July was a difficult month for 28-year-old Rohit Rana. Since 2012, Rana had been employed in a diesel machine shop at Maruti Suzuki’s Gurugram plant in Haryana. As the eldest of three siblings, it became Rana’s responsibility to take care of his father, a retired Delhi Transport Corporation employee, and his ailing mother. He had got his younger sister and brother married off last year. His parents were looking for a bride for him. But their plans went askew when Rana, a contractual employee, suddenly lost his job in July.
Rana recalls how the contractor broke the news to him and about 40 others on July 13. “We were asked to go on leave for three months,” he says. The contractor said that production had dipped due to the slowdown in the economy, and their leave period could be extended. “This came as a shock to us. Many of my co-workers have families to take care of. They live in rented houses. We lost our jobs without any prior intimation. Some of us had worked at the plant for over a decade,” says Rana.
“I cannot go back to my parents and ask them to pay for my expenses,” says Rana. “I tried to look for a job at Maruti’s vendor companies in and around Gurugram, but I had no luck. Everyone spoke of the slowdown and said they were not hiring. In fact, there have been layoffs at vendor companies too, to cut costs.” Rana has now joined a BPO in Udyog Vihar. He gets about one-third of the salary he was earning at Maruti Suzuki, which is barely enough to pay for his room rent at Mullahera village in Haryana and meet his daily expenses. He is desperately hoping for a turnaround.
![COIMBATORE, TAMIL NADU 19/08/2019.(for Ground Zero) A worker inspecting automobile components at Indo Shell Cast's foundry in Coimbatore on Monday August 19, 2019.
Photo: M. Periasamy/ The Hindu. COIMBATORE, TAMIL NADU 19/08/2019.(for Ground Zero) A worker inspecting automobile components at Indo Shell Cast's foundry in Coimbatore on Monday August 19, 2019.
Photo: M. Periasamy/ The Hindu.](/theme/images/th-online/1x1_spacer.png)
COIMBATORE, TAMIL NADU 19/08/2019.(for Ground Zero) A worker inspecting automobile components at Indo Shell Cast's foundry in Coimbatore on Monday August 19, 2019. Photo: M. Periasamy/ The Hindu.
Indefinite leave
Across India, the automobile industry, employing about 3.7 crore people directly and indirectly, has been caught in a downward spiral. This began in the last quarter of 2018-19 and has only been intensifying since. The slowdown, triggered by low consumer sentiment, non-availability of liquidity, and other factors, has led to job losses and low production. Even as the government scrambles to come up with solutions, workers who have been laid off are uncertain and anxious about their future.
Bikram Singh, 26, has returned to his village in Punjab after being told in August by Maruti Suzuki to go on indefinite leave. He is yet to break the news to his parents. He has started searching for a new job, but he has little hope of earning anything close to what he had been earning at Maruti Suzuki. “I had worked for almost seven years to get a salary of ₹15,000 per month. Even if I find a job, I will have to make a new beginning. I have a family to support, so I have to take whatever comes my way,” he says.
Speaking on condition of anonymity, a senior official at Maruti Suzuki’s Gurugram plant says the production of cars has reduced to almost half since July — from 60,000 to 30,000 vehicles per month. With demand only shrinking, the third assembly line of the plant has been shut, while the first assembly line is running on a single shift, he says. Typically, a plant has three assembly lines and two shifts. The official says that 700-odd contractual workers, who had been on the rolls of the company for a decade or so, were asked to go on leave.
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The Union General Secretary of Maruti Udyog Kamgar, Kuldeep Janghu, says the union had suggested to the management that it should stop hiring temporary workers instead of sending contractual staff, who have been employed for a long time, on leave. Temporary workers are typically hired for 6-7 months.
Production at the Gurugram plant dipped by 30-35% in July compared to 25% in June. August was even worse, says a production department official.
“It seems like we are heading towards a situation similar to what we saw in 2000. At that time, production had reduced to almost half, and the company was forced to introduce a voluntary retirement scheme to cut expenditure,” says Janghu.
Cause of slowdown
Parmeet Singh Sood, Managing Director of Climax Overseas Private Limited, concedes that the automotive industry, which has about 50% share in manufacturing GDP, has been down for over six months due to reduction in demand. Climax Overseas is a tier-two supplier to several original equipment manufacturers including Maruti, Honda, Hero, Toyota and Tata. A manufacturer and supplier of all types of automotive components including track control arms, tie rod ends, ball joints and stabiliser links, Sood says the demand for these components has gone down by 25-30%, which he calls “humongous”. His company has managed to stay afloat because it has a sizeable share in the export market, which has grown over the past one year.
