ALLIED INDUSTRY PREPARING FOR THE NEXT NORMAL
<strong>CONSTRUCTION ENCOMPASSING REAL ESTATE, INFRASTRUCTURE, AND INDUSTRIAL STRUCTURES, IS THE LARGEST INDUSTRY IN THE GLOBAL ECONOMY, ACCOUNTING FOR 13 PERCENT OF THE WORLD’S GDP. THE COVID DISRUPTION IS NOW RESHAPING THE WORLD’S LARGEST ECOSYSTEM</strong> <strong>Text: Dolly Singh</strong>
Published -
Dec 28, 2020 6:52 AM
CONSTRUCTION ENCOMPASSING REAL ESTATE, INFRASTRUCTURE, AND INDUSTRIAL STRUCTURES, IS THE LARGEST INDUSTRY IN THE GLOBAL ECONOMY, ACCOUNTING FOR 13 PERCENT OF THE WORLD’S GDP. THE COVID DISRUPTION IS NOW RESHAPING THE WORLD’S LARGEST ECOSYSTEM
Text: Dolly Singh
As the world is preparing for the next normal, so does construction. Today, construction leaders are tasked with not only navigating through an ongoing crisis, but also to accelerate an impending disruption, which will be crucial for the recovery of an industry accounting for 13% of the world's GDP.
Scarcity of skilled labour, changes in logistics and revised regulations for health safety are some of the main challenges faced by the building materials companies across India. Engineering, construction, and building materials (ECB) companies have experienced large stock price decline as most construction sites were shut down during lockdown and disrupted supply chains and operational restrictions had become the major hurdles.
The problems persist, the recovery is slow but the industry is hopeful of a strong comeback as the economy is doing better than expected especially the real estate sector. Affirming the industry’s potential to make a positive return, Shyam Sujan, Secretary General, ELCOMA, the apex body of lighting manufacturers in India shared, “Although the lighting industry is currently facing a slowdown due to global supply chain disruption, the industry is expected to bounce back stronger by gaining 5% year-on-year growth in the next three years with LED market occupying 92% share of total lighting value. As the economy resettles, the step to localise supply chain will definitely strengthen the industry and eventually help us become one of the major players in the global lighting segment”.
COVID IMPACT & INDUSTRY RECALIBRATION
If the industry trend nationally and globally are any indication, the ramifications of the pandemic will only serve to accelerate the new business and operating models that will aid growth and will strengthen the overall construction materials & building products market.
Mario Schmidt, Managing Director, Lingel Windows and Doors Technologies Pvt Ltd said, “COVID- 19 brought in the new normal and those who were willing to adapt and move ahead will be the ones able to make it. In our industry the focus remains of sales. If you are able to do that in the current scenario then surely the demand –supply chain will continue. It took us a while to rebuild the smooth supply chain. But eventually we were able to achieve it only because we did not stop or move from the focus. Even during the lockdown we kept in touch with our customers and worked towards creating a product that would be useful. The customers have come forward to invest and to purchase again. The present heat we are facing is that globally all raw material inspite of still very low demand are witnessing significant price increases. Upvc raw material, steel, glass, EPDM gasket, for each part of the window the input material went higher up and at the other end the consumer is expecting a price cut post pandemic. I cannot forecast, I only hope this situation is a temporary impact and it is going to be smoothen quickly.”
Pushp Raj Singh, President Marketing at JK Cement Ltd. (Grey Cement Business) said There has been a slowdown in the businesses all across. This period was definitely difficult for us, however with the easing of the lockdown restrictions, construction activities have started and we have witnessed a good demand from the rural areas. The demand is expected to be subdued throughout this financial year. The biggest challenge is to run the business operations smoothly by ensuring everyone’s safety. Seeing the impact of the pandemic, we took some important decisions to make certain changes both concerning our business and for our employees. It is and has been a learning experience for us.”
Sebi Joseph, President, Otis India added, "We are seeing increased interest in our touchless technologies and hygiene-promoting products. “We’re delivering innovative solutions to help our customers. One example of touch less technology is the Otis eCall® mobile app. In addition to our touch less technology offerings, we also offer elevator and escalator purification products, apt for the current scenario."
