For Saurer Embroidery, India is one of the most important markets today, with a lot of potential. In an exclusive interview with Reena Mital, Efthimios Katsidis, General Manager, Saurer Embroidery, along with Rajesh Kapoor, Head of Operations – Embroidery, India, give important insights into the Indian market, the strengths and pitfalls, and how a changed Saurer is much stronger today.
‘Saurer Embroidery will further strengthen its automation platform’
What’s new from Saurer Embroidery at ITMA 2019?
We showcased our proven technology – Epoca 7 – our flagship of embroidery machines. We showed the complete set-up with the full Head Line-System, including Sequins Head, Soutache Head, Laser Head, which opens up the possibility to produce very advanced designs in a very efficient way. The major innovation here that is not obvious to the viewer is the automation technology. We connected the machine to a production management system that collects & visualizes the data. A company owner or production manager, from anywhere in the world, can get accurate, real-time information on what’s going on on his machine – which product is running, how efficiently it is running, what the next production cycle is, and so on. All this will enable him to communicate effectively with his clients on order progress, etc. With the additional automation features, we help our customers to better service their clients. We have completed the first step, we have the platform, and we will continuously add more services.
What are the end applications of the LaserHead on Epoca 7?
It is used to make very beautiful fabrics for exclusive high-end fashion. Our first client for the LaserHead was a company ennobling denim, jeans-among others fabrics-by adding high-quality embroidery appliqués; one such garment, a trouser or skirt, would sell for Euro 5000. When he saw this innovative solution, he immediately ordered one. The client instantaneously realised the added value that this technology offers – it is not about squeezing out the last percentage of productivity, it’s about creativity, the huge variety of options and combinations. His own designers use expensive raw materials that are processed exclusively on Saurer machines. Most of our customers though use our standard machines.
As manufacturer offering jobwork for exporters, their requirements are different. Additionally we also offer versions of this machine e.g. for contract embroiderers, which are plentiful in India. This group of customers again has completely different requirements, as they tend to produce larger quantities.
‘Indian market must adapt to automation’
How is the Indian market for Saurer embroidery machines?
India is a very interesting market, where I find a large variety of clients. There are high-end companies like D’Decor-very well organised and running at an aspiration level that rivals that of some European businesses.
There are also businesses whose owners have invested in 1-2 embroidery machines, jobworking for other companies. A larger percentage of the market is in the mid and lower segment. So, the requirements of the Indian market are very demanding and varied. We are studying the market carefully, trying to understand precisely the needs of our clients, so that we can offer them the right solution. There is a lot of potential. Leading corporations are entering into home textiles; we therefore expect demand for our high-end machines to increase. Another segment focuses on fine embroideries, and these clients use machines equipped with Pentacut. We expect India eventually to enter this segment too.
So, it is a challenging market too?
Oh yes, it’s a very fragmented market. There are several companies producing the same product, for the same market, one company has full order books, while the other has idle machines. This is complicated to understand. I think one possible explanation is the respective production philosophy – some have a very efficient production set-up, while others are less quality oriented and do the best they can. Price wars are rampant.
In many companies, I found that they have more employees in their mending department than in the production department itself.
I cannot understand this because not only are labour costs rising in India, but it is difficult to find qualified people. I’ve tried to engage my clients in discussions about profitability calculations:
Is it really more profitable to run the machine at high speed to have as much output as possible and to manually deal with quality problems later, or is it more profitable to have sensors on the machine that stop production automatically when a problem arises, so that the quality can be optimised immediately?
I was very surprised to find that in India they switch off these sensors on most machines. So even with faulty production, or yarn breaks, the machine continues to run. This is because of the belief that only a running machine means profits, regardless of the quality of the end product.
Then the embroider takes the resulting fabric and fixes the defects by hand – the result is not optimal and the client does not pay full price for the mended product. As a result, the embroiderer spends money to produce, to repair the defect, and at the end does not get the full price. He incurs three times the cost. Our machines are equipped with sensors to avoid this, but often the function is not used although doing so would result in higher profits for the embroiderer. This phenomenon is very specific to the Indian market.
In this scenario, what is the market potential for Saurer embroidery machines?
As I said, India is a very important market for us, and we are developing products to cater to different levels of needs. We realise that not every company can become a D’Decor. We have very few such companies all over the world. These companies help develop technologies according to their needs, but we have to look at the broader market too.
We have certain opportunities here, which are also risks in a way. We could bring out the next generation machine with much higher speed. But that does not serve any purpose as the raw material will not allow for that speed. Or I could bring out wider machines, but my clients don’t want that because it is expensive, and the new machine might not fit into the existing building.
So what does the market need? There is a very big market for simple, robust machines that don’t need maintenance or any high level of technical understanding. So we will have offerings for this market, while continuing to work at the high end of the market.
