerly employed by Prodrive, Ricardo, Arrows F1, McLaren F1 and Lotus. CAEPRO’s Indian headquarters is in Pune, which is a magnet for Western industrialists keen to invest in the country. Described as the Detroit of India, Pune lies southeast of Mumbai.
CAEPRO uses the imported engineering expertise to manage the Indian workforce and ensure that there are no gaps in their product knowledge. This has led to the company developing tried-and-tested processes and procedures.
The company’s main interest is in meeting the outsourcing needs of clients that arise from overflow work or a lack of capability in house. Its strategy focuses on three core competencies which, if carried out properly, should eliminate problems associated with poor quality, increased costs and delays in delivery. Roebuck says: “The main thing people have had problems with is lack of product knowledge, communication problems and sometimes delivery time. Our product knowledge, communication, and time – that’s on-time delivery and reduced turn-around time – are our competitive advantages.
“These are things we really try to focus on. We can take all our knowledge and best practice that we have developed in consulting with motorsports and automotive OEMs and create a set of best-practice procedures that our engineers in India can follow. We bring the best practice we have seen in the automotive industry around the world and get it done in India where the costs are lower.”
Although CAEPRO’s list of clients included some work from OEMs, it prefers to focus its efforts on companies that do not have an adequate volume of work to start up their own low-cost facility in India or China. The company says many of these small to medium-sized businesses face intense cost pressures but are unable to justify or afford their own outsourcing facilities. It is the demand that CAEPRO has set out to satisfy.
The company is not interested in detailed design work and sees this as an area that should remain a core activity. “We are really looking to take the non-core competencies,” says Roebuck. “We get the design and then we do the model and analysis for that. Seeing how components are going to survive in terms of reliability, for example, as well as performance tests against European and US safety regulations.
“UK companies need to compete on innovation. They need to have their engineers focused on that. They shouldn’t be spending their time doing analysis. If they are doing modeling analysis, there are people who can do it cheaper and just as well.
“Concentrate on what your competitive advantage is and what your core competence is and let the other stuff go.”
As manufacturing has migrated to lower-cost economies in recent years, will more added-value activities follow suit? Should the UK automotive industry worry that the international OEMs might pack up altogether and head east?
“It would be very difficult,” says Roebuck. “British engineering is in exactly the right place. It’s at the high end, spending money on R&D. It has a cluster which is so hard to develop. I don’t think anyone [in the UK automotive industry] should be too worried.
“But they should be outsourcing some parts; otherwise they may have trouble because they should not be wasting their talents.”
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