Too many workers, too few jobs as automobile sector slowdown hits ancillaries hub in Jharkhandhttps://indianexpress.com/article/business/economy/automobile-industry-slowdown-jharkhand-ancillaries-hub-tata-motors-5913722/

Too many workers, too few jobs as automobile sector slowdown hits ancillaries hub in Jharkhand

Jamshedpur is home to Tata Steel and Tata Motors, which contribute significantly to the economic activity in the region.

automobile industry, job loss in automobile industry, automobile industry jobs, jobs in automobile industry, automobile industry down, india news, Indian Express
Demand in the automobile industry has been slumping over the last few months. (Representational Image)

About 9 o’clock on weekday mornings, some 200 daily wage labourers can be seen at Jamshedpur’s Imli Chowk, waiting for a contractor to hire them for a day’s work.

There are evidently too many of them — and not enough work. Only three months ago, things were different — Imli Chowk wouldn’t be this crowded.

Labourers from places such as Saraikela and Rajnagar, around 30 km from Jamshedpur, who were employed in auto-ancillary units in the steel city, have joined the crowd of daily wagers. With demand slumping in the automobile industry over the last few months, these ancillary units need less labour now.

Explained

Job losses across auto value chain

Major automobile manufacturers have announced declines of up to 50 per cent in their domestic sales in July, with market leader Maruti Suzuki reporting a 36.2 per cent drop in sales. Hit by the liquidity crunch for non-banking financial companies and a dip in consumer sentiment, July became the twelfth out of the last 13 months in which the auto sector has seen a decline in domestic sales. Manufacturers are now going for cuts in production, and the industry is staring at a deep-rooted slowdown and job losses.

Jamshedpur is home to Tata Steel and Tata Motors, which contribute significantly to the economic activity in the region.

Advertising

The plants offer opportunities to labourers from rural areas in industrial and construction jobs. Agriculture is often not a sustainable option in largely rain-fed Jharkhand — and even the Rs 171 per day under MNREGA is not reliable, given late payment cycles and implementation issues in the scheme.

Raju Kumar travelled from Aurangabad, Bihar, to Jamshedpur in search of a better livelihood and worked in a forging unit for the last two years, earning Rs 450 on a 12-hour shift. “Today I will be happy if I get even Rs 250 per day,” he said.

Bablu Pradhan from Rajnagar, who was among the dozens waiting for work on the day The Sunday Express met him this week, said he was no longer required in an auto ancillary unit where he had a job until recently.

That same day, Badal Marandi hung around until 1 pm, but could get no work. Janki Devi, who had travelled 73 km from Barambo with a tiffin box in hand, said she was in despair.

Ashok Bhalotia, president of the Singhbhum Chamber of Commerce and Industry (SCCI), one of the oldest industry associations which represents about 600 MSMEs, said: “As per our analysis, at least 10,000 people have been rendered jobless across small units, mostly auto ancillaries, in Jamshedpur. If Tata Steel and Tata Motors are impacted, the labour market goes for a toss.”

SCCI estimates the MSME segment has suffered losses of about Rs 1,000 crore in the last five months. Bhalotia, who also owns a company that builds automobile bodies on chassis, said he had lost “crores of rupees” in the last four-five months. “I have retained skilled workers, but had to ask 200 labourers to go,” he said.

Tata Motors in Jamshedpur manufactures heavy vehicles, and employs about 10,000 workers, about half of them on contract. According to sources in the industry, the company has sharply cut monthly production to about 2,500-3,000 units from the earlier 10,000-12,000 units.

Tata Motors declined to comment on numbers. A spokesperson said: “As indicated earlier, external environment remains challenging, leading to demand contraction. We have aligned our production to actual demand and adjusted the number of shifts and contractual manpower.”

Tata Motors Workers’ Union president Gurmeet Singh said: “Jamshedpur and Lucknow together are producing 4,000 units per month compared with 10,000-12,000 a few months ago… The government needs to intervene and start more work in the mines so that the demand for the vehicles increases.”

The sources said Tata Motors has gone for block closures of 10-14 days since July. “For those on contract, no work means no pay. Permanent workers receive half their salary during block closures. The auto ancillary industry in the area which supplies components to Tata Motors has been the worst hit,” said Prakash Kumar, a former Tata Motors’ union general secretary.

Outside the premises of TMF, a company that manufactures axle spindles, a notice in Hindi informs staff that “due to lack of requirement from the customer, the company will remain shut from August 7 to August 18”. Another note says the company is trying to pay salaries, but advises the workers to call the management to check before coming.

TMF owner Rupesh Katriar, who is also the president of Laghu Udhyog Bharati, Jamshedpur and Adityapur, said: “The auto ancillary market is like an outsourcing business; there is no creativity. We get designs and we have no option but to supply the products in a fixed range of rates. Where are the other large industries to support us?”

Inder Aggarwal, president of the Adityapur Small Industrial Association, said: “There are around 800 auto ancillary units in Jamshedpur that are heavily dependent on Tata Motors and Tata Steel. We used to run three shifts, but now we work just one shift. Our business is down by two-third. Tata Steel supplies inputs for many ancillary companies. Due to the slump, even the demand for steel has dropped.”

Aggarwal also has an iron casting unit. Ancillary units manufacture components of brakes, suspensions, axles, electrical parts, body and chassis, and various other components, and supply to Original Equipment Manufacturers such as Tata Motors.

Sameer Singh, owner of Singhel Engineering, which supplies sheet metal press to Tata Motors, said business has shrunk by 70 per cent. “At the same time, our fixed costs remain the same — interest, electricity charges, increased security in the plant for asset protection, overheads like payment to skilled labourers despite lack of work, land rent, etc. Any midsized company has to spend at least Rs 2.5-3 lakh a month, when there is absolutely no work. Where will this money come from?”

Singh, who is also the general secretary (Jamshedpur and Adityapur) of the RSS-affiliated Laghu Udyog Bharati, an all-India organisation of Micro and Small Industries, said Tata Motors has sent drawings of BS-VI complaint auto components for which investment has already been made.

“The company is planning to roll out BS-VI emission norms compliant vehicles in October-November for which we will give components. If we don’t invest, we will be out of business. Again, where will the money come for paying the interest? We haven’t yet recovered the investments made earlier for BS-IV technology,” he said.

Advertising

Gobind Das, who stays in Adityapur and works in an ancillary plant, has a job card that mentions his shift timings as “8 am to 4 pm”. But there are only four such entries. “August 13 is my fifth, I don’t know when the sixth day of work will come for me this month,” he said.