John Crane. more pics
This is the only manufacturing site we visited on this trip, and they were very welcoming in spite of the fact that they didn’t get much notice about our visit.
They first divided us into three groups to tour the corporate building then we joined up again for a tour of the factory. The company is UK-based and they had just moved to this facility three or four months prior. In fact, they still don’t have all the equipment set up yet. They are dismantling the equipment from the UK and shipping them here, and they have one or two people from the UK office who are here for a few months to help them get the equipment set up. This site would produce couplings and mechanical seals.
After beverages and coffee, we sat in a large hallway for presentations. The first presenter talked about the company, the second about something they called LIFE, which stands for Little Improvements From Everyone – the Japanese concept of kaizen. The world is really getting flat.
They talked about return on management, which I hadn’t heard of before. They said that return on management equals the collective organizational energy released divided by management time and attention. They aim to maximize the numerator and minimize the denominator, because their goal is for management to spend more time thinking about strategy than solving operational problems.
They feel that their 90% retention is due to the fact that they hire young engineers and give them training, a career path, and growth opportunities. Unfortunately, there aren’t many women in the mechanical engineering field, so there are very few women in the company.
They subcontract some of their work but they purchase the raw materials themselves. This gives them control over the quality of materials and they get economies of scale. Their labor costs are even lower than what we’ve heard so far. Machinists are paid $3K/year. MBAs get $8K to $9K/year, depending on the school.
Their disaster recovery plan includes using their sites in China and the Czech Republic as backups. Each area is required to have a business plan that includes their production targets.
The still-empty factory floor. more pics
In the end, they gave each of us a parting gift – a bound journal/calendar book. I thought that was a wonderful gesture.
JumpStartUp
We got a short talk from an Indian VC at the fifth floor Executive Lounge of our hotel. They’re a five-year old VC based in Silicon Valley with only one fund – $50M. They invest in young early-stage technology companies, which they set up as US companies for a quicker exit, at least at a legal standpoint.
They have global capital sources, and their portfolio firms have global operations. He called their firms “micro-multinationals.” He said the trick is finding companies of the right size.
We all know about the labor arbitrage of off-shoring, but I wondered how startups could afford the costs of learning how to do business in a new country, so I asked him if India is the only country outside the US that their portfolio companies operate in. He said that his other two partners are from Taiwan, so they have that part of the world covered too.
A view of the nearby golf course from the fifth floor of the Royal Orchid. more pics
Observations, insights, and lessons learned
Manufacturing seals may seem to be far removed from my industry and my business, but I’m still learning something new.
In Sapient, project plans; in John Crane, business plans - all cascading plans: different execution, same concept. Each member of the team becomes responsible for results, because they created the plans themselves. I like that concept.
From what I hear, few VCs invest in early-stage companies because there’s too much risk, particularly of dilution, in being a first- or second-round investor. But maybe JumpStartUp’s strategy of off-shoring their portfolio firms’ operations means those startups wouldn’t need additional funding, which in turn means less likelihood of dilution. Might be worth watching if their strategy pans out.
I think that companies are downplaying labor arbitrage as a strategic move, at least partly, not only because their costs are getting higher due to low supply of talent, but also because they don't want their services to be a commodity.
Sarees too late
Well, in a second poll, nobody else wanted to wear the sarees anymore. But I was able to convince Wendy to wear one with me. And, good sport that she is, she agreed. So, off we went – the threesome of us with Mahdad. As we walked to Airport Road, we found an empty auto rickshaw coming our way. We flagged it down and got a great deal. The driver said he’d charge us 100 rupees for four hours, simply because we were guests at the hotel. Why hadn’t we heard of this deal before?
We told him that we wanted to go to Commercial Street to buy some sarees and a suitcase. He said he would take us to a place that sells silk sarees. It was a store called Resham Udyog. We figured it was owned by one of his relatives, but we went in anyway. It turned out to be a good store. They showed us beautiful silk sarees at good prices. Since I didn’t have to buy so many anymore, I could afford to buy a better quality for myself. I picked a red see-through one for 1980 rupees to wear tonight (Wendy’s choice), and another purple-and-gold one for 1250 because I liked the threadwork. Wendy got an electric blue-and-yellow one, and Mahdad got a much more expensive green one for Cheryl.
They had ready-made underskirts and stretchable tops that looked like they would fit a small child. They promised the stretchable top would fit me. Well, it did, but it showed more than I was willing to air out. So, they showed us some kameez tops instead, but we couldn’t find a pattern or color that would match the sarees we picked out. Finally, they offered to have a tailor sew the tops for us for 150 rupees. We said we wanted to wear them to a dinner tonight, so we needed them by 6pm; they said 6:30. We didn't have a choice. So, we ordered tops for me and Wendy to wear tonight, and the other two tops for me and Cheryl to be delivered by 9pm. Then the woman showed us how to wear a saree by wrapping a red-and-black one around Wendy. Wendy looked like a goddess! The woman promised to pin the pleats for us when they delivered them.
Then off we went. The rickshaw driver then took us to an older mall (which looked like it doesn’t get much business). Wendy and I helped Mahdad pick out a kurta (we agreed that the maroon one looked better than the black or cream-colored ones). And while Mahdad shopped for a suitcase, Wendy and I looked at some jewelry in a souvenir shop. I bought four pendants at about 400 rupees each. On our way out, they gave each of us inch-high wooden sculptures of Ganesha, the elephant goddess, for luck. As Mahdad bowed to them with folded hands, I said, “Namaste.” And, off we ran; we were running late.
Well, the sarees didn’t arrive at 6:30. Wendy had gone ahead to the restaurant to make sure that everything was set. I promised to bring her saree with me. But by 7pm, the sarees still have not arrived. I put on regular clothes and the shawl I bought while riding the elephant. Mahdad said that, in case the sarees arrived by the time I got to the lobby, I could just change at the Leela Palace (where the final dinner was), so I brought the underskirt with me and wore the sequined slippers I bought over the weekend. We waited a little but the sarees still had not arrived. We saw the driver of the same rickshaw waiting for us, and he suggested that we call the shop. So we went back into the hotel and a guest services manager called the number for us. They said it was on its way. By 7:30pm, still no sarees, so off we went to Leela Palace. Mahdad felt bad that he was the only one dressed up, but he was the star of the dinner because of it.
We caught the tail end of the appetizers and enjoyed the start of the main entrees. They were slow serving us anyway, so we enjoyed some of the live music in the meantime. Unfortunately, we had to leave early to pack so, at 9:30pm, Mahdad started his rounds hugging everybody. Since Rohit had said something about hugging and the Indian culture during a classroom exercise last month, I decided to be safe this time and wave instead. Joyce went with us to confirm our ride to the airport.
When we got back, the sarees had arrived. The front desk clerk said that they arrived only a half hour prior. Wendy’s underskirt was missing, but the pleats of our sarees were pinned as promised. My tops both fit – very tightly, I might add, but that’s the way the Indian women wear them. Wendy later tried on her saree to show Christina, but she didn’t put on the top. She still looked like a goddess.
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