Jayant Jain, CEO, GM Modular Pvt Ltd feels that home improvement industry along with other industries globally have seen a major setback due to the Covid 19 pandemic. "Globally retail shops, supermarkets, hypermarkets of large and small brands have been shut down. Due to the economic downfall, real estate and decor industry has taken a toll. Factors like decline in sales, migration of the labour class and lockdown norms have affected the industries severely. Renovation, construction work and other services related to architect and design industry has been stalled. Disposal income is a prominent avenue for the decor industry, due to the pandemic people have been more focused on saving rather than spending, this sentiment of the customer has hit the industry too. Job security, employee downsizing, salary cut has been the deciding factors when it comes to spending in home renovation or decor industry. All these factors have created a less demand for the home electrical solutions. On the supply side, production has been slowed down due to the lockdown, lack of labour resource and social distancing norms. Moreover, restriction on logistics has been a vital reason that has affected the business adversely.”
Jinal Palkhiwala, CEO, Insight Interiors stated, “Corona prolonged presence, has had a significant effect on the market’s supply and demand. “During the onset of the pandemic, businesses experienced a sudden halt with the market flow which led to a drastic downfall in the supply. Lately, with the reopening of the market India has seen a momentous rise in the demand for a variety of goods and services. Construction projects, manufacturing industries and various other sectors are now trying to ramp up their speed to cover up for the lost time during the lockdown. Businesses are making full attempts to meet their pre-COVID schedules and get back on track by expanding their capacity because supply times have increased and orders are pouring in. With that, buyers are mindful of the backlogs companies are currently facing and they too are being proactive by placing orders well in advance so that the supply-demand dynamic can be brought to equilibrium again. "
SHORT TERM DRIFTS
• Increased digitization
Organizations across the industry are shifting to remote ways of working. For instance, designers and engineers are relying even more heavily on digital collaboration tools and contractors are looking to online channels and apps for monitoring their employees’ ordering construction materials, managing scarce resources more accurately, and maintaining cash flow.
• Rebalanced supply chains
Contractors are building inventory, securing critical materials and long-lead items, and identifying alternative suppliers.
Investments in technology
The case for digital tools that are proven to increase productivity, such as 4D simulation, digital workflow management, realtime progress tracking, and advanced schedule optimization, will become even stronger. An increase in R&D spending to develop new standardized building systems to speed up and automate elements of design and construction.
TRENDS FOR THE SHORT & THE LONG TERM
Beyond the short-term impact of an economic downturn, the crisis is also expected to hit long-term supply and demand, resulting in lasting shifts. Research from the McKinsey Global Institute suggests that economic activity could be back on track by early 2021—if the virus is contained within the next few months and the right economic policies are enacted.
According to Pushp Raj Singh infrastructure and realty sectors are the key drivers for the Indian economy and are now picking up pace with the relaxation provided through subsequent phases of unlock. “Cement is among the essential commodities which is vital to the infrastructure development of a fast-growing economy. The industry is also influenced by a lot of government policies and infrastructure related decisions. Since the month of June onwards have been good for cement consumption, going forward, once the govt. push comes into effect and we see major activities in Infrastructure, road projects, housing for the underprivileged (Pradhan Mantri Gramin Awaas Yojana), the consumption will further go up”
Mario Schmidt said, “Presently due to the ongoing cash crunch because of the pandemic and the effected economy buyers in short term are looking for budget products to complete their construction work. At the other hand we with uWDMA are working with the BIS to set the standards for windows and profiles in place. This is fundamentally needed as the price should never be achieved by lowering the agreed specifications especially the product safety and long lasting figures. This may freeze the pricing at some level but it will provide transparency to customers. Where at times the costing for similar products are just double, it’s impossible for a customer to understand the actual reason behind. Therefore it’s our main focus with the association to support BIS to get this standards as quickly as possible in place.
Jinal palkhiwala added, “Within real estate, there has been a continuous drive to bring projects to completion on time even after the temporary pause. Commercial and residential properties have a notable surge in demand. Buyers inclination to occupy fully furnished properties motivated has motivated developers to finish the project on time. The product line-up has also altered to readymade products such as kitchens, wall panels, wooden ceilings, trap doors to speed up the entire process. On a corporate level, we too have doubled our capacity at Inmobel doors to satisfy the current and upcoming demand.”
