Slowdown Effect: Auto sector workers' seek government intervention

The employees cited that till now job losses have mainly occurred on the part manufacturers' side, however, if the current market conditions prevail then downsizing might become a reality even in the OEMs.

New Delhi/Mumbai: Faced with the nightmarish prospect of job losses, auto sector employees have sought government's intervention through relief measures for the industry dented by truncating demand.

The employees cited that till now job losses have mainly occurred on the part manufacturers' side, however, if the current market conditions prevail then downsizing might become a reality even in the OEMs.

At present, the automobile industry has been impacted the hardest by a consumption slowdown which is a culmination of several factors like high GST rates, farm distress, stagnant wages and liquidity constraints.

Besides, inventory pile-up at the dealership level and stock management of unsold BS-IV vehicles have become a problem for the sector.

Accordingly, the industry's production levels have also receded as demand plunged, eventually leading to job losses.

Industry insiders at the auto cluster of Gurugram-Manesar, home to automobile majors such as Maruti Suzuki, Hero MotoCorp and Honda Motorcycle & Scooter India, say that around 50,000 to 1 lakh temporary employees across the entire value-chain, including those from ancillary industries, logistics and raw material suppliers, have been sent on unpaid leave or sacked.

However, no authentic data is currently available on the extent of job losses, as most of these have occurred on the auto part suppliers' side.

"The industry is struggling to survive. It requires oxygen in the form of relief measures like lower GST taxes and better road networks," Kuldeep Janghu, General Secretary of Maruti Udyog Kamgar Union, told IANS in Gurugram.

"The auto industry is completely run by the private sector and these companies will not be able to sustain or require the current levels of manpower, as production will fall on the back of declining demand."

According to Satish Kumar, an employee with a tier-I parts manufacturer to an automobile major, stable policies are required, as the ever-changing physical specification of parts due to newer norms has led some vendors to shut-shop.

"These changes based on newer norms have been taken from developed countries and require heavy investments even on the side of small parts manufacturers. Many vendors had to simply shut shop because they did not have access to that kind of resources," Kumar said.

"It seems that customers have also postponed purchases and are waiting for the change in technology from BS IV to BS VI."

In addition, the employees have asked the government to create an environment for easier access to finance that might prop-up sales.

"The collapse of NBFCs is a major factor for the sales downturn as these companies used to provide bulk of automobile financing," Rajesh Shukla, General Secretary of Hero MotoCorp Workers Union, told IANS.

"The government should look into the issue and create an environment where access to cheap finance is available."

Last week, automobile sector's representatives met Finance Minister Nirmala Sitharaman to apprise her of the grim situation.

Recently, all major OEMs consisting of passenger, commercial, two and three-wheeler manufacturers have reported a massive decline in domestic sales.

Figures from the Society of Indian Automobile Manufacturers (SIAM) showed that domestic passenger car sales in June went down by 24.07 per cent to 139,628 units. The July figures are awaited.

Consequently, sales slowdown led to curtailment of manufacturing with the domestic passenger cars' production coming down by 22.26 per cent to 169,594 units in June.