We have one more scenario that is common in India, China, Indonesia, Turkey, and many other countries. Our clients face challenges in finding staff to work for them. We can bring out a next- generation machine that is so easy to use and so highly automated that one worker can operate four machines. This is our vision – and this is exactly what my customers want.
Herein lies the risk for low cost countries. Once such machines are on the market, I anticipate that a lot of European embroidery companies will restart production, because cost of investment there is much lower than in other countries. At the end, if there is no difference in labour cost, raw material cost, machine cost and energy cost: it is investment capability that will be the deciding factor. For instance, in Turkey interest rates are around 10%. In Switzerland they are less than 1% and you can get bank loans within 48 hours. In India and Turkey, the wait can be as long as 4-5 months.
So, I believe it is vital for Indian companies to begin adopting automation to stay competitive and maintain their global marketshare.
‘The importance of training cannot be overstated’
What is your strategy for the Indian market?
In Switzerland, we are used to being two steps ahead of the market, which is what I want my Indian clients to understand too. I am discussing this with my staff in India: how can we build up this knowledge in the country.
I saw a few companies in India with their fingers on the pulse of the market, and do things differently. We have begun training and coaching programmes for our clients.
What does the coaching involve?
There are a number of options available. We have the Saurer Academy – this is an online training portal that includes tutorials, videos, recorded presentations, etc.
The next level is more personal, where either we go to the client or the client sends his staff for specific training programmes to Saurer. We can share in-depth knowledge about embroidering and related topics, because one fourth of our staff were embroiderers, and they know this business very well.
We have launched a training centre in Delhi and are eager to welcome customers’ employees. Our approach to attracting students to the classroom is talking to our customers’ clients, the ultimate users of the end product. The aim of our training is to inform our customers about the market’s true needs and facilitate the transfer of know-how.
To complete the offering we have services like predictive maintenance, which is possible due to the high level of automation and digitization in our machines. A client in India can also call us for consultation about how to run a certain design on the machine, or to improve productivity, and we offer solutions directly from Switzerland.
In the future, we would like to provide coaching on financial aspects of the business – cost calculations, modern investment calculations, when is an investment profitable, when is production profitable, etc. Some of the financial models I have come across are quite simple, which means they may not always be very accurate. So, this will be an important part of our coaching service.
It’s a tough business environment at present – everyone has challenges – but those in our industry must understand that those who take advantage of the opportunities are growing and are able to stand out from the crowd. I believe now is the best time to get trained, because when the markets pick up, you will not have time for it. Every year, at the beginning of the year, I book one week of training for myself. This is because if I don’t do this in the beginning of the year, it will be the end of the year and I will have missed it. And I’ve never regretted this training. I always learn something new and meet interesting people from the industry.
‘Saurer’s strength is in its unity’
How big is the global embroidery market and what is Saurer’s share?
The global market for all embroidery machines is around US$ 1 billion. Out of this, almost 60% of the market is for embroidered labels and logos on finished garments and accessories such as shirts, blazers, T-shirts, caps, etc. These are done on single-head and multi-head embroidery machines, we are not in this segment.
We operate in the fast-growing high-tech segment, which is worth around US$ 60-100 million. At the moment, Saurer’s share is 60% and we want an even bigger slice of this market.
I am confident this will happen, as we leverage the strength of and the knowledge within the group. Now, it’s all Saurer, we are not operating as different divisions, but as a single, united entity. This gives us strength over the existing competition. We have a pool of 1000 engineers working at Saurer. To give an example, it would have cost us US$ 20-30 million to develop a production management platform on our own. However, another business unit had been working on such a system, called Senses, and within three months, we had it connected to our machines, and could display the integration at ITMA. That’s the way we have to do it? leverage off and profit from our size.
Are your embroidery machines manufactured in China?
At present we buy components from manufacturers on four continents, and do a pre-assembly in Switzerland. A pre-assembly for an average standard machine takes 80 hours. Then we ship to the client’s site, and our specialists do the final assembly, which takes around 400 hours. Our global presence allows us to serve customers quickly and effectively. For instance, if we see that a certain market is booming, we will use our nearest production site for pre-assembly, capitalising on obvious logistical advantages.
We have also begun delivering services from India to certain countries. Our Indian crew did installations in Egypt, Indonesia and Thailand. Of course, our Indian team serves the Bangladesh and Sri Lankan markets too. We believe in the global sharing of services, and will equip our team in India with more capabilities.
How was response during the ITMA show?
For us, this was the best ITMA to date. We also had the most impressive booth at the show, in my opinion. We had visitors from all important markets. We also welcomed a group of visitors, who were clients of our competitor ? they were visibly impressed by the Saurer booth. This is a success in itself – we’ve started discussions.
We are very positive about the Indian market – members of the younger generation are beginning to make their presence felt: they are very aware, flexible, adaptive and quick decision makers. They are ready to grab the opportunities and make a name for themselves.