Automakers in Chennai have announced pay-cuts and some of them have even decided to halt production temporarily owing to continued weak demand for its products. The Hinduja Group flagship firm Ashok Leyland is the latest to join the bandwagon of automobile companies which had announced halting production.
On Monday, the heavy vehicle company announced that it has decided to halt production for 59 days at its various plants across India. In Tamil Nadu, the company has decided to halt the production for 16 days in Ennore and 5 days at Hosur.
Chennai, popularly referred to as the ‘Detroit of Asia’, accounts for close to 33% of auto parts production in the country. As the entire country is staring at a deep-rooted slowdown, in the last three months, automobile giants in the city like Ashok Leyland, Apollo Tyres, Daimler, TVS Groups, Nissan, Royal Enfield, etc have cut down on the number of working days and reduced the strength of contractual employees.
“The contractual employees are in a state of shock. If the production goes down, naturally the company will try to cut down on expenses that are not necessary. The contractual employees won’t be getting allowances like transportation, food and other benefits they received while working in an established automobile company. They are forced to switch over to smaller firms, where they will be getting only their wages and no additional benefits as the industry is in very bad shape,” says an executive working in the automobile sector at Oragadam, near Chennai.
Speaking to indianexpress.com, A Soundararajan, President of Centre of Indian Trade Union (Tamil Nadu Chapter), said the manufacturers are facing a litmus test. “The situation is very grim, companies like TVS, Ford, Nissan, etc, are forced to declare at least two non-working days a week because the already manufactured products are stagnant for a long time. Even service industries have reduced their work-force and some of them have shut-down their business,” he said.
Soundararajan added that purchasing power has dropped significantly for the past few months. “The layoffs are increasing day-by-day. People at executive levels have been forced to resign as a cost-cutting measure. In other places in Tamil Nadu like Tiruppur and Sivakasi, hundreds of enterprises in the garment and fire-cracker business have shut down. They are our potential customers, if they are affected, the auto industry too will be affected, it’s an interlinked system. If the automobile industry needs to revive, the government needs to reduce GST.”
In a press release earlier, the TVS Motor Company said the registered sales have dipped to 279,645 units in July 2019 as against 321,179 units in July 2018. Owing to the Industrial shutdown, Lucas TVS too has announced non-working days for its employees in certain divisions. “Due to the prevailing business slowdown across sectors, we are forced to declare non-working days for this month as well. We are continuously monitoring the sales; if the situation improves we will let the employees know. We request the employees to co-operate with us,” the statement read.
S Kannan, CITU President (Kanchipuram District) said many of the contractual employees are returning home as the industry is facing an unprecedented slowdown. “People working in manufacturing units in Oragadam, Sriperumbudur and Maraimalai Nagar near Chennai have been affected badly. The contractual employees are trained for a particular job and it’s very difficult for them to get accustomed to another Industry like construction, food maintenance, etc. The slowdown has curtailed the revenue growth of tyre and glass Industry as well. On a whole, as of today, 15,000 workers have lost their jobs in Kanchipuram district alone,” he said.
Kannan further added that the layoff indirectly other business sectors as well. “One direct job paves way for three indirect jobs; the layoff indirectly affects the other small business entities. The house-keeping departments, where a large number of women are employed have lost their jobs. Similarly, the tea and biscuit suppliers to the factories, share-autos, and other transport operations which depend on these labors are also affected. As the lull in the industry continues, people from other states have started to go back to their hometowns gradually. ” he said.