Sebi Joseph feels that a good portion of the demand stems from macro trends such as urbanization and digitalization. "When looking at urbanization specifically, I see it as continuing to be a key growth driver for the vertical transportation industry over the years. Otis is well positioned for sustained, long-term growth in an industry with strong fundamentals, backed by these macro trends. Across India, the number of tall buildings and the height of structures has also kept increasing. As urbanization continues, the need for housing grows and commercial space grows. Growth must be sustainable and the demand for technology that can aid such growth is influencing developments in the elevator and escalator industry.”
LONG TERM MOVEMENTS
Increase in off-site construction
Building in controlled environments makes even more sense in a post Covid world. Developers will gradually push fabrication off-site and manufacturers will expand their range of prefabricated subassemblies.
Acceleration toward sustainability
Governments may stimulate the economy by encouraging measures to meet carbon reduction targets through policy changes and direct public investments. There will be parallel shift in demand toward more sustainable buildings and communities that promote healthier lifestyles.
NEW ORGANIZATIONAL STRATEGIES
It is becoming clear that the world will look different post Covid and ECB industry is already navigating this crisis to look beyond the immediate crisis and start to plan for the next normal. In India, a lot of Asian and European markets have been canned and restrictions on certain products have been enforced. With government’s focus on Indian manufacturers, Indian suppliers can foresee massive growth opportunities in the long term.
“Although, the world is witnessing the effect of pandemic, we at GM are striving hard to take care of the businesses, employees, customers and all the stake holders. To make sure we are constantly in touch with our customers we have adopted the digital route. We have encouraged “work from home” culture so that our employees are safe and at the same time business is operational in its capacity and adhering to the government norms. We are making ourselves ready to pick up with the time. We are using this time to communicate with our employees and keep them motivated, focusing more on training them and enhancing their skill sets. Understanding the market demands, we have developed new product categories. GM has come up with UVC sterilization health care products that is used for disinfecting every objects and keep people safe from the germs and viruses including corona virus. Due to lockdown and the emerging work from home trend, we have launched GM Cuba music accessories range that includes earphones, speakers, data cables and more that support the work from home trend, said Jayant Jain.
“We strive constantly to create a progress story and to evolve, so that we can provide our channel partners and customers with superior quality products and services. In our quest to be the best, we are steadily improving our business operations. We have recently launched our new grey cement grinding unit at Balasinor in Gujarat. We have successfully completed our grey cement capacity expansion of 4.2mtpa comprising of (2mtpa), in Rajasthan, Uttar Pradesh (1.5mtpa) and Gujarat (0.7mtpa). This plant will enable us to further strengthen our presence in India’s high growth markets. It will not only generate employment opportunities for locals, but would also facilitate access to quality cement for consumers, coupled with on-time delivery. We are on a continuous growth journey and have expanded our capacities from 10.5 Million Tonnes to 14.7 Million Tonnes in the last one year and intend to become a 20 Million Tonnes capacity cement manufacturer in the next few years. The company’s core value of keeping “people first” makes us a promising brand. I also personally believe that “People” are the most important asset and driver for the growth of any organization. We at JK Cement, have an experience of over four decades in cement manufacturing to deliver the best in class products to our customers. We have successfully positioned JK Super Cement as a brand that resonates with building safe,” elaborated Pushp Raj Singh.
Sebi Joseph stated, “From my perspective, touch less technologies are especially attractive options in this current environment. Beyond touch less technologies, Otis offers its CompassPlus® destination dispatching system, which assigns passengers traveling to nearby floors to the same car. This minimizes the number of stops per trip, reduces car crowding and decreases travel times. The industry is also looking at remote maintenance, which can improve elevator uptime by recommending proactive maintenance. By keeping customers’ elevators running, the possibility of overcrowding in elevators due to limited availability is reduced; in turn supporting social distancing efforts. Further, it can help reduce the number of visitors in a building by reducing the number of in-person service calls. To expand on the concept of speed, our engineers are working to develop the next generation of elevators. This new generation will strengthen connections between the manufacturing, installation, and service segments of our product lifecycles. Further, we’re transforming our service business on a global level to incorporate smarter, more connected technology that delivers proactive, quick and effective diagnostics and repair. For our field professionals, this information is tied to a suite of smartphone apps. Most Otis field professionals now use company-issued smart phones loaded with those of custom apps to help them perform their job more efficiently. These digital tools help employees to diagnosis and fix issues faster than before”
Explaining their strategy, Mario Schmidt informed, “We ensure that we all take the precautionary measures when meeting customers and also when we work at the factory, Everything at Lingel is well planned and taken care of by various departments. We have introduced new products keeping in mind security due to COVID and also the health related issues that one could face. With most people spending more time at home created its own new value and customers are upgrading, renovating and moving into their new own homes which is a wonderful situation for us and our entire industry. With many still working from home they want to ensure they have enough ventilation and breathe more fresh air. What we would suggest to our customer’s keeping in the current scenario is that the focus has to be letting fresh air come in the house through proper ventilation. For that we need to have fresh air devices, which allows predefined amount of air to enter per hour. A centralised air purifier system is the need of the hour. A person needs 300 cubic feet of fresh air per person, per hour and per room. Also one must not forget the office spaces- air circulation is required atleast 6 times in one hour. The security windows are also gaining popularity due to COVID. Our new security windows have all the features to ensure our customers are secure with their family in the comfort of their home. The new security windows have the following features and this is achieved from the right combination of glazing, hardware and locking system.”
