Tata Motors announces another temporary shutdown; Hero, too, shuts plant for 4 days

As an unprecedented slowdown continues to rattle the automobile sector, vehicle and components manufacturers have resorted to temporary factory closures to align production with demand. And temporary workers have begun to get pink slips.

What started as a one-off event is now becoming routine. Yet again this week, some companies, including Tata Motors, Hero MotoCorp and two TVS group firms have announced temporary factory closures.

Meanwhile, Maruti Suzuki Chairman RC Bhargava said over 3,000 temporary employees have lost their jobs with the company. Their contracts were not renewed due to the slowdown, he said while asserting that permanent workers have not been impacted.

Hero said its manufacturing plants will be shut for four days from August 15 to 18 to align production with demand. “Production planning is a matter of advance monitoring of the market dynamics and prudent demand forecasting. This helps us to plan our production well in advance, enabling us to stay flexible both in terms of volumes and production schedules,” it said.

While this has been part of the annual holiday calendar on account of an extended weekend with Independence Day and Raksha Bandhan, it also partly reflects the prevailing demand scenario, it added.

Tatas’ third closure

Tata Motors appears to have announced its third factory closure of this month. The automaker is shutting its Jamshedpur unit for two days — August 16 and 17.

“The external environment remains challenging, leading to demand correction. We have aligned our production to actual demand and adjusted the number of shifts and contractual manpower,” said a Tata Motors spokesperson.

If OEMs are resorting to such measures, auto parts suppliers cannot be far behind. Chennai-based Sundaram-Clayton Ltd, a TVS group company, has declared August 16 and 17 as non-working days for its Padi plant.

Lucas-TVS, a manufacturer of auto electrical parts, has already announced two non-working days at its Padi unit on the same days in view of the slowdown in the vehicle sector. The company said it is examining the situation for further decisions.

Vehicle sales in India fell 19 per cent in July to 18.3 lakh units on the back of the economic slowdown and weak consumer sentiment. All sectors, including passenger vehicles, commercial vehicles and two-wheelers, reported a double-digit decline in sales.

Auto production also witnessed a decline of about 11 per cent at 10.88 million units in April-July 2019, against growth of about 17 per cent in the same period last year.

Large inventories of 30-45 days with dealers have forced many major manufacturers to cut production, according to analysts at CARE Ratings. With the monsoon wreaking havoc in several States, hopes for a recovery in demand in the coming months, during the festival season, have also diminished.

With inputs from Ronendra Singh in New Delhi

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