What will change/not change in the next ten years?

During the last twentyfive years, things have changed so much in the world technologically and otherwise that people find it difficult to predict what will happen in the next five or ten years! Change has happened in India and world over. It has changed many business processes. It has made life both easy and challengingThe methods of travelling may vary, but people would still want to meet face to face!  

What else will not change? Customers will keep on asking for more discount or lesser price. This aspect of the business is never going to change. People will expect better and better service from companies; BOTS may reduce human resources, but the quality of service ultimately has to be managed by humans.  

What is definitely not going to change is people and their behaviourPeople are good and evil, smart and dumb! People are generous, and they are greedy! But the fundamental nature of people will never change. The institutions like marriage may change; livein relationships may increase, but people are not going to stop giving birth to kidsThe legal status of progeny may be different, but this is like the cycles in the fashion industry.  Ten thousand years back, people lived in communes! Institution of marriage did not exist. The same may happen in the world. The % of such couples may increase in the world!  

What will happen to institutions like governments and nations? In place of globalisation, there could be policy reversal and countries will try and safeguard their interests. But will the United Nations change? No, it will not! The concept of the United Nations was started with Noble thoughts, but when it comes to self interests, especially of large and powerful nations, things will changeA classic example of such things is the sudden reversal by the US about their commitments to environmental change movement.  

Malala Yousafzai and Greta Thunberg is one change that is likely to happen. It is about young people coming forward to take charge of the future. The classic case of young people not taking part in the referendum is Brexit. Young people in Britain took this referendum casually, and many of them did not take part in it. The end result is there for us to see. Young people not taking part in matters that may affect their future is a common thing the world over. Malala Yousafzai and Greta Thunberg are the exceptions to the rule. I will be most happy if I am proven wrong. Greta Thunberg, all of 16 years of age, gave an emotional speech in the United Nations about the environment. She also led the Environmental march in Montreal, Canada. The movement was attended by fifty thousand people. So, there is a hope that people to whom this is going to matter will get more involved. 

Another thing that is not going to change is natural disasters. Natural disasters have been part of our life all the time. The population of the world has increased tremendouslyA classic example of natural disasters causing huge damages and deaths is the Tsunami in the year 2004. After an earthquake measuring nineplus near Indonesia, resulted in Tsunami, which hit India’s east coast. This coast is not prone to be hit by Tsunamis, but that is nature. More than one hundred thousand people were killed, and property worth the US $ 15 billions were damaged.  

Another natural disaster hit Mumbai on 26th July 2005. On that day, within twentyfour hours, it rained 944 mmthe previous record was 575 mm in twenty-four hrs in 1974 in Mumbai. In 2005 rain deluge, almost 1100 people died in Mumbai floods. There is a tendency to blame the builders, corporation, and people in general who are not bothered about environmental damage. The quantity of rain on 26th July would have caused floods in any city in the world. No cities in the world are designed to handle such deluge. 

A rain-related disaster happened in Pune recently; in four hours it rained 135 mmThe same standard blame game is on. Though part of it is correct, there is an important reason.  

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The image above (shared by my friend Prakash)  shows the old waterways in Pune. These were designed 250 years back. The waterways always have a specifically designed capacity to handle water flow. But the deluge for four hours on 25th September was too much for these waterways. All these years at least I have never heard of so much damage due to rains in Pune. I will share one example. One of the waterways passes behind the compound wall of a housing society. The waterway started overflowing, and water pressure forced the compound wall to come down like a pack of cards. There were more than 400 cars in society, mostly in the basement parking. The basement was filled with water, and all the cars were sunk. All these new buildings and societies have come up in the last 30 to 40 years. Waterways were there even during those 30 to 40 years. But fortunately, there was no deluge during that period.  These unprecedented rains were destiny and increased population added to the woes of people. The area was sparsely populated before all the houses came up to accommodate the increased population, not necessarily breaking the rules.  

The cheats and corrupts will always be there, that will never change. Their method would change, and there is a chance that the amounts involved would be massive. Frauds would be done mostly using technology and computers. One person was in charge of computer systems in a large bank. He came up with a brilliant idea. In one of the systems, the amount was always rounded off to close the transaction. The gentleman came up with a neat idea. He opened an account discreetly, for which only he had access. From each transaction, the rounded off amount would be transferred to this account. There were thousands of such transactions. At the end of a couple of years, he emptied this particular account. He had become a millionaire!  

Humans, their nature and greed, nature and its fury are some of the things that are never going to change. Society rules might change, but basic societies will never change; that is because humans are never going to change.  One thing that looks like changing is that younger people are taking responsibilities and will push the authorities for a better future.

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End of the road for Diesel cars!

Maruti Suzuki declared today that they would not manufacture cars with diesel engines starting from 1st April 2020! That is the day on which BS 6 norms for pollution will be implemented in India. This time the government is very stringent, and it is declared that from this date, only the cars BS 6 norms will be registered. Forget the selling; there will be no registration of cars other than BS 6! It is a great thing that the government means business, now!