Indeed, the government’s enterprising incentives have paved way for the market to flourish again. There is plenty manpower and workforce available along with which the numerous economy boosters by the government are pushing industries towards a positive outcome in both the short and the long term. Moreover, imports and exports have been very precarious due to which local products have undergone a rise in demand.
ROADMAP TO RECOVERY
Today, businesses’ future survival depends on their capacity to prepare for post-Covid scenario. Completely automated, manufacturing, digital marketing and increasing revenue while reducing reduced operating costs have become the new success mantra of the allied industry companies.
Mario Schmidt feels that there is no real road map. “Working and going out of your comfort zone is what is one has to do to complete the chain of supply and demand. At the end of the day the customer wants value for his money and quality product and that is what every customer is looking and one must be able to provide it.”
Pushp Raj Singh expects to see in post-Covid era a greater demand in both the cement and housing sector. “We hope to see the workers gain more employment and also return to their workplaces and contribute to the economy. We also wish to see a revival of the cement industry, in terms of increasing operations and getting our business fully functioning again.”
Sebi Joseph is of the view the very definition of normal may change. “People are experiencing a lot of behavioural changes from working remotely and focusing on new hygiene practices. It’s too soon to say which changes will remain as we emerge from the pandemic. Our vision is to give people freedom to connect and thrive in a taller, faster, smarter world. We work towards this vision in every facet of our business and it steeped in our culture and values. We move 2 billion people a day and maintain more than 2 million customer units worldwide, the industry's largest maintenance portfolio. I’m excited to be working at a company surrounded by a passionate community that is helping to move the world.”
Jayant Jain was optimistic that as restrictions are beginning to ease, firms will gear up to catch the new opportunities. "Implementing new strategies, more focus on digitization, regular motivational programme are the key areas. Smarter expansion is one of the important strategy of GM. With an objective of increasing its retail footprint in the international market for instance, the Company has marked its presence in UAE, Spain and gradually entering other markets too. Seizing new opportunities, introduction of new product range, expanding distributor network and creating new opportunities for business to expand are quintessential to overcome the aftermaths of crisis.”
Jinal Palkhiwala concurred, “The market has been replenishing faster than expected and in the long term it is predicted to be moving upward and onward. In other words, a rebound has occurred and there is hope for a thriving market. Everyone including businesses, governments, workforce and otherwise, have been doing their bit to keep it that way. I believe that once a vaccine is created everything can go from the ground up much faster. Real estate, manufacturing, government projects, infrastructure and every other sector, small or big, will record maturation.”
A strong and productive ECB industry is vital for the Indian economy. Now is the time for ECB companies to strategize their business priorities. In fact, responding to COVID-19 could present opportunities to make long overdue moves for the businesses. Many companies, are utilizing time to up skill the entire workforce and upgrading operating procedures. Most ECB players are also consolidating supply chains and implementing vertical integration of value chain. They are identifying backup distribution channels, and recruiting direct labor to replace subcontractors. Such measures will not only to minimize risk but also drive future productivity.
Tags : FEATURES ARTICLE Latest News Realty+ Connect technology India Otis India construction industry covid19 Sebi Joseph GM Modular Pvt. Ltd. Allied Industry Jinal Palkhiwala ELCOMA recovery Shyam Sujan Lingel Windows and Doors Technologies Pvt Ltd Mario Schmidt JK Cement Ltd. Pushp Raj Singh Jayant Jain Insight Interiors ECB industry