Saman Gunadasa
More than 365,000 auto industry workers’ jobs—350,000 at auto-parts manufacturers and dealers and 15,000 in vehicle assembly—have been destroyed in India since April in response to falling sales. In August, the industry slumped for the 10th straight month with sales of passenger vehicles dropping by 30 percent and car sales by 41 percent, the steepest fall in two decades.
Some commentators are predicting that about half a million jobs will be slashed in the coming months. This attack is part of an escalating global assault on the jobs, wages and conditions of auto workers in the US, Canada, Mexico, Europe and Asia.
The auto industry in India employs about 37 million workers directly and indirectly. Manufacturers include Japanese and Korean companies (Maruti Suzuki, Honda, Toyota, Hyundai, Nissan and others), US and European automakers (GM, Ford and Fiat), and Indian manufacturers, such as Tata Motors, M&M, Bajaj and Hero Motor Corporation.
The downturn has engulfed India’s main auto manufacturing areas—the Gurugram-Manesar-Bawal automotive belt in northern Haryana state, Sriperumbudur, Oragadam and Maraimalai Nagar near Chennai in southern Tamil Nadu, and Pune in western Maharashtra—and auto parts manufacturers scattered across India. Hundreds of laid off internal migrant workers from impoverished Indian states, such as Bihar, Jharkhand and Uttar Pradesh, who were previously employed in the Indian auto industry, are returning to their home villages and cities.
* Maruti Suzuki, the Japanese joint venture, has cut 6 percent of its temporary workforce in Manesar and Gurgaon and declared two days in September as “no production days.” In July, production was reduced by 30 to 35 percent. In August the company’s total sales (domestic and exports) fell to about 106,000 units, a drop of more than 32 percent from the 158,000 units it sold in the same month last year.
Over the past 12 months an estimated 50,000 workers have lost their jobs in the Gurugram-Manesar-Bawal industrial belt. The 3,000 automotive parts plants that supply to large auto companies in the region have reduced production by about 30 percent.
* Tamil Nadu accounted for 45 percent of India’s motor vehicle exports and 33 percent of auto parts production in 2017–18. The state’s capital Chennai, which is known as the “Detroit of Asia,” is said to have the capacity to manufacture a car every 20 seconds and a commercial vehicle in 90 seconds.
While reliable statistics are not available on the auto industry layoffs and job cuts in Tamil Nadu, the Hindu newspaper reports that over 10,000 workers have lost their jobs in recent months. Ashok Leyland, India’s second largest producer of commercial vehicles, is suspending production for five to eighteen days at its five plants, two of which are in Tamil Nadu.
In terms of sales, India’s automotive sector is the fourth largest in the world and the most affected by the slowdown in the Indian economy. The industry has an approximate 50 percent share of India’s manufacturing sector gross domestic product and 7 percent of the country’s total gross domestic product.
A recent statement from the Society of Indian Automobile Manufacturers (SIAM) blamed India’s slowing economy and high ownership costs, including increased road taxes and safety regulations and high interest rates, for the falling vehicle sales and demanded concessions from the government.
Prime Minister Narendra Modi’s government is desperately attempting to arrest falls in India’s gross domestic product growth rates by lowering interest rates. The Reserve Bank of India has cut the official interest rate four times this year, reducing it to 5.4 percent. The government has also indicated that it will attempt to boost demand by lifting a ban on government departments buying new cars.
There is no redress, however, for the tens of thousands of sacked auto workers. Contract auto workers, who only earn between 6,000 to 8,000 rupees ($US86 –$US115) per month, face a dire situation, as will permanent workers as the auto industry crisis deepens.
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