Economy

Amid auto slump, components sector sees 8-10 lakh job cuts

S Ronendra Singh New Delhi | Updated on July 24, 2019 Published on July 24, 2019

Contract staff bear brunt of pink slips

The decline in growth in the auto industry over the past 11 months has affected the components industry as well. It has resulted in the laying off of 8-10 lakh contract employees in recent months in the auto parts sector.

According to a senior official at the Automotive Component Manufacturers Association of India (ACMA), the job losses are happening largely because of the slowdown in the auto industry and in the major hubs including the Gurugram-Manesar belt of Haryana, Pune, Jamshedpur (Jharkhand) and some parts of Pithampur (Madhya Pradesh).

Without giving details about the major companies that are cutting jobs, ACMA Director General Vinnie Mehta told BusinessLine: “The job cuts are happening around the hubs and by at least 10-15 per cent in each of the companies. The entire Haryana belt is suffering. There are around 50 lakh workers in the auto components industry and around 70 per cent of them are on contract.”

He said the losses are a ‘trickle-down’ impact of the slowdown in the auto industry, especially passenger and commercial vehicles makers, and if this continues, more lay-offs are expected. The two-wheeler sector is doing fine now, but one can’t be sure for how long, he added.

Regular employees

Though contract employees are more in numbers, there is some dilemma on the regular ones, too, as there is not much work in the factories due to poor demand from original equipment manufacturers, Mehta said.

For instance, leading auto parts maker Bosch had to close its factory for five days recently, which is something unheard of earlier, he added.

Turnover forecast

ACMA is lowering this year’s turnover forecast to higher single-digit growth. The components industry had recorded a turnover of ₹3.95-lakh crore in FY19, up 14.5 per cent from the previous fiscal’s ₹3.45-lakh crore.

“The industry needs urgent government intervention. There is an immediate need to stimulate vehicle demand and also sustain it post BS-VI implementation, as vehicles will become significantly expensive thereafter,” said Ram Venkataramani, President, ACMA

Published on July 24, 2019
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