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Labour shortage in Chennai is driving auto-parts maker MM Forgings to shift a part of its machining processes to tier-II cities in Tamil Nadu.
The company's manufacturing plant in Chennai is located at Padappai – 3 km from the auto manufacturing hub of Oragadam. When MM Forgings set shop here in 2002, it was one the few settlers in the area. Today, Oragadam is home to over 400 companies.
This exponential growth has triggered a labour crisis, especially at the shop-floor operation level, says Mr Vidyashankar Krishnan, Managing Director, MM Forgings.
“Growing labour demand and higher wages elsewhere is causing attrition which in turn is causing availability issues,” says Mr Krishnan.
“We need 250 people at the machine shop. But every month, we see people leaving in double digits. The machinists are particularly in demand, as the skill is generic across most manufacturing industries. Someone running a CNC machine here can run it elsewhere for any company,” says Mr Krishnan.
While the company has managed the situation by recruiting on the spot, this brings down skill levels, while rejections go up. “It takes nearly a month to substitute people and train them too. All this hits production and in the long term, quality.”
In the last 2-3 years, wages have gone up by 30-40 per cent in the auto/component industry in the Chennai region.
“Today, CTC on casual labour is Rs 250 a day. It is difficult to compete with a Nissan or Bharat Benz on wage rates.”
For the last six months, MM Forgings has been moving machining related processes to its other plants in Tiruchi (Viralimalai) and Madurai, where labour is more stable and quality better. In the next few months, it plans to shift 10-20 per cent of its processes from Chennai.
“In Tiruchi and Madurai, we get people who are natives. Whereas, in Chennai, it is largely migrant labour from Orissa and Assam,” says Mr Krishnan.
MM Forgings' three plants employ 2,000 people in total (700 in Chennai).
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