"In addition to factories in the Netherlands and Eastern Europe, we need to set up a production site in Asia," realizes Ferry van de Pasch when he joins HTR, the Eindhoven-based maker of industrial rubber and foam products, as managing director in 2005.
Where in Asia that factory could best be located, he did not know then. "In those days, many manufacturing companies blindly got on a plane to China. That's where you had to be, but by now many companies have returned disappointed." Van de Pasch did not follow the crowd blindly, but went on an extensive research trip that took him a couple of years. He analyzed Singapore, Malaysia, South Korea, Vietnam, China and India, among others, and neatly listed the pros and cons.
India was the country where HTR needed to be, his thorough research showed. Van de Pasch: "India is a real rubber country: there are traditionally rubber plantations and a lot of knowledge about processing rubber. Indians speak English; the legal system is reasonably understandable because largely based on British law and India is a democracy." In addition, he is enthusiastic about the level of education in India. "That is really quite good. I also feel that Indians are more open to learning from Europeans than many other Asians."
India offers the most long-term prospects for HTR, Van de Pasch concludes, especially given its huge internal market. "Several Western customers also produce in India, so we can supply them right here." Remarkably, low labor costs were not the deciding factor in choosing India. "You can produce cheaply anywhere in Asia. In the end, it's about whether you can meet the quality requirements, but certainly also about the perception and interpretation of quality by your local partner."
Once India was chosen, the adventure was just beginning. Van de Pasch: "You can build a factory yourself, take over an existing Indian factory or enter into a joint venture. We soon realized that we needed someone familiar with the Indian market who understood our business from A to Z." After two years, he came across someone at a trade show who met all the requirements. "An Indian who had studied in the United States with work experience in the automotive industry in the U.S. and India. From India, moreover, he had worked a lot for European customers. He wanted to participate in a new company and also invest himself. Bingo."
The preparation of HTR took a total of six years. Van de Pasch is convinced that that time investment will pay off in the long run. "We are not expanding into India for a few years, but at least for ten years. This is a strategic move. Moreover, I now have relatively little to worry about. Our local director oversees the production site in Delhi and is responsible for our site in Pune. That is going like clockwork. HTR India is growing fast and already handles fifteen percent of our production. I expect that the Indian factories will eventually make a third of our products."
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