Initially MSL had entered into a JV agreement with the Holland Group in 2006 and later in 2007 Holland as a company was taken over globally by the SAF Group of Germany.
Mr. Gary J. Schultz, Director (Indian JV and Market Development), said: “The JV agreement with MSL was signed in February 2007 and the investments made in April. Currently the plant is being set up in Madurai, and we expect to be in production by April 2008”.
SAF Holland is a global leader in the design, manufacture and distribution of quality-engineered components, systems, and services to the transportation industry. The company specializes in coupling, lifting axle, braking, and suspension systems for trucks, buses, tractors, and trailers.
Said Mr. Gary: “SAF Holland has been trying to do business in India for more than 10 years now. After much effort, it became apparent that you cannot succeed in the Indian market by trying to import the product. So the option was to set up a manufacturing facility either through a JV or on our own. Since the market is a bit restricted we felt it is better to have a JV partner to work with in India. MSL was already manufacturing mechanical suspensions, and they knew the customers and the market well. So we decided to enter into a JV with MSL. We have the right partner in MSL and we are confident about the success of this JV”.
MSH is setting up a state-of-the-art facility in Madurai for manufacturing air suspension systems. Although India is known for its low labour cost, the JV is investing heavily on several automated processes aimed at providing better quality to its customers.
“We have engineered the first product and fitted it on the Isuzu luxury buses manufactured by Swaraj Mazda. This is the first order in the bus segment. We have already supplied several units to be fitted on trucks and trailers. We have also made a few supplies to defense vehicles in the last few years. We are in discussion with all the other bus manufacturers in India, and we are confident that we would do a fair amount of production by the middle of this year out of the plant in Madurai. The Indian venture is right on track”, added Mr. Gary.
Until recently in India, there was no bus chassis concept as such. Bus bodies were built mostly on a truck chassis. But this is changing fast as Indian OEMs have developed specific chassis for buses. Once you start designing the chassis specifically for buses, then you would look at a specific suspension system to suit that chassis, and this is where a company like MSH can add a lot of value to Indian OEMs.
According to Mr. Gary, “The strength lies in so designing the suspension as to integrate with the bus chassis. Each program we have with an OEMs is completely different. We work with the OEMs to develop the product based on the chassis configuration, and this helps in establishing very strong relationship with the OEMs”.
Market in China
Talking about his experience in China, Mr. Gary said that SAF Holland has been selling air suspensions in China for well over 10 years. Initially the company was importing the products, and later it set up a manufacturing facility. Ten years back when air suspension systems were introduced in China, the market size for buses was close to 20,000 buses. Today that market size is over 80,000, and 20 per cent of these buses run on air suspension.
“The Olympics in Beijing is definitely driving the bus business and all the buses which run on the BRT system are fitted with air suspension system. SAF Holland has a 20-22 per cent market share in the Chinese market. The company has its own manufacturing facility which is primarily used only for the Chinese market. But in India, we decided to get into manufacturing straightaway.
“India is probably five years behind the Chinese bus market in terms of penetration for air suspension products. In India, with the infrastructure growth and the new road building project in place, it opens up the luxury bus market in a big way. The advantage with India is that the country has better managed growth. India may not have huge unrealistic growth rates but will definitely continue to grow at a steady pace”, said Mr. Gary.
“India has a strong manufacturing base and this has helped us in already indigenizing our products. We have started working with local vendors for specific components and all these components will be tested at our testing department in the US and once it is approved we will start sourcing from India component suppliers mainly for the Indian JV and going forward we will explore the possibility of using this vendor base for our global operations as well. Globally SAF Holland has secured significant additional orders in recent period, further strengthening its positive outlook for 2008.
India is a growing market for air suspension systems. Typically the market for these products starts with the Bus segment and later moves to the truck and trailer segment. India will be a huge market for air suspension systems in the next 5 to 10 years and MADRAS SAF Holland will play a major role in this market”, added Mr. Gary.
