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Forging industry hints at job cuts as auto slowdown continues

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Highest sales decline seen in commercial vehicles segment

Even as Indian automobile manufacturers reported a 5-7% rise in retail sales during the recent festival season, the forging industry, which caters to the auto sector, witnessed a decline in demand of around 25-30%, with the highest sales decline seen in the commercial vehicles segment.

If the current trend continues, the forging industry may see further cut in production and jobs as some OEMs (original equipment manufacturers) have already announced additional curtailment of production for November 2019.

The forging industry is worried because more than 60% of its capacity is dedicated to the auto sector.

The Association of Indian Forging Industry (AIFI), the apex body of the forging industry in India, has expressed concern over the lack of demand with regard to fresh orders from the automotive sector.

The sharp decline in demand has resulted in substantial production cuts, it said. “The sales figures during the festive period clearly indicate higher retail sales than the volume of whole sales. This increase, coming after a drop in sales for the last two quarters, is driven by higher discounts offered by OEMs to allow for the liquidation of inventories,” S. Muralishankar, president, AIFI, said. “The production and demand at the manufacturing level have not seen any upward movement because of which the forging and auto components sector continues to reel under the auto slowdown,” he said.

“Currently, there is a huge inventory build-up due to poor demand and to curb this, many forging units have been making proportionate cuts in terms of working hours and production,” he added.

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Printable version | Dec 7, 2019 12:38:50 PM | https://www.thehindu.com/business/forging-industry-hints-at-job-cuts-as-auto-slowdown-continues/article30029889.ece

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