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But is this the beginning of the tumultuous scenario in the automobile domain? Is it a mini tsunami? Has this statement started indicating the way things would happen in the auto industry? All these years life was much more straightforward; introduce a new model, play around a bit with the price and periodically change pollution norms when government forces you. The smooth ride was the norm! But a statement by Maruti says that the cost of development of BS 6 compliant diesel engine and the cost of making the BS 6 engine will be so high that in the small car segment, customers may not be able to afford them. Currently, the price difference between petrol and diesel model of a car is around Rs. One Lac. They feel that this difference could be Rs.2/ lacs for BS 6 cars ( ten lacs is a Million). On a vehicle costing Rs. 5 to 6 lacs, difference of two lacs will be too much, and customers may not be able to afford these cars. For cars/SUV’s costing Rs.10/ lacs and above, though the difference will be similar, % increase would not be high. How this sector will perform from next financial year needs to be watched. For SUV (both mini/standard) good news is Maruti Brezza will not be sold; hence manufacturers will rush to pick up the market share up for grabs. Maruti, however, has left the option open for 1.5 L diesel engine cars, used in Brezza.

Diesel engine cost issue due to BS 6, was expected. Volvo has already declared that they will stop making diesel cars when the norms change from Euro 6 to Euro 7, because of the cost of development and the price of the vehicle. Compared to trucks, the number of cars sold is much higher hence a smaller number of diesel cars will be better from the pollution angle.

Why did people use small cars with diesel engines? The lower price of diesel was the main reason. These cars cost approximately Rs. One lacs, plus plus, more than petrol cars. If the usage of vehicles was not enough, then owning such a car was not cost effective. On top of this, diesel engines have periodic mandatory maintenance cost which petrol cars don’t have. In many cases, it was not viable to own a diesel engine car.

With the imminent entry of Electric Vehicles in large numbers, the market is expected to be shaken further. In the late ’90s of the last century, Toyota came up with Prius, their first Hybrid car. (For those new to this subject, a hybrid car is one which runs on petrol and battery combination; each manufacturer has its own combination of the technology) It was expected that Hybrid would be the future and Toyota was expected to be the leaders. Yes, they are still the leaders in Hybrids. But a maverick called Elon Musk decided to plunge into EV’s. General Motors had manufactured around 500 EV’s at the beginning of this century, but then what happened? Petroleum lobby made sure that this initiative was killed. A few years later GM scrapped the vehicles.

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Combination of Tesla’s efforts, cheaper battery sets (hopefully!) at some stage, fast charging technology are pushing humans towards EV’s. Range per charge still remains the primary concern. Add to this reduction in the price of solar systems is making cheaper fuel for the EV, the Electricity. Now, what is adding to making it more difficult for petroleum products further, are the pollution norms for diesel cars?

What will be the future of diesel engines in the car segment? In India, the overall car segment is under pressure. In the last financial year, four lac more old cars were sold than the number of new cars that were sold. It looks like more small vehicles are being sold in II and III tier cities. Will Maruti’s prediction about diesel engine cars affect thinking by other car manufacturers? Will they also go away from diesel engine cars? Only time will tell.

The current financial year is going to be very tricky for car manufacturers. Let me explain what is involved, as the last date on which the BS IV car will be allowed to be registered. That date is 31/3/2020. To achieve this target, they will have to attempt and sell BS VI models from 1/1/2020. To meet this date, they will be required to push in BS VI vehicles from 1/10/2019. During this transition period, there will be tricky scenarios. BS IV cars will be produced less and less, but customers may want to buy them, as these will be cheaper than BS VI models. There is a possibility that in certain areas there will be customers and no cars; in other areas, there will be cars but no customers. All unsold BS IV cars will have to be sent back to manufacturers for conversion to BS VI at a considerable cost. Predicting requirement from 1/10/2019 to 31/3/2020 is going to be a nightmare for sales teams and along with them the dealers. The trend of lower sales is going to add to the difficulties further.

Will everything be hunky dory after 1/4/2020? That is again a very tough question. To achieve better fuel efficiencies and to go away from petroleum products, there will be efforts to introduce hybrid cars. But except Toyota, nobody has real expertise in this area. The predicted numbers for 2030 are 30 % EV’s, 30% Hybrids and balance IC engine cars, mostly petrol and CNG version. Does it mean that it is a death knell to diesel cars?

Another prediction by Maruti is that for small EV’s, where numbers are high in the typical small car segment, the volumes can be tricky as the price could be between 9 to 12 Lacs. This price is based on battery packs being manufacture in India. Larger cars will cost much more, but the high-price segment is less sensitive to the price tag. How the volumes will be achieved in EV’s, will be difficult to predict. I have not even discussed the charging station infrastructure issues! In India, most cars are parked on the roads for the night, so how and when will the charging be done?

At least in India, there is a significant turmoil about where the car market will go? Will Maruti continue to lead the pack? Will others follow Maruti and go away from small diesel engine cars? Only time will tell.

Lathe Joshi!

