Enterprise and resilience

Print edition : October 11, 2002

Coimbatore is on the fast track again. Diversified industrial activity and an ever-alive entrepreneurial spirit, among other factors, are powering the region forward.

COIMBATORE never ceases to amaze. Its resilience and uncanny ability to find opportunity even in the most trying of circumstances have seen it emerge stronger from every economic low. In fact, it is this strength that has transformed the humble Kongu Nadu into a thriving industrial hub in less than a century. Coimbatore is today synonymous with industry and innovation; it offers unlimited opportunities to the entrepreneur and the worker.

At an automobile horn manufacturing unit, working with a range of state-of-the-art tools.-K.ANANTHAN

Coimbatore district accounts for goods and services worth Rs.15,000 crores and export earnings of over Rs.750 crores a year, and its growth is sustained by a variety of industries ranging from the traditional cotton textiles industry and foundries to the manufacture of electric motors, pumps, automotive parts and accessories, consumer goods and computer peripherals. About 60 per cent of the water pumps and 40 per cent of motors used in India are made in Coimbatore. If Tata Engineering sources 25 per cent of its auto component needs from Coimbatore, Maruti Udyog Limited gets nearly 40 per cent of its requirements from here.

With more than 2,000 registered factories employing over two lakh workers, Coimbatore district has 477 small units per lakh population compared to the State (Tamil Nadu) average of 229. In terms of the number of people employed in the organised sector too, the district is way ahead against the State average of over 4,000 persons per lakh of population, the figure for Coimbatore is 6,000 plus. Hence unemployment is relatively rare in Coimbatore; in fact, the region attracts labour from the neighbouring States of Kerala and Karnataka.

According to former South India Mills Association (SIMA) secretary P.R. Subramanian, the productivity of a Coimbatore worker is at least 15 per cent higher than the State average. According to South India Textile Research Association (SITRA) director Indra Doraiswamy, the high labour productivity helps Coimbatore mills save an additional Rs.7.50 a spindle every month compared to units elsewhere in the country. According to the managements of several industries, cordial labour-management relations prevail in most units.

The diversified and inter-linked pattern of industrialisation is spatially well spread and has resulted in a high level of urbanisation. For instance, the increase in the urban population since the beginning of 20th century to the early 1990s was over 1,900 per cent, four times higher than the rate of increase in the State as a whole. While the ratio of urban to total population is 53 for Coimbatore, it is only 34 for the State as a whole.

With industrialisation came infrastructure development. For instance, while the length of surfaced roads per sq km is 0.44 km in Coimbatore district, the figure is 0.38 km for the State. Over 92 per cent of the district's villages have water supply, compared to 84 per cent for the State.

Coimbatore district scores over the State average in terms of several economic parameters. The number of motor vehicles per lakh of population is double that of the State average. While literacy is higher by four percentage points in the case of men, it is 10 percentage points higher for women. The number of hospital beds per lakh of population is 83, against the State average of 78. The per capita bank advances in Coimbatore district is double that of the State average a primary reason for the rapid and widespread growth of small units.

With its industries, big and small, attracting people from all over, Coimbatore city has a cosmopolitan population of 3.5 million. As many as six languages, including English, Malayalam and Hindi, are widely spoken, though Tamil and Telugu are the main languages. With three universities and over 40 colleges and polytechnics, besides a number of research institutions, Coimbatore is an important seat of learning too.

THE story of Coimbatore's industrial growth is the stuff of legends. Gounders, essentially a farming community, were the early settlers here. With good irrigated land occupied by them, the Kammavar Naidus, who came to Kongu Nadu after they were driven out by invaders from what is now Andhra Pradesh, got only dry, rainfall-deficient land. By means of sheer hard work and enterprise, members of the Naidu community developed an effective, well-irrigated system to use the meagre water available, sowed cotton in the largely black-soil region and made the land pay. Little did they realise that they were also sowing the seeds of the region's industrialisation.

When the British came, they saw an opportunity. They sent cotton to feed the textile mills in England. With the demand for cotton increasing, the Coimbatore farmer took to cotton in a big way and prospered.

