Tata Motors has halted production for three days, while neighbouring auto components hub at Adityapur is working single shifts and staring at layoffs in a an attempt to tide over sluggish demand in the wake of the ongoing economic slump.
In the backdrop of a crashing stock market and a free-falling rupee, the auto giant shut down operations for three days since Thursday along with subsidiary TML Drivelines and diesel engine-maker Tata Cummins.
Since the “block closure”, the first in Jamshedpur this financial year, is followed by Sunday, the companies will not be running their plants for four days on the trot with production resuming only on Monday, September 2.
|The Tata Motors plant at Jamshedpur
|The manufacturing hub in Seraikela-Kharsawan
Obviously, optimising costs is the primary objective.
“The company decided to go in for a three-day block closure to match production with demand and also to avoid unnecessary build-up of inventory at the company or with dealers/vendors,” said Captain P.J. Singh, spokesperson of Tata Motors.
The block closure means that around 10,000 employees across companies will be paid only half a day’s salary for each of the days the plants remain shut.
In July, the Jamshedpur plant of Tata Motors rolled out over 5,000 heavy commercial vehicles, including trucks, trailers and other multi-axle vehicles. But this month, sources said, production was below 5,000 due to lack of orders.
Production of gearboxes and axles at TML Drivelines and engines at Tata Cummins has also gone down in August, confirmed sources in the workers’ union.
In the last fiscal (April 2012 to March 2013), Tata Motors shut down operations as many as six times. The first and the last block closures lasted six days each in June 2012 and March 2013. In between, the company observed four block closures of three days each.
Santosh Singh, the vice-president of Telco Workers’ Union, attributed this time’s shutdown to poor demand. “The economic downturn and slump in demand of heavy commercial vehicles have led to the closure. We are keeping our fingers crossed. If the situation doesn’t improve, the company may have to go for a few more block closures,” he said.
According to an agreement, which is signed during wage revision deals inked between the management and union every three years, Tatas can shut down operations for 18 days in all.
If the company needs to close for more number days, the management has to take a fresh consent of the union. In the recently signed wage revision agreement, too, there was a provision of 18-day block closure.
At Adityapur Industrial Area in neighbouring Seraikela-Kharsawan district, the mood was dismal. As many as 500 ancillary units, manufacturing components for the automobile giant, have been feeling the pressure of the economic downturn.
“Most ancillary units will not operate at full capacity during the three-day shutdown,” said R.K. Sinha, who employs 300 in his factory.
“Productions at the ancillary units and their vendors have already gone down considerably due to low intake of auto components by Tata Motors,” he added.
A workforce of over 80,000 in Adityapur was staring at uncertainty. According to sources, large, medium and small-scale units, especially ancillaries, were working single shifts, as opposed to three, due to lack of work.
Moreover, several units were running only five days a week instead of six to save costs.
Gurudas Ray, the general secretary of Adityapur Small Industries Association, feared that more such shutdowns could mean lay-offs.
“We are passing through a very critical phase. If such block closures take place, workers in the industrial units will suffer as they would be rendered jobless,” he said.
How can the present bleak scenario be improved?