But though his company is not required to send workers home, Sood has been running it on a tight leash. Cuts have been made in expenditure and no one is getting salary hikes. Sood says his peer groups discuss how they have been forced to “cut jobs by 10-15%”. There is no new demand, he says.
Sood says that while the overall sentiment in the market was positive when the BJP-led government came to power in 2014, and the ‘Make in India’ slogan infused confidence in manufacturing, demonetisation dealt a severe blow to the economy. “Since we have traditionally been a cash economy, scrapping high-value currency reduced cash-in-hand. This adversely impacted expenditure. Though cash has returned to the economy to some extent, it is still concentrated in a few hands. This has kept demand low. The jobs lost during demonetisation could not be fully restored. Sectors such as real estate, which employ a large number of people, are still in a shambles. Soon, other sectors like retail and hospitality also started seeing a reduction in demand due to the cash crunch and job losses. The entire economy was impacted,” he says. Sood says the demand for small cars and two-wheelers was hit the most as there was low demand in the predominantly cash-driven rural economy.
Maruti Suzuki Chairman R.C. Bhargava rubbishes this view. He holds that demonetisation and the Goods and Services Tax are not responsible for the slump in the automotive sector. “There is no link at all,” he emphasises. Bhargava argues that the cost of buying a car went up sharply due to other factors. “Imposition of safety regulations, increase in road tax, high interest rates, and low availability of finance all came together unfortunately,” he says.
Bhargava says not a single permanent worker has been sent home despite the slowdown. He admits that the contracts of 3,000 workers that had expired have not been renewed. When asked about workers being sent on leave, he says he does not deal with “day-to-day affairs”. Bhargava refuses to comment on the fall in production.
Though there are no official figures available on the number of jobs lost on account of the slowdown in the Gurugram-Manesar-Bawal automotive belt, a member of the central committee of the Inqlabi Mazdoor Kendra, and labour rights activist, Shyambir Shukla, claims that at least 50,000 workers may have lost their jobs in more than 12 months. This is about 10% of the 5 lakh employed in the 3,000-odd automotive units, which are mostly the ancillary units, of the three auto giants in the region — Maruti Suzuki India Limited, Hero MotoCorp, and Honda Motor Company.
“Over the past year and more, 16 automotive units have shut shop rendering at least 20,000 workers jobless. With the three original equipment manufacturers registering a fall in production to even 30%, their ancillary units have also felt the heat and lost business. When the Maruti Suzuki management accepts that it has not renewed the contract of 3,000 temporary workers, the loss of jobs across the ancillary units in the area is anyone’s guess,” says Shukla.
Contractual workers hit
The vice president of the Bellsonica Auto Component India Employees Union, Ajit Singh, says the production of the company, which is a tier-1 supplier to Maruti Suzuki, has declined to almost 30% over the last 10 months and 400 contractual workers have been sent home. “We have filed a case in the labour department against the retrenchment of the workers. The situation has worsened. Maruti’s announcement to shut down production for two days (September 7-9) is not a good sign either,” he says.
Only a little over a hundred automotive units in the region have workers’ unions. Layoffs in other factories have mostly gone unnoticed as companies are sending workers home in batches of 10-20. Most of the retrenched workers who earned ₹10,000-15,000 a month prefer to look for odd jobs instead of knocking at the doors of the labour courts or the labour department to fight a legal battle.
According to the Gurugram District Industries Centre, there are 1,950 automotive units in the district employing 62,300 permanent employees. Almost 80% of the workers employed in the automotive sector in the region are contractual or temporary workers.
The Haryana president of the Centre of Indian Trade Unions, Satbir Singh, says workers’ unions had compiled a charter of demands to their respective companies but these demands have not been addressed in a long time because of the slowdown. The layoffs and unmet demands have now led to protests in the region.
Impact on the local economy
To make matters worse, the job loss in the automotive sector has also hit the local economy of the villages in Gurugram and the Industrial Model Township (IMT) in Manesar, which depend mostly on the income from these workers. With the agricultural land of villages such as Kasan, Khoh, Naurangpur, Dhorka, Naharpur Kasan and Manesar having been acquired for the IMT or bought over by private builders, a vast majority of the villagers are now dependent on the migrant workers employed in the industrial units in the region.
“The migrant workers from Bihar, Jharkhand and Uttar Pradesh are returning to their native places. This has hit the incomes of the local villagers as well. Even saloons, grocery shop owners, vegetable vendors and sweet shops in the area have registered a fall in the sales,” says Rakesh from Khoh village. Taxi owners have also lost business. “Earlier I got a business of ₹1-2 lakh per month from the ancillary units in Manesar. But that reduced to half in July and went down further in August. The automotive units have reduced the hiring of taxis for the visiting staff to cut costs. We were earlier hit by Ola and Uber. Now we have received yet another blow,” says Anil Handa, who runs a taxi service in Gurugram.
