In an interview with Sourcing Hardware, Assa Abloy’s South Asia region managing director Raman Koul talks about his company’s crisis management, possible silver linings, and a six-point economic revival recommendation for the government. Assa Abloy is a Sweden-based access control giant, with subsidiary operations in India.
How do you assess the economic management by the government? What more can possibly be done? To what extent will the stimulus help your industry recover and revive?
India has already lost a lot of revenue due to lockdown and the spends for combating the emergency. Post lockdown, the government should quickly revive the infrastructure projects under public-private partnerships. Though the government has taken multiple steps to tackle the corona pandemic, I believe that they were reactive in approach. We would expect some proactive measures by anticipating the economy’s behaviour post lockdown. Visible actions will help in building market and consumer sentiments. Priority for the government so far has been to contain the outbreak, and the bold decision of complete lockdown has been in the right direction. Some of the steps the government must take are:
- Support industries with labour wage support during the lockdown
- Increase disposable income with the middle-class by reducing income tax
- Reduce GST to boost consumption
- Increase rebates to industries involved in exports
- Create jobs by investing heavily in government projects
- Create a better environment for FDI in India
In your opinion, how will the Covid-19 crisis play out in the coming months and years?
According to experts, the coronavirus is going to stay with us till the time a treatment is available for everyone. In an optimistic scenario, the treatment could be available towards the end of 2020. In such a scenario, companies will be forced to rework their management styles and operations. Those adopting process automation in their entire value chain, right from gathering the customer requirement to manufacturing, will gain. Real-time data analysis and data-based decisions shall be the winning mantra. Going forward, technology or automation will be given greater weightage and many jobs may get redundant. The localisation efforts of enterprises will be stepped up. Social hygiene and social distancing will be the foundation of all decisions, even commercial.
How has Covid-19 affected your company and industry? What may be the mid-term impact of this assault?
Our addressable market is dependent on construction and real estate. The market is badly impacted, as construction activities are on hold due to the lockdown. Further, cash flows will be under pressure. This is expected to have a bearing on the real estate industry post-lockdown. The hardware industry may experience sluggish demand for a while. But, demand will bounce back as soon as consumers are assured of stability in the external environment. In the mid to long-term, we might move from globalisation to regionalisation/localisation of our supply chain. The January to March quarter is the time when majority of the orders are released to ensure timely completion of construction projects, in both the private and government sectors. Further, the construction industry requires nearby presence of a large workforce of both skilled and unskilled labour. So, ensuring social distancing norms is going to be a challenge.
Crisis management is a critical element of leadership. What initiatives did your strategy team take to safeguard your stakeholders?
Safety of employees comes first for us. Hence, we had encouraged employees to work from home one week prior to the official lockdown declared by the government. It is important to retain a pool of stakeholders and build up their confidence in critical times. The impact of Covid-19 is short-term, and the companies who can retain the value chain of stakeholders will recover fast. Therefore, we have been in close touch with our employees, distributors, dealers, influencers and customers and have built up their confidence. The idea is also to infuse positivity in the ecosystem through engagement activities that help in becoming future-ready. With technology, we have the power to come together to communicate and collaborate from all over the world. Identifying weak links and implementing actions to strengthen the value chain has also been our priority.
Every crisis has a silver lining. What market changes and demand drivers do you visualise, which may open new fronts for your company?
Most of the developed economies are planning to de-risk their supplies by developing vendors in different geographies or nations. India is expected to gain from this trend and have a larger pie in the overall market. Cash-flow and credit are going to become scarce in the new market scenario, so organisations will try to ensure a secure line of payment. The products and solutions will have to ensure compliance, while localisation efforts to ensure viability will be encouraged. There can be several learnings from this crisis:
- We need a supply chain which is sustainable and scalable, that includes manufacturing in multiple locations with decentralised warehousing, etc
- Highly leveraged businesses will find difficult to survive this kind of crisis
Assa Abloy is on a strong footing to sail through the crisis with its local manufacturing in India. We have manufacturing units spread across the globe and a strong focus on innovative and customer-relevant products. We will bounce back soon.