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Shutdown of production at the Tata Motors’ car plant in Pune, the second time in six weeks, triggered by a general slowdown in sales of passenger cars has dampened spirits in the region.
A significant portion of this gloom is attributed to the fact that Tata Motors sources over 70 per cent of the parts needed for its cars from small and medium manufacturers, and two consecutive closures has affected output at the vendors in the surrounding region adversely.
The latest four-day block closure beginning August 1 follows on the heels of a similar 3-day closure of the car manufacturing unit here from June 22-24.
Such a measure generally involves paying employees half their salary on the specified days.
“A block closure will take place at the car plant in Pune beginning tomorrow for four days. This is to align production with demand, in the light of the prevailing market dynamics. The company has established norms, agreed with the union, for such steps,” a spokesperson for Tata Motors said.
High turnover
According to Mr Nitin Banker, President, Pune Small Scale Industries’ Association, the auto components business in Pune notches a turnover of over Rs 50,000 crore annually. “Tata Motors offloads nearly 70-80 per cent of its requirement to small manufacturers who are operating at 25-30 per cent of their production capacity now,” he says.
For the last few weeks, several OEMs around Pune have been staggering production to align with the requirement.
At General Motors’ Talegoan plant, one non-production day (NPD) was observed last week.
“This is a practice we follow to avoid pile up of inventory,” Mr P. Balendran, Vice-President, Corporate, GM, said.
With over 25,000 employees, Tata Motors is the largest single employer outside of the IT industry in the region. The auto industry supports not only a huge vendor base, but indirectly also a large number of smaller unrelated businesses.
The owner of a small garment shop in Pimpri says that his sales are affected as buyers turn parsimonious, while the manager of a small restaurant reveals that there is a noticeable drop in footfalls as blue collared workers turn cautious on spending.
> alka.kshirsagar@thehindu.co.in
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