The first major step towards the industrialisation of the area was taken in 1888 by the British who, wanting to use the abundant supply of cotton, set up the Coimbatore Spinning and Weaving Mills. Members of the enterprising Naidu community followed suit and set up a number of spinning and weaving mills, the first of which was the Kalleswarar Mill, set up in 1907. The transformation of dry land farmer to industrialist was complete.

Coimbatore is an important centre of trade, in particular for fabrics.-K.ANANTHAN

Members of the Naidu community converted into opportunities the precarious situation arising out of the two World Wars and the Great Depression. For instance, during the First World War, when the demand for cotton from mills in Bombay (now Mumbai) rose owing to increased demand from the military and the fall in supplies from Europe, the Naidus of Coimbatore and nearby Tirupur stepped in to fill the gap.

After 1922, when the Bombay textile industry went into an extended decline, Coimbatore displayed its resilience by channelling its supplies to Madras (now Chennai) and by expanding local mills. The enterprising cotton farmers thus got drawn into the market, sold at the right time and place and rarely left the business to merchants. There was no looking back after this, and soon the region had many spinning and weaving mills of various sizes. This, in turn, gave the region's economy a high level of market orientation.

One advantage of Coimbatore is its location. Straddling the north-south and east-west trade routes and with connections to all major towns, it is an important centre of trade. The good road network was complemented by the arrival of the railway. By 1930, four lines of communication converged at Coimbatore, uniting finally at Palakkad, and radiating again to the north, the south, and the west. The well-developed transportation infrastructure intensified the market orientation of the agrarian economy. With farming becoming expensive, farmers turned to industries, initially agriculture-related, and developed them in an impressive manner. For instance, with oil engines and pumps extensively used in farming, a large number of units were set up to produce them. The commercialisation process was aided by the development of plantations in the nearby Aanamalai hills.

This period also witnessed a massive industrial growth. Almost all industries ginneries, cotton pressing factories, hosiery and spinning mills grew with links to the farm sector, particularly cotton. Engineering industries also had a headstart. In the early 1920s, the PSG group one of the pioneering business families of Coimbatore started a small workshop, first for repair and then to manufacture ploughs and other farm equipment, followed by the establishment of a foundry in 1924. The PSG group, which manufactured pump spares, was soon making complete sets. Thus, the demand for commercialised agriculture provided the basis for the emergence of the engineering industry in the region.

But the buoyant markets of the 1920 collapsed during the Great Depression of the 1930s. Cotton prices fell, there was a contraction in trade, and there was large-scale rural distress and migration to the urban areas. The credit pyramid collapsed. But, given the resilience of the people, the Coimbatore region bounced back. By the process of rationalisation, Tirupur diversified into upstream activities such as ginning and spinning, thereby sustaining the demand for cotton in the face of a contraction of exports.

This was followed by a textile boom in the 1930s (22 mills were set up in that decade) as the members of the Naidu and Gounder communities made full use of the tariff policies that encouraged new mills. The number of ginneries also increased, thanks to the availability of power from the Pykara hydel project and the idle funds available with the farmers.

However, the textile boom of the 1930s occurred in a haphazard manner. The mushrooming of mills, especially the small ones, led to over-production. The Second World War, which broke out in 1939, and the rising demand for textile helped the region tide over the situation. This resulted in another round of mill- building that lasted until the 1950s and was followed by the growth of related activities such as dyeing, bleaching, printing and the manufacture of elastic tapes, cardboard boxes, labels and so on. The medium and small manufacturing sectors grew. Significantly, they provided 50 per cent more job opportunities than the large sector. Uniquely, all of them grew and units of all sizes and of different technology levels co-existed, linked with, and feeding into, one another. There was a method to the expansion and diversification.

The structural deficiencies of the bloated textile industry brought about frequent crises. But Coimbatore diversified to other industrial and commercial activities such as manufacturing electric motors and pumps and setting up foundries, machine shops, repair shops, and so on. This, in turn, provided the basis for the development of light industries.

While Coimbatore seemed all set for a boom, several poor monsoons between 1971 and 1981 sent the pivotal textile industry into a decline.