Lathe Joshi is a film about one Joshi, who is an expert lathe machine operator. As per the famous rule of this world, “Change is the only constant”, one day his world changes when the workshop owner decides to close his workshop as it is not profitable. Joshi loses his job. But he is not willing to change. He does not want to acquire new skills, nor does he want to retire and join a bhajani mandal to pass his time. He tries to buy the lathe from his old owner but it does not work out. His wife, and son change as per needs of the modern world; though they struggle initially, later they settle down with a reasonable success taking up modern work. They change with the time. Joshi who is known as Lathe Joshi remains Lathe Joshi and has a tough time in later life as he is out of tune with his family, who try to help Joshi. 

We see many Lathe Joshi’s in this world! Last 50 years of previous century changed our world drastically but the changes in the 18 years of this century are breath taking to even reasonably techno comfortable people. Many new things, modern things are making life easy and tough at the same time. Many gadgets that were standard in any office, have become extinct e.g. type writers, filing cabinets, typists, filing clerks. Now every person whether he or she likes it or not needs to reskill, retrain. If it is not done then it will not take time for these people to become Lathe Joshi.  

But is it necessary to change everything old? No way! Everything in the world does not become modern. Old values of love and empathy remain intact! We should all respect each other as human beings. In many areas, what changes is the method of doing things, processes being followed but basics don’t change.  

When anyone goes to take a loan from a bank, that company or the individual needs to provide various documents. These documents now can be submitted electronically, processed electronically and approved electronically. I am sure loan departments of banks are shrinking. We see the same thing while making payments and withdrawing cash. It is said that in next five years number of physical branches of banks will reduce drastically! More Lathe Joshi’s?  

Modern technology makes buying a totally new experience. Amazons and Flipkarts are changing the way we buy things; items bought still need to be shipped so shipping industry will not change. In fact, there will be more and more jobs available in this sector. The courier service, tracking of parcels will become more efficient. But in logistics basics don’t change! Whenever we have any issues with these companies, we chat with their representatives. These “representatives” are many a time BOTS, robots who can chat with you. There could be one human supervising 10 BOTS, same as self-check-out counters in the malls. As far as humans are concerned, obsolescence will happen! Retraining for people in this field is a must!  

Obsolescence looks to be the name of the game but it is difficult to predict what will happen in future. When experts find it difficult to predict, for common person it will be almost impossible to predict and judge about future. Look at the automobile industry. Since last decade, people have been talking of Electric Vehicle (EV). But it looks like finally everybody is jumping the bandwagon. In an IC Engine vehicle there are hundreds of parts in the drive train, which is in between radiator in the front and the exhaust system at the back. These hundreds of parts will be replaced by about 18 parts in the EV. Out of these 18 parts 10 will be electronic controllers! What will be the scenario in 2030/2040? This change is bound to happen once the inflection point is reached.  

An inflection point is an event that results in a significant change in the progress of a company, industry, sector, economy or geopolitical situation and can be considered a turning point after which a dramatic change, with either positive or negative results, is expected to result. Companies, industries, sectors and economies are dynamic and constantly evolving. Inflection points are more significant than the small day-to-day progress typically made, and the effects of the change are often well known and widespread.  

The automobile sector changes, will affect this world in both good and bad ways! Good way is that air pollution will reduce drastically due to lesser use of petroleum products. World will become free of OPEC hegemony. But the bad part will be that  hundreds of thousands of parts currently used in the industry will not be needed. These industries will become obsolete, even though they may want to change. The industries like casting, forging, heat treatment will shrink in size, drastically, world over. This obsolescence will be simply path breaking and breath taking. Top manpower, highly skilled, will become Lathe Joshi’s in very large numbers! Even though they may be willing to change, system will find it difficult to accommodate such large numbers.  

Friends there appear to be obsolescence of two kinds, one is like our friend Lathe Joshi. He simply refused to change and adapt. He did now want to go with the flow and change. Lathe machines were replaced by modern system performing many things simultaneously. But the changes I have mentioned due to EV, are mind boggling. I was chatting with a younger friend running a service industry and manufacturing machinery, for auto industry. His is a core automobile business. He is running the business very successfully. While we were discussing life in general in a party, I asked him a pertinent question about effect of EV’s on his business model. He said, “Pramod, I simply shudder to think about it. I am in business for 25 years, I have funds, I have technology and I have risk taking ability. Business  men running auto ancillaries today, will have to adopt from 2030 onward. There will be thousands of people with my background running businesses very successfully today. How can they re-skill themselves? How can they retrain themselves? It is going to be extremely tough. Luckily by that time, I should be around 70, so it will be left to my next generation to bother about these things.” He smiled and said, “I will make sure that I have retired by then”.  

If a smart person like my friend who employs 100 people, does not know what to do ten years hence, what will these 100 people know about their future?  I am definitely a positive guy but as of now, I am also flummoxed! Yes, there will be solutions, but people will have to make massive changes in their thinking. In whatever new industries come up, people will have to retrain massively to join them. When a lathe was replaced by machining centers, it affected a small group of people world over. But the advent of EV’s is going to create a tsunami and will create more Lathe Joshi’s in the initial period, as there will be millions and millions who will have to adopt! Retrain, re-skill from today? What skills will not be obsolete 20 years hence, I do not know!