Chennai: S. Atmanesan, who runs a unit that manufactures auto components at Ambattur Industrial Estate in Chennai, feels defeated by the ongoing slowdown in the automobile industry. He has had to shrink his workforce, and he is not pleased.
“In Ambattur Estate, there are more than 30,000 small scale companies and nearly 80 per cent of them employ contract employees. Many of them have been forced to shut shop as there are no work orders,” said Atmanesan, who is also the president of the Ambattur Tiny Manufacturers Association.
“After the decline, the workers have been forced to sit at home as we don’t have enough orders to employ them. After GST, our businesses were affected,” he added. “Now this slump has hurt us more. The 28 per cent GST is the highest in the world.”
The Ambattur Industrial Estate is a small suburban hub for tiny auto components in Chennai and, according to Atmanesan, most firms have either cut down their staff by 80 per cent or just closed down due to lack of orders.
Atmanesan’s gloom finds resonance across the Tamil Nadu capital, one of India’s most bustling automobile hubs that is often called “Asia’s Detroit”, a tip of the hat to the US city that serves as the centre of the nation’s automobile industry.
Through Sriperumbudur, Oragadam, Maraimalai Nagar and Thiruvallur on the outskirts of Chennai, all of which are automobile manufacturing zones, layoffs lend a touch of tension to the air.
Several of the contract workers who have been laid off have left for their hometowns, but a few have stayed back, working small jobs in the hope they will get that elusive call from their managers.
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‘Threats to stay quiet’
In the automobile manufacturing zones at Sriperumbudur and Oragadam, contract workers are reluctant to talk about the crisis facing them.
Most job cuts have been among contractual employees and they have been discouraged to speak out or protest: With either the promise of a fresh contract in the coming months or plain threats that they will not get a fresh contract if they speak to the media or participate in protests.
“Our HR (human resource) managers stand by the bus when we board it at the gates. Nobody is allowed to speak to anyone outside the company,” said a temporary assistant working in the tools department of a company.
“The doors of the bus are locked too until we reach our destination. They have warned us that, if we speak, we will lose our jobs,” the assistant added.
Automobile hub
Tamil Nadu is among the top 10 automobile hubs in the world, producing close to 13 lakh cars a year — over 27 per cent more than the total number of cars currently on Mumbai’s roads.
It produces three cars every minute, one truck every two minutes, and a motorcycle every six seconds, according to industry experts.
In order to expand their presence in the Asian markets, top manufacturing companies such as BMW, Ashok Leyland, Ford, Mahindra and Mahindra, Hindustan Motors, Integral Coach Factory, Mitsubishi and Royal Enfield and many others have set up manufacturing facilities in the state.
Tamil Nadu accounts for 35 per cent of India’s auto-component production, and nearly 45 per cent of the country’s motor vehicle exports.
It’s no surprise then that the ongoing slowdown, caused by slackening demand, as well as tightened financing conditions that have squeezed lending by non-banking finance companies (NBFCs), has resulted in the automobile industry seeing a record drop in sales over the last few months.
As reported by ThePrint Monday, the sales in July fell to a two-decade low — contracting by nearly 19 per cent — across most segments and the company numbers trickling in for August indicate the situation has worsened.
Several stakeholders, which include small-scale industries dealing with auto parts, have been forced to either shut shop or cut down their workforce.
According to industry estimates, the slowdown may cause as many as 14 lakh people to lose their jobs. And this figure doesn’t even account for the largely-informal transport sector, where the impact remains undocumented.
In Tamil Nadu alone, nearly 80,000 to 1 lakh workers have faced the axe in the last 11 months, according to local trade union leaders.
A. Soundarrajan, president of the Tamil Nadu Centre of Indian Trade Unions (CITU), said nearly 5,000 contract labourers had lost their jobs within the Sriperumbudur-Oragadam area.
“In the last three to four months, there has been a sudden drop in sales of automobiles as many people are looking at buying vehicles that adhere to the new emission norm (BS-VI), which will be available only from April 2020,” he added. “Many companies are either letting go of their contract employees or have reduced the number of working days.”
BS-VI or Bharat Stage-VI is the latest-generation emission standard that kicks in from next year. Alarmed by India’s pollution problem, the Union government has leapfrogged straight from BS-IV to BS-VI, and the Supreme Court has ruled that once the deadline expires, owners of BS-IV vehicles won’t be able to register them.
A senior official from the Automotive Component Manufacturers Association (ACMA), an industry body, said one of the major contributing factors to the slowdown has been the economic crisis as well as the trickle-down effect of GST and demonetisation.
Data released by the Society of Indian Automobile manufacturers Friday showed automobile sales contracted in August by a record 24% — the sharpest fall recorded since 1997-98 when the body first started collecting these numbers.
The passenger vehicle segment also contracted 32%, registering a fall for the tenth consecutive month.
