The Backbone of Manufacturing: Blue-Collar Workers

Manufacturing is an industry reliant on labor. Whether operating machinery, ensuring the effectiveness of assembly lines, quality in production, or timely delivery—blue-collar workers define the quality and quantity of manufacturing output.

Machines can be purchased, technology can be imported, but it’s the human resources who provide productivity in manufacturing. Disregarding their management, development, and welfare is like building a manufacturing facility without a foundation.

The Current Reality in India

In India, many manufacturing companies, particularly SMEs, view blue-collar workers as costs rather than valuable resources.

• Compensation is low and often not received on time.
• Training and skill-building are rare or nonexistent.
• Work is often unsafe and sometimes antiquated.
• Workers are given no recognition or dignity at work.

This strategy reduces productivity and leads to high turnover, low morale, and poor quality work, making Indian manufacturing non-competitive globally.

Insights from Global Manufacturing Companies

Countries like China, Japan, Korea, and Taiwan clearly demonstrate manufacturing excellence through their respect and management of blue-collar workers and employees in general.

• Japan’s Kaizen philosophy highlights continuous improvement and recognizes the importance of input from workers on the shop floor.
• China’s massive-scale training programs ensure that workers are skilled, disciplined, and efficient.
• Korea and Taiwan provide strong labor welfare provisions that motivate workers to remain loyal to their employers.

The end result? Increased productivity, improved quality, and rapid growth of scale of manufacture.

Why Respectable HR Management is Non-Negotiable

For India to compete globally, HR practices for blue-collar employees must go beyond payroll and compliance. They must include:

• Fair Wages and Payments in a Timely Manner â€?Employees must be paid wages commensurate with the industry that they are working in and on a timely basis in order to survive financially.
• Skill Development & Training â€?Ongoing training in areas of safety, technology, and efficiency results in a workforce that is able to be responsive to advanced manufacturing needs.
• Health & Safety â€?Reducing incidents and worker downtime in safe work environments builds trust in the employees.
• Recognition & Respect â€?Operating within a culture that acknowledges the contributions of all team members will build motivation and commitment.
• Career Growth Opportunities â€?Employers, by offering pathways for team members to advance in roles and responsibilities will positively build employee retention into the future.

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Many manufacturing businesses in India, especially SMEs, do not have an issue with a lack of supply but rather with the quality of their management. If manufacturers want to scale their business and create a profitable and sustainable business, then they need to establish a structure around the principles of business management.

Top 10 Business Management Principles 

1. Clarity of Vision and Goals: A manufacturing business must have a clearly articulated vision and it must set measurable goals. Whether that goal is to increase capacity, produce with zero defects, or enter new markets, every employee must understand why they are working and what they are working for. When this is unclear, daily decisions become aimless.

2. Strong Financial Discipline: Cash flow is the heartbeat of manufacturing. Many manufacturers in India incur losses not due to lack of demand but due to lack of financial management, for example, late payments, extended credit cycles, or lack of budgets.

• Exercise firm control over receivables and payables.
• Review cost sheets, margins, and working capital regularly.
• Employ accounting software for accurate, real-time information.

3. Prioritize Quality and Process Discipline: In India, many SMEs often take a hit on quality in order to save on costs. This can result in more rejections, a bad reputation and a lack of trust for their customer base. Establishing standardized processes via Good Manufacturing Practices (GMPs) and utilization of quality checkpoints will always guarantee consistency and long-term profit.

4. Effectively Manage Supply Chain & Inventory: Raw material delays or incorrect stock levels can completely halt production. Therefore, manufacturers should consider:

• Just-in-time (JIT) principles (where applicable).
• Engaging with vendors that guarantee supply.
• Leveraging technology to track inventory.

An effective supply chain leads to increased levels of productivity and customer satisfaction. 

5. Investments in Technology & Automation: Indian manufacturers may feel uneasy when contemplating investments in technology, as they are often cost-sensitive. Even small investments in automation, ERP, or IoT monitoring can lead to large reductions in waste, downtime and human error; thus allowing for more competitiveness on a global scale. 

6. Importance of Skilled Manpower and Training: Although machines, technology, and processes are very important, skilled, critical thinkers are equally important to enhance the productivity and efficiency of the organization. Regular training on safety, new technologies and process improvement will create a more efficient, loyal, and innovative workforce. 

7. Sales and Marketing Orientation: This is the area in which many Indian manufacturers have difficulty operating. When sales and marketing de-prioritize production, they rely too heavily on in-person networks or distributors for sales. Make sure you have an intentional sales team ready to market the business without a current inventory of products. 

8. Customer Orientation: Repeat orders are the foundation of any manufacturing unit. Sustainable growth is created by building relationships through after-service, timely delivery, and customizing specific solutions. Customer feedback collected daily and dealing with their pain points should be part of the management culture.

