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Stakeholder Snapshot: Construction material, equipment, and furniture manufacturers and suppliers

Updated: Aug 24


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After agriculture, construction is India's second-largest economic sector. Construction investment accounts for approximately a quarter of India's Gross Domestic Product (GDP). During the period from 2013 to 2018, INR 2107 crores were invested in India's infrastructure.


Infrastructure development is a major driving force in a country's economy and growth. Following the Industrial Revolution, infrastructure development received a lot of attention in India. This sector offers in building up facilities such as roads, flyovers, etc., required for easing our daily lives. In India, infrastructure is majorly built by the Indian construction companies.


The building industry plays a significant role in the economic growth of the country. This sector is labour-intensive one. In 2012 alone, more than 49.5 million people were employed. This includes people hired for direct and indirect job roles.


At present, the Indian construction industry employs over 51 million people. Along with that, this industry contributes about 9 per cent to the country's GDP figures. By 2022, the Indian construction industry is expected to become the largest employer. The numbers are anticipated to rise to 76 million people, up from the current figures of 60 million. In turn, this would result in adding 16 million employment opportunities. The construction companies will have to rely more on next-generation workers in the future, regardless of where they do business.


Role played by Furniture and Construction Equipment players


Furniture manufacturing sector and Construction equipment industry play an important role in the AEC industry. These sectors help in offering nitty-gritty essentials while working on a construction project. Furniture manufacturing sector is responsible for:


· Producing furniture and related commodities such as mattresses, window blinds, cupboards, and fixtures.


· Manufacturing process involves cutting, bending, moulding, laminating, and assembling various materials.


· These materials usually comprise of wood, metal, glass, plastics, and wicker.


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In addition, the furniture manufacturing process is heavily influenced by design and fashion trends. And integrating design elements helps in providing aestheticism to the product. This, in turn, ensures a variety of options for customers to serve their ever-changing needs.


This sector of the industry is a key indicator of development. Why? Because it provides prospects for investment in a variety of connected sectors. The construction industry contributed an estimated 670,778 crores to the national GDP at factor cost in 2011–12, a contribution of 8.2 per cent.


The construction business is a fragmented one. In this sector, only a few major enterprises are known to be engaged in all the elements of construction. At the same time, medium-sized firms specialise in operations concerning specific areas while small and medium contractors work as subcontractors or aid in performing field labor. There were slightly over 500 construction equipment manufacturing enterprises in India in 2011.


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Demand for construction equipment is also influenced by macroeconomic factors. Here, indicators like interest rates, infrastructure investment, and liquidity act as determinants for a country's economic health. Alongside, there has been a spread of real estate development from India's major cities to tier-2 and tier-3 cities. Thereby, this phenomenon is expected to drive the demand for construction equipment.


Concrete equipment is the second-largest segment, accounting for over 14 per cent of the market. Asphalt finishers, transit mixers, concrete pumps, and batching facilities are all part of it. Material handling equipment accounts for 10 per cent of the market while material processing equipment accounts for 6 per cent. The largest category of material handling equipment is cranes.


Usually, these stakeholders offer products of two different types that are defined as follows:


Original Equipment Manufacturing (OEM) Product


· OEM refers to a product that has been customised for a customer.


· Customisations generally include its design, material, proportions, functioning, or even colours.

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· Some people assume that OEM only refers to things that were completely designed based on a buyer's specifications. In contrast, others believe that OEM includes even the most minor changes to an existing ODM product design. However, most buyers and suppliers would agree that an OEM product is one for which tooling (such as conventional manufacturing) must be produced before the manufacturing process can begin.


Original Design Manufacturing (ODM) product


· An ODM product is produced based on a manufacturer's pre-existing design.


· An ODM product can be the result of the supplier's own product development efforts.


· Otherwise, it can be a knockoff of an existing product.

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· ODM products are often known as ‘private label items.’ These products are usually affixed with the buyer's trademark.


· Furthermore, ODM goods are frequently customisable to some extent by the client.





Challenges faced by the stakeholders


Construction is also a challenging business to manage. There is a lack of openness with regard to material costs and its availability amongst stakeholders. Significant information asymmetries and coordination challenges exist between suppliers and contractors. This generates time and cost overruns. The client's design requirements vary, so do the design specifications. Due to low levels of digitisation, there is no proper method to track or manage material inventories.

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There are frequent challenges persisting in the manufacturing or logistics process. This results in limiting the supply of building materials. Material price inflation is another major issue. Any modest to medium infrastructure project will take at least a year or two to complete. The cost of raw materials fluctuates, so do the gasoline rates. Rents for construction equipment fall as a result. Construction equipment becomes inefficient as technology advances at a rapid pace. As a result, it is obsolete, and equipment is scarce.


In addition, logistical concerns result in damages to the finished building materials. On a regular basis, equipment failure produces a slew of problems and delays in the project. For example, if the taping machine ends up failing, then numerous carpenters would be required to manually tape the board's edges. A highly efficient machine would take about a minute in completing a kitchen shutter. However, if everything is performed manually, then the entire process would take about four carpenters and 15 minutes to just finish off one shutter.



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About the Writer

Anchal Srivastava is an architect, urban planner, writer, researcher and scholar. She is a certified GIS specialist from IIRS, ISRO, Dehradun. She is a graduate of the School of Planning and Architecture (SPA), Delhi and Dr. A.P.J. Abdul Kalam Technical University (APJAKTU), Uttar Pradesh. She has experience working at the Town and Country Planning Organisation Delhi, Jabalpur Smart City Limited, Suresh Goel & Associates (SGA), APS Green Architects & Associates, and as the head architect at SSAP and Shantiniketan Buildtech Pvt. Ltd.


About the Editor

Naveen Kumar is a public policy and regulatory governance professional. He is a graduate of the Tata Institute of Social Sciences (TISS), Hyderabad. He has experience working at the Gitika Trust, Tata Institute of Social Science (TISS) Hyderabad, Krishi Vigyan Kendra - MYRADA, AID India Eureka, Larsen & Toubro Infotech Ltd. (LTI) and Eco Foundation for Research and Training (EFFORT).


About the Illustrators


Anonymous


Meghna Singh is an architect, urban sketcher and design enthusiast. She is a graduate of the School of Planning and Architecture, Bhopal. She has won numerous national and international architecture design competitions, namely, NASA Mohammad Shaheer Landscape Trophy 2018, Heal+ Regenerative Housing for Kerala 2019, and the World Architecture Festival Student Charrette, Amsterdam 2019. She has experience working at Archohm Consultants Pvt. Ltd.


Ridhi Jain is a graduate of the Guru Nanak Dev University, Amritsar. She is an experimental spatial and graphic designer, brand identity manager, art director and architect. She has conceptualised various music videos, and theatre. She has worked as a Spatial and Experiential designer at TOD, Delhi handling design and on-site execution for various National and International Exhibitions, including IHGF 2019, Expo Mart, Greater Noida.

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