Post by scootdoggydog on Dec 6, 2014 0:44:00 GMT -5
THE Hero motorcycle plant at Gurgaon, an industrial city near New Delhi, India’s capital, is a model of order. The lawns are closely cropped, the plant pots well tended. The shop floor is spotless and divided into three parts. Frames and petrol tanks are welded and painted in one section. Further along, a team of 150 people in white overalls work at close quarters piecing together the components of the thousands of motorbikes made here each day. Engines are built in a third, air-conditioned zone. Assembly-line staff earn around $800 a month, a handsome wage by Indian standards. This is the sort of jobs-intensive manufacturing that Narendra Modi, India’s prime minister, would like more of.
Hero MotoCorp is one of the world’s largest manufacturers of motorbikes. The factory at Gurgaon and its three sister plants can make up to 26,000 vehicles a day. Hero has roughly half of the Indian market, where 14m two-wheelers were sold last year. Yet it is not as well-known outside India as Bajaj, a rival, which sells less than half as many two-wheelers in India, but is the country’s biggest exporter of such vehicles. And this is what Hero now wants to change. “Our ambition is to be a global brand,” says Pawan Munjal, the firm’s boss. On December 2nd it announced that Tiger Woods, a well-known golfer, would endorse its products across the globe. Hero is also building factories in Bangladesh and Colombia and it has bold plans to enter America and Europe.
To understand why Hero is only now stepping out, go back three decades to a deal that transformed the company. The firm was founded in 1956 and quickly became India’s largest maker of bicycles. In the early 1980s India allowed the import of the technology needed to make small motorcycles. Hero looked to Japan for a partner and teamed up with Honda in 1984. At the same time Honda set up another joint-venture in India to make motor scooters, then the most popular form of motorised transport. But the market changed. As the economy grew so did demand from rural Indians to travel to towns. Scooters were fine for urban roads, but not well suited to tougher rural terrain. Motorbikes trumped scooters and Hero thrived.
The deal with Honda tied Hero to markets close to home. When the two firms went their separate ways in 2011, it was free to travel farther. It now sells in 22 countries in South Asia, Africa and Latin America. “These are markets that can take our products with little modification,” says Mr Munjal. The Hero Splendor, a basic, fuel-efficient 100cc bike, is the world’s best-selling two-wheeler by dint of its popularity in India. At $850, it is also well priced for other emerging markets. But Hero will need fancier products to entice rich-world consumers. Last year it launched a new research facility near Jaipur. It has plans to enter Europe and America soon with a cheap, hybrid-power scooter, driven by a battery, which is charged by an engine.
Hero is puttering down a path beaten by others. Bajaj sells almost 50,000 two-wheelers a month in Nigeria, trouncing rivals from China. But for India to become as well known for its manufacturers as its IT services, much still has to change: the country’s power supply must become more reliable, its labour laws more flexible and land-acquisition rules less onerous.
Hero’s plant at Gurgaon is not on the power grid. Its generators runs on expensive diesel much of the time because of a gas shortage. The factory spans 112,000 square metres on a tract of land that would be hard to piece together under current laws. After the rigours of India, Hero may find life on the outside a little easier. www.economist.com/news/business/21635496-one-worlds-biggest-motorcycle-makers-wants-become-even-bigger-coming-out-hero?fsrc=scn/fb/wl/pe/comingoutforahero
Hero MotoCorp is one of the world’s largest manufacturers of motorbikes. The factory at Gurgaon and its three sister plants can make up to 26,000 vehicles a day. Hero has roughly half of the Indian market, where 14m two-wheelers were sold last year. Yet it is not as well-known outside India as Bajaj, a rival, which sells less than half as many two-wheelers in India, but is the country’s biggest exporter of such vehicles. And this is what Hero now wants to change. “Our ambition is to be a global brand,” says Pawan Munjal, the firm’s boss. On December 2nd it announced that Tiger Woods, a well-known golfer, would endorse its products across the globe. Hero is also building factories in Bangladesh and Colombia and it has bold plans to enter America and Europe.
To understand why Hero is only now stepping out, go back three decades to a deal that transformed the company. The firm was founded in 1956 and quickly became India’s largest maker of bicycles. In the early 1980s India allowed the import of the technology needed to make small motorcycles. Hero looked to Japan for a partner and teamed up with Honda in 1984. At the same time Honda set up another joint-venture in India to make motor scooters, then the most popular form of motorised transport. But the market changed. As the economy grew so did demand from rural Indians to travel to towns. Scooters were fine for urban roads, but not well suited to tougher rural terrain. Motorbikes trumped scooters and Hero thrived.
The deal with Honda tied Hero to markets close to home. When the two firms went their separate ways in 2011, it was free to travel farther. It now sells in 22 countries in South Asia, Africa and Latin America. “These are markets that can take our products with little modification,” says Mr Munjal. The Hero Splendor, a basic, fuel-efficient 100cc bike, is the world’s best-selling two-wheeler by dint of its popularity in India. At $850, it is also well priced for other emerging markets. But Hero will need fancier products to entice rich-world consumers. Last year it launched a new research facility near Jaipur. It has plans to enter Europe and America soon with a cheap, hybrid-power scooter, driven by a battery, which is charged by an engine.
Hero is puttering down a path beaten by others. Bajaj sells almost 50,000 two-wheelers a month in Nigeria, trouncing rivals from China. But for India to become as well known for its manufacturers as its IT services, much still has to change: the country’s power supply must become more reliable, its labour laws more flexible and land-acquisition rules less onerous.
Hero’s plant at Gurgaon is not on the power grid. Its generators runs on expensive diesel much of the time because of a gas shortage. The factory spans 112,000 square metres on a tract of land that would be hard to piece together under current laws. After the rigours of India, Hero may find life on the outside a little easier. www.economist.com/news/business/21635496-one-worlds-biggest-motorcycle-makers-wants-become-even-bigger-coming-out-hero?fsrc=scn/fb/wl/pe/comingoutforahero
