With more than 15 years of experience, GAMESA is one of the world leaders in design, manufacturing, installation and maintenance of wind turbines, with around 21,000MW of installed power in 30 countries in 4 continents and more than 13,600MW in maintenance, with an international workforce of more than 7,200 employees.
Recently, the company has announced investments of 60 million Euros until 2012 for the setting-up of new production centers.
In this case study we present GAMESA’s experience in India and draw the most interesting conclusions from its implementation. For this, we have interviewed Ricardo Chocarro, Chief Operation Officer of GAMESA.
In 2007 GAMESA identified India as one of its strategic markets. At that time, India represented the 5th largest wind power market in the world and they already foresaw that it would reach the 3rd position soon, as it is the case now-a-days.
Given the difficulty and cost involved in transporting wind turbines, it is necessary for them to set up production plants close to where their demand is located.
Mr. Chocarro tells us how they developed their entry strategy: ‘we traveled around India extensively in order to understand how things work there. We studied the possibility of entering the market through a Joint Venture with a local partner but the prevailing high failure rate discouraged us. We believe that a good local knowledge is more important than a local partner. And that knowledge can be provided by a good local team, so that’s where we focus our attention. While designing our entry strategy, INDOLINK helped us significantly by providing that knowledge of the country, thanks to their understanding on the Indian reality and business culture from an European perspective, necessary to understand our needs. That duality, along with their previous experience, made us choose them as our consultants in India. It’s important to have a balanced knowledge on both cultures in order to make as accurate decisions as possible.’
GAMESA was ambitious about their expectations since the very first moment. Their aim was to reach position among the 3 main wind turbine suppliers in India. At the same time, one of their initial concerns was about managing to understand the market and being able to respond to it suitably.
During the initial prospection visits, a strategic analysis was carried out, followed by a location study, where various cities were assessed according to a number of key factors such as access to supplies, availability of staff, legal security, proximity to the port…
From this analysis, Chennai, southwest of India, was positioned as the best choice for GAMESA’s needs. After checking several locations for the construction of a plant, and in order to accelerate the process, they finally decided to rent, with a long term contract, an already existing building in the outskirts of the city. In the beginning of 2009 conditioning works started in the plant. Meanwhile, the newly recruited team worked for some months in a business center in the city center, close to the airport.
In February 2010 their first production center in India was launched. The initial assembly capacity of the plant, which manufactures GAMESA G-58-850 kW wind turbines, was 200 MW per year.
‘The experience so far has been very positive, we have grown even faster than what we originally expected. Market acceptance has been excellent as we have gained a significant market share in a short time’, says Mr. Chocarro.
The production process too has moved faster than expected. Given the necessity of catering to the robust demand growth, they have increased the assembly capacity to 500 MW.
The figures give an idea of the evolution of the company in India. During the first year of operations (2010) they sold 196 MW, a figure that accounts for 8% of total company sales. Also, they multiplied almost by 5 the number of employees in the country, with more than 330 (direct employment).
In terms of sales forecast, taking as a reference the period 2009-2013, GAMESA expects cumulative growths of 166% in this market, expecting an approximate sales volume of 800 MW for 2013.
When asked about which the key factors for the success achieved are, Mr. Chocarro states that ‘the first and most important factor is to correctly select the local management team. Hitting the mark with the team is essential. It’s the basis on which the whole venture is founded. Secondly, GAMESA has understood the specifications of the Indian market and we have been able to respond accordingly, since India is a very particular market. Thirdly, our product, of course!, all above mentioned factors are not enough if one lacks a good product. And finally, I would highlight the agility in decision making. ‘
The experience of setting up in India has probably been the fastest among those undertaken by GAMESA so far. In other international markets such as China and USA, GAMESA entered in a time when the wind power sector was just starting. There were not experienced professionals so they had to ‘create’ that know-how. On the contrary, when they entered India the sector was more mature and they have been able to identify skilled and experienced professionals in the labor market, with the time savings it entails.
GAMESA launched its project with a low investment which has achieved a high return on investment. Now, once it is established in the market, the aim is to make a major future investments. GAMESA plans to open a blade plant in 2011, with an initial capacity of 300 MW, and will continue with the location of G9X-2,0 MW in 2012.
In the new plant, located in the state of Gujarat – northwest of India -, blades for G5X-0,850 kW will be initially manufactured, but some other higher power models might be incorporated, such as G9X-2,0 MW.
GAMESA also plans to install new production plants for the manufacturing of nacelles and towers (in joint venture with other Spanish companies) in different locations in the states of Gujarat and Tamil Nadu during the coming years.
Set in the strategy to consolidate their presence in the country, with industrial and technological base, GAMESA has also started its first technology center in Sholinganallur, in Chennai.
They plan to add a total of 100 engineers in this center in 2011 to develop R & D activities in India, an amount that could be duplicated in 2012. Gamesa technology center in India will work closely with the local supply chain and work with experts in energy, universities and institutions in the analysis and development of new materials and production processes.
At the time of finishing this article GAMESA has secured an order of 2,000 MW with Caparo Energy India, for the next five years.