9. Compliance and Risk Management: Ignoring labor laws, safety regulations, or environmental laws can immediately shut down a business. Indian manufacturers need to stay current with statutory compliances, insurance, and safety. Risk management also requires managing your client list so you’re not relying on a few clients for work.

10. Continuous Improvement & Innovation: Markets are changing and holding onto the past is just as bad as neglecting to evolve. Indian manufacturers should consider Kaizen (continuous improvement) and encourage investment in R&D. A small change to process or design can create tremendous competitive advantage and substantial profitability.

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Getting to the Bottom

Price competition has increasingly become the default state of many Indian manufacturers. Instead of competing with respect to quality, technology or customer service, competitors are forced to cut their margins so as to maintain any relevance, at times disregarding any growth whatsoever. This trend leads to a race to the bottom, where survival of a business is favored over growth.

For example, in the steel, textiles and consumer products industries, firms have resorted to continual price cutting in order to capture bulk orders, especially from exporters/distributors. Ultimately, although price competition can temporarily increase sales, firms are weakened with less ability to reinvest in technology, product development, and training new talent. Over time, this weakens the entire ecosystem and the ability for that ecosystem to compete globally.

Erosion of Profitability

The most immediate effect of ongoing price wars is reducing profit margins. Manufacturers are already feeling squeezed by increasing raw material costs, energy prices, and regulatory compliance. When businesses drop their prices for products rather than differentiating the product offering, they effectively enter the decreasing market value, which means damaging their own survival fund. This use of their survival fund doesn’t leave much margin for new product innovation or scaling product or processes.

Moreover, global buyers usually sense this vulnerability and begin to demand even lower prices, trusting that Indian suppliers will fight each other. Indian manufacturers are competing against each other so much that they frequently end up making far less money than overseas manufacturers producing similar products.

Declining Quality and Innovation

Once the margins reduce, companies start to cut back on other aspects of the business. Often quality is the first aspect to take a bite. To remain competitive with costs, manufacturers can use a lower raw material standard, cut corners in production processes, or exclude quality checks altogether. This doesn’t negatively affect only individual brand reputations but entire industries, as customers start seeing “Made in Indiaâ€?as cheap instead of world-class.

Investment in innovation or research and development also suffers. In a truly competitive market all businesses innovate and draw attention to a unique offering. However, when competition in the market exists because of price, the need for survival overwhelms any planned investment in innovation, new spending on product development, investment in technology, or efficiency.

The post The Price War Among Indian Manufacturers: A Self-Destructive Battle appeared first on Manufacturing Industry.

Surveys say that 42% of producers have either planned to invest in their factory to enhance their capacity or extend it for the next six months—the same level of optimism as reported in the previous quarter. This stable investment optimism is sustained by government initiatives such as the production-linked incentive schemes, infrastructure development, and policy reforms to enable ease of doing business.

Sectoral Trends and Order Books

Confidence in manufacturing continues to strengthen due to increasing orders. Consequently, 83% of manufacturers are hoping for rising orders in Q3 FY 2025. The survey covered eight major industries: Automotive & Auto Components, Capital Goods, Chemicals, Pharmaceuticals, and Electronics. Machine Tools, Metals, and Textiles. Automotive is expected to demonstrate buoyant to moderate growth due to an emerging robust EV presence and increasing focus on sustainability. However, machine tools and metals would continue to expand at a slow pace owing to supply chain bottlenecks and cost pressures.

Issues and Challenges

On the upside, the sector still faces several challenges:

• Rising Raw Material Costs: Increasing prices for iron, steel, rubber, and chemicals are contributing to increased production costs.
• High Interest Rates: Increased interest rates are troubling the financial situations of relatively many producers due to the associated high funds that need to be borrowed.
• Bottlenecks of regulation: Lengthy approvals and compliance add to the operational burden.
• Labor shortages: The potential for employment has not changed, but the lack of skilled workers has not ceased.
• High land and infrastructure costs: Not only may land pricing be a bottleneck to large-scale expansion, but there’s also fierce competition with overseas locations.

Exports and Employment Outlook

Going forward, over 70% of respondents expect greater exports in Q3 FY 2025 as compared to the previous year, post a 65% increase in exports in Q2 FY 2025. Thirty-five percent of manufacturers are keen on employing new labor in the next three months, sending some positive signals toward specific industries in creating jobs. However, the industry does face a challenge as regards skilled labor. Eighty percent of manufacturers report that skilled personnel or trained people are available; however, the remaining twenty percent mention there is an urgency for skills use—particularly coming from new fronts, such as electronics, AI-driven manufacturing, and advanced automation.

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