Slowdown in the automobile sector leaves MSMEs in the lurch

Many units reduce working hours, have stopped recruitment and are downsizing

With the automobile sector witnessing a steep slump in sales, Micro, Small and Medium Enterprises (MSMEs) in Tamil Nadu that manufacture components or do job work for the sector are bearing the brunt of the slowdown. Across the manufacturing hubs in the State, MSMEs working in the automobile sector have reduced their working hours, stopped recruitment and gone in for job cuts.

At the SIDCO industrial estate at Kurichi in Coimbatore, 40% of the 220 units make auto-components. According to S. Surulivel, president of the Coimbatore SIDCO Industrial Estate Manufacturers’ Welfare Association, many units that do job work have issued a ‘No Work’ notice for a week to 10 days. “The units have stocks and the industries that gave orders do not want to take the components they had asked for,” he says.

R. Ramamurthy, president of the Coimbatore District Small Industries’ Association, says foundries and MSMEs that cater to the automobile sector here are witnessing a 50% to 60% drop in production. Foundries in Coimbatore are facing a steep decline in production.

The slowdown started two or three months ago and the impact was heavy last month. Migrant workers, who join industries as contract workers, are losing their jobs. It is not just those catering to the passenger vehicle segment but also the MSMEs that are tier-one or tier-two suppliers to commercial vehicle and tractor manufacturers that are in trouble, he says.

According to him, the GST for automobiles should be reduced to 18% and the government should provide a special package to help MSMES meet operational costs until they recover.