In Coimbatore, where a large number of industrial units and foundries are working in the automobile sector, the slump in vehicle demand is impacting several businesses indirectly.
A micro industry with just two CNC machines, doing job work, used to earn nearly ₹10,000 a week from selling scrap. This income has reduced steeply in the last couple of months because of the slowdown in the automobile sector, says J. James, president of the Tamil Nadu Association of Cottage and Micro Enterprises.
Scrap dealers, numbering nearly 250 in the city, collect the iron and metal scrap from engineering industries and supply it to the foundries and steel plants as raw material.
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Almost 80% of the foundries in Coimbatore manufacture castings for the auto sector. “Production in foundries supplying to automobile sector has dropped considerably,” says G. Ezhil, chairman of the Institute of Indian Foundrymen, Coimbatore Chapter. Since production of castings is affected, employment and consumption of raw materials have also reduced, he says.
According to KZ Moyyed, former president of the Coimbatore Scrap Dealers’ Association, the dealers collect scrap from the engineering industries here and also import scrap to supply it to foundries and steel units. The foundries mostly use the scrap from the local industries. Demand and prices of scrap started reducing three to four months ago. Though it is difficult to quantify the volume of scrap handled by the dealers every month, there has been a drop in demand, he says. Mr. James says the micro units used to sell scrap for ₹19 a kg. Now, it is ₹15 a kg. A unit with two CNC machines will produce 500 kg to 700 kg of scrap a week, he says. The dealers are reluctant to take the scrap from the industries. At least 15,000 job working units in Coimbatore, which are all in the micro and small-scale sector, were working in the automobile sector. With uncertainty, lack of orders, and delay in payments, most of these units have stopped production and are asking workers to go home, he says. President of Lorry Owners’ Association, Coimbatore, K. S. Kalia Perumal, says several lorries in Coimbatore used to make domestic trips and also to Kerala and other States, carring iron rods, machinery, steel, etc. With the industrial slowdown, lorries that used to make eight to 10 trips to Kerala now make just four or five trips, he says.