Tamil Nadu Auto Component Industry Hits Road Block Amid