At this time, the Tamil Nadu Agricultural University was set up under the Indian Council of Agricultural Research. Because of the over-exploitation of ground water through the use of pumps, the well irrigation system faced a crisis. This also affected the quality of irrigation, particularly in the cotton tracts, which were at the heart of Coimbatore's agriculture and provided the basis of its resilience.

The crisis, the general recessionary conditions in the economy, and competition from synthetic mills in other parts of the country hit hard Coimbatore's textile industry, which touched a low in the 1970s. However, this was offset by the boom in the hosiery industry, largely due to the export incentives offered to it. Although the 1970s saw many other sectors besides the hosiery industry looking outside the country for market and knowhow, most of them continued to rely on home-grown technology, especially that developed by the PSG, Lakshmi and Ramakrishna groups.

Most of today's entrepreneurs recall with pride their initial association with one of these groups, especially the PSG Trust, whose high-quality education facilities ensured the presence of a pool of talent.

In the 1990s, there was a slow-down of the industry, primarily because of the crash in the textiles sector. This happened owing to a combination of factors such as frequent failure of the cotton crop, faulty production estimates (leading to speculative trading), restrictive and frequently changing export policies and the fall in international demand primarily due to the South-East Asian financial crisis (the United States, Canada and the European Union being under the quota regime, the bulk of Indian yarn was exported to the South-East Asian countries) that led to the accumulation of huge quantities of yarn. While crises are not new to the textile sector, this time the crisis was a prolonged and severe one. This led to the closure or downsizing of activities in several industries directly linked to cotton textiles, including those that produced components and spares for the major textile equipment manufacturers. While several mills closed down, several others cut down on production. The activities of powerlooms, hosiery units and mills fell by over 40 per cent.

Local people blame government policies for the problems. Says the Lakshmi Group patriarch G.K. Sundaram: ``The crisis was neither financial nor raw-material based, it was government-induced.'' The major grouse is against the frequently changing export policy on cotton and yarn. For a region that has industrialised and developed largely on its own, there is a general feeling of distrust vis-a-vis the government. The local industrialists are happy that the ``government culture'' has not invaded the region.

The new economic policy and the globalisation programme would seem to have made little difference to Coimbatore's industries, which had gone global decades ago on their own. In fact, according to several industrialists, the recent efforts at globalisation have only hampered their otherwise impressive growth because several incentives, such as the cash compensatory scheme and the freight equalisation scheme, have been withdrawn.

There are now signs of a recovery from the general recessionary trend of the mid-1990s that extended over five years the longest in recent times. The industrial sector in Coimbatore has yet again displayed its grit and enterprise, emerging stronger in the process. While all along Coimbatore's industrial diversification had been linked to textiles, the recent trend has been to move away from this unpredictable sector. Moreover, those that survived and gained in spite of the prolonged recession, which just about took a U-turn early this year, were units that moved away from being textiles-dependent, diversified, attempted to establish forward and backward linkages, and sought world markets for technology and business.

For instance, while Roots Industries is expanding its product range (of automobile horns, its base product) and product line (to hygiene products), Sara Elgi is diversifying into environment-friendly products and backward (contract cotton farming) and forward (apparels) linkages and UMW Industries is updating its technology, Aquasub Engineering and Fisher Pumps are looking to foreign markets.

However, the prolonged recession has had its impact, and the situation was further compounded by the 1998 serial bomb blasts in Coimbatore. People from the neighbouring States, particularly Kerala, have kept away, leading to a fall in trading. This fear, says Indian Chamber of Commerce and Industry treasurer M. Krishnan who owns a landmark in Coimbatore, Krishna Sweets has to be wiped out from the people's minds if Coimbatore is to get back to its golden days. He has come out with a number of schemes, including ``Chezhumaiyana Kovai'' and ``Sangamam'', aimed at building communal harmony and making Coimbatore an even more consumer-friendly place.

Says a confident Krishnan: ``There are already good signs of the city bouncing back. It will not be long before Coimbatore emerges on top again.'' That Coimbatore will, given its record of resilience.

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