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‘Fired for being sick’
Benny Antony, 23, used to work out of a small shed in Gudalur district, Tamil Nadu, where he would re-model old RX-100 Yamaha motorbikes and earn around Rs 1,500-2,000 as commission, but that was only if the bike was sold.
In early 2017, friends told him about openings with a world-famous two-wheeler manufacturer in Chennai. A bike enthusiast, he applied and was thrilled when he received the offer letter to work in the welding division.
“I joined as a trainee and worked for a year-and-a-half. I used to earn Rs 15,500 a month,” he told ThePrint. “If I was made permanent, I could have got additional benefits. That’s why I took up the job.”
He is now one of around 700 workers laid off by the multinational company — allegedly fired for taking a break for rest while on duty.
“One day, I was suffering from severe ear pain and had to rest. We are assigned a place where we can rest in the welding department. I lay down there… After some time, the manager asked me to leave,” said Antony.
“He said I was sacked because I took a break while at work. I tried to explain my condition and even brought in medical certificates to show that I was genuinely ill,” he added. “They wouldn’t hear me out. They simply took away my ID card and asked me to go.”
Antony is now back in Gudalur, working at a garage repairing motorbikes and cars.
Site of protests
As you drive around the Sriperumbudur-Oragadam highway, it’s hard to miss the large tent by the road with flags of the All India Central Council of Trade Unions (AICCTU), a prominent trade union.
It marks one of the designated spots where laid-off employees who belong to trade unions come and protest against their sacking. Here, ThePrint caught up with Hyundai Employees Trade Union chief S. Rajguru.
“The daily-wage workers are among the worst-affected. There are trainees who have been laid off and, in other cases, the companies have deducted employees’ leaves for the days they have been asked not to come to work,” he said.
“We have heard that Daimler has laid off many people, Nissan is trying to lay off by providing a small compensation package to the affected parties. In Ford, too, there have been lay-offs,” added Rajguru.
In a statement to ThePrint, Hyundai Motor India Limited said it is “not considering layoffs of employees or contract workers”, but insiders say that there have been job losses.
Ashok Leyland, which has announced non-working days at multiple facilities, including 18 at one, did not want to comment. At its plant in Ennore, Tamil Nadu, the company has announced 16 non-working days.
According to reports, many companies such as Tata Motors, Mahindra and Mahindra, Maruti Suzuki , Toyota Kirloskar, Bosch, and Wabco have announced the closure of their plants for a period between 8 and 20 days due to decline in production.
“Non-working days mean that they would have to sit back at home and come to work only when called in. As of now, salaries will not be deducted, they said,” said Saravanan, an employee of Motherson group, which deals in auto ancillary products, in Kanchipuram district. “But if the situation worsens, they may do that too.”
In July, TVS stated that their sales had slumped from 3.21 lakh units in July 2018 to 2.79 lakh in July 2019. The sales of other scooters and motorcycles have been similarly hit.
Lucas TVS, an ancillary company of TVS Motors, issued a circular in June, which said, “We have already declared certain days as non-working due to slow sales. As this situation continues, we have to declare non-working days this month (August) as well… We are continuously assessing sales. Once we reach a conclusion, we will announce this to workers.”
Speaking to The Hindu BusinessLine, ACMA director general Vinnie Mehta said “job cuts are happening around the hubs and by at least 10-15 per cent in each of the companies”.
He also said the slowdown had affected passenger and commercial vehicle-makers and, if the situation continued, one could expect more layoffs.
Heavy loans, no work
Sahaya Mary, an employee of Atmanesan, the aforementioned president of the Ambattur Tiny Manufacturers Association, was one of six people asked to stay home as the effects of the slowdown kicked in and orders dried up.
That left Atmanesan, whose unit produces nuts, bolts and rods for trucks and heavy vehicles for companies such as Telco, Ashok Leyland and Eicher, with a staff strength of two.
Mary has been a machine operator at the unit for the last 10 years. With five family members to feed, rent to pay and a huge loan taken for her daughter-in-law’s fertility treatment, Mary is worried about how she will make ends meet.
“I used to earn around Rs 8,000 a month. But suddenly I was told that of the eight of us working, six cannot come to work from the next day. My employer said since there has been a sudden decline in sales of vehicles, our work orders have also been stopped,” she said.
“He is unable to pay us and so, until we get another bulk order, I am out of a job,” she added.
Ever since then, Mary has been going to the unit daily in the hope of finding a job. One such day last week, just as ThePrint caught up with her, she received a call from her son. He needed money for doctor fees.
“My daughter-in-law is unable to conceive and I have spent close to Rs 50,000 on her treatment. I have no money left,” she said. “My son just called as we need to pay the doctor. I have sold the last of my gold jewellery.”
As the interview ended and this reporter made her way out of Ambattur Industrial Estate, Mary walked up to her with a grin on her face.
“Please recommend my name to my boss and tell him that, the next time a work order comes, he should call me back to work,” she said. “I really need the money.”
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This was the sort of story Ms Faye D’Souza would have done justice to on Mirror Now.