ZF’s Sachs building in Schweinfurt, Germany. (Photo: Gerd Fahrenhorst, CC BY 3.0, Wikimedia Commons)
ZF Friedrichshafen expects its purchases from suppliers in India to grow 10% to 15% a year over the next four years, a board member told Business Standard in an interview.
ZF, a German maker of auto parts and industrial technology based in Friedrichshafen, Germany, has 153,000 employees worldwide, according to the company. Andreas Moser, a member of its board of management, said its sourcing from India has grown 20% over the past three years. “Year by year, we will have a growth rate of 10–15 per cent when it comes to sourcing,” Moser said.
Moser said suppliers in India offer a cost advantage of 20% even after shipping costs. ZF buys steel, metal castings, fully machined components and complete units there for its operations in other countries.
Moser put ZF’s annual sourcing from India at $674 million at current exchange rates for its commercial vehicle business, $561 million to $674 million for passenger vehicles, and $168 million for industrial technology.
ZF also wants India to play a bigger role than a source of low-cost parts and engineering. Moser put ZF’s business in India at $1.35 billion, with 20,000 people, seventeen production locations and thousands of engineers. Teams in India should increasingly decide which technologies and products local customers need, with the global organization supporting development.
ZF is developing products specifically for customers in India instead of adapting European designs. Moser gave the example of a transfer case, a part that sends power between the front and rear wheels of certain four-wheel-drive vehicles. A version built to European requirements costs $3,370, he said, while the price point that works in India is $1,680. Cutting the cost of an existing design is not enough, Moser said, and ZF has to develop a new product from the technical requirement.
The numbers show a supplier base that a large European parts maker is counting on for its plants abroad as well as for customers in India.
