India’s $57-billion auto components industry is expected to face more jobs losses over the next quarter due to the ripple down effect of slumping automobile sales. Front-end sales jobs and those related to technical, painting, welding, casting, production technology and services are primarily at risk, industry players said.
“The vehicle industry is witnessing de-growth, resulting in 100,000 job losses in the component sector over the last few months. Should this trend persist for another 3-4 months, it could lead to 1 million job losses,” said Vinnie Mehta, Director General, Automotive Components Manufacturers Association of India (ACMA).
Recruitment firms Xpheno and TeamLease have pegged the job losses at more than 500,000 in the coming quarter. “The job cuts are happening around the major hubs, and by at least 10% in each of the companies,” said Rituparna Chakraborty, co-founder, TeamLease Services. The downturn in the auto sector is expected to last anywhere between six and nine months, she said.
Tier II-III companies with a turnover of less than Rs. 400 crores are bleeding the most. Around 5 million are employed in the sector, which exports components worth $15 billion. “Contractual employees are being laid off after unskilled and semi-skilled employees in the auto ancillary industry,” said Mehta.
The slowdown started during the festival season in September last year. “About 15% reduction in man-hours, including actual lay-offs and reduction in work days/hours, has taken place since September 2018 till date,” said Ram Venkataramani, President, ACMA, and Managing Director at Amalgamations Group, an auto ancillary player. Another 15%, roughly 750,000 workers, may be forced to quit over the next quarter or so, he said. Amalgamations Group has laid off about 200 across functions and levels.
Other companies, too, have started taking protective measures. For instance, automobile components manufacturer Minda Industries Ltd. has put a freeze on fresh and replacement hiring. It has also reduced inventory and operational costs. “We are not touching the people in the company just yet,” said Nirmal Minda, Chairman, Minda Industries, adding that contract workers may be the first to let go in case the situation worsens. The company has more than 20,000 employees, of which 5,000 are contract workers.
Ajay Kumar, HR head at tyre maker Continental India, said: “We closely monitor our production and process cost. Hiring is being looked at carefully as a matter of process discipline but we are continuing to hire.”
“The auto ancillaries sector would definitely see some impact; Apollo Tyres has been able to keep itself above troubled waters till now,” said Satish Sharma, President, Asia Pacific, Middle East and Africa, Apollo Tyres.
Bosch, Ceat, Shriram Pistons and Rings, and Lumax Industries did not respond to queries on the employment scenario.