Focus on quality even during a slowdown: Smith & Founders | SupportBiz

Managing Growth

Focus on quality even during a slowdown: Smith & Founders

Small to midsize automobile component makers should not make desperate moves during a slowdown. Instead, they should focus on maintaining and improving quality, which works to their advantage in the subsequent growth phase, according to a leading auto component firm.

“Indigenious orders are down by about 50 percent. Orders started dipping around May, this year,” said Umesh Shastry, co-founder, Smith and Founders, a leading name in the automobile castings and forgings space. Export orders “are almost the same” owing to the fact that they manufacture components for the overseas replacement market, Shastry said.  

Shastry has been in the auto components manufacturing business for over three decades. “This is the fifth recession that we are facing. You have to tighten your belt, and keep an eye on quality, to remain in the market.

“During tough times, manufacturers tend to cut corners and compromise on quality, which will hurt them in the long run,” said Shastry. Maintaining quality can give a manufacturer the upper hand when negotiating prices, he said.

In their business, especially if a company is targeting the export markets, one has to constantly upgrade technologies to match international standards, Shastry said.

A recessionary period is similar to corrections in the stock market, said Shastry. Companies ramp up production to meet growing demand and then they are left with excess capacities when demand is lower, he said.

“Staying afloat is not easy, more so for the smaller units. Typically, payments from customers are delayed during a slowdown. This can get frustrating. But entrepreneurs have to be tolerant and wait for things to improve,” Shastry said.

Simth and Founders manufactures 2,000 tons of castings and forgings every year. They export components to Africa, which are then sold across Europe. Shastry and his two brothers founded the company. It operates manufacturing plants in Shimoga and Chikkaballapur, in Karnataka.