Trouble down south
The original equipment manufacturers in the Gurugram-Manesar-Bawal belt account for around 50% of the cars and 35% of the two-wheelers manufactured in India. Besides this belt, the automotive industry has two other main centres: Chennai in Tamil Nadu, where Ford Motor and Hyundai Motor plants are located, and Pune in Maharashtra, where Tata Motors and Fiat have plants.
In the manufacturing hub of Coimbatore in Tamil Nadu, the slump in automobile sales has hit foundries, workers, and engineering processing industries, among others, which all cater to the automobile sector. The worst affected are the units that supply parts for heavy vehicles.
At Pricol, a tier-one supplier to two-wheeler commercial vehicles and tractor manufacturers, Managing Director Vikram Mohan says the company is dealing with the blow by putting a freeze on hiring workers, cutting down on employee travels, using video conferences for meetings, and organising townhall meetings for workers. He says they now have block closures for three or four days a month in some production facilities. “We are also consolidating our vendor base. In the next 12 months, the plan is to jettison at least 35% of the vendors so that the good ones can be strengthened. We would not have looked at these measures if the industry was doing well,” he says. Pricol is an electronics-oriented company and imports all its electronic requirements. “Compared to our planned sales, we are down 10%-15% every month,” he says.
About 40 workers, majority of them women, are busy inspecting the machined parts at Indoshell Cast, a foundry, in Coimbatore. The buzz of air grinders and clank of metals at the inspection room is in sharp contrast to the silence in the adjacent despatch hall. Machined castings, packed in sacks, are stocked here, waiting to be picked up. “We usually despatch the finished goods in 24 hours. But now buyers who placed orders are not taking the parts,” says an employee.
Nearly 60% of the machined castings at Indoshell are for the automobile sector. Managing Director J. Ganesh Kumar says production is down almost 40%. Since the auto sector saw growth in 2018-2019, there was a push for expansion. But problems began in February-March. “We work only five days a week. The number of contract and casual workers has reduced. And we do not operate all the furnaces,” he says. The company used to employ 950 workers. Now there are 550.
At Prim Engineering, production is just 15% for more than a month now. “We had 120 tonnes of components delivered to us. But we have been asked not to machine (process) these parts,” says M. Parthiban, one of the partners. “Since the parts were supplied to us, we had to bill it and pay ₹12 lakh GST on it,” adds R. Jayakumar, another partner.
Same story in the ‘Detroit of Asia’
The auto hub of Chennai, popularly called the ‘Detroit of Asia’, is facing one of its worst crises. Chennai has installed capacity to produce one car every 20 seconds (three cars per minute) and one commercial vehicle every 90 seconds. Tamil Nadu accounted for 45% of India’s motor vehicles and cars exports in 2017-18. Chennai accounts for about 33% of India’s auto parts production. The three prominent auto clusters near Chennai – Sriperumbudur, Oragadam and Maraimalai Nagar – have shown several thousands of employees the door. Though auto and auto component firms have not published official numbers on the number of jobs lost, union members from various firms say that over 10,000 workers, including contract workers, have been slowly and silently sent out.
S. Kannan, President of the Centre of Indian Trade Unions, Kancheepuram district, claims that over 15,000 workers have been laid off till date. “There have been layoffs at Apollo Tyres, JK Tyres, Nissan, and Yamaha, among others. The Centre and the State governments have not dealt with this issue well.” Some compensation should be given to those who have lost their jobs, he adds.
At the Yamaha plant, employees have been given all kinds of excuses to be laid off, says an employee, Suresh. “I was not well, so I slept for a while on the shop floor. I was asked to leave immediately,” he says.
For Anand (name changed), this is his second job. He recalls that many auto firms came to Tamil Nadu in the early 2000s. “Most of them hired people from in and around Kancheepuram. At that time, the local people here were engaged in weaving and handloom. When the auto firms offered lucrative salaries, good food, and transport to and from work, many youngsters dropped out of diploma courses and left their family businesses to join these firms.”
While Hyundai Motor India Limited says it is “not considering layoffs of employees or contract workers,” employees at Apollo Tyres, which has a greenfield facility in Chennai, say many at the plant have lost jobs in the last month alone. None of them is willing to speak to the media, though. The spokesperson of Apollo Tyres says the “demand for tyres in the replacement market is still strong, but the slowdown in vehicle sales has resulted in lower demand from the original equipment manufacturers”. The Ennore plant of Ashok Leyland has sent a notice to its employees on September 5 informing them that there will be ‘non-working’ days. This is a scary prospect for workers. “Those who left their family businesses and joined these firms don’t know any other work other than handling and assembling cars,” says Anand. “Where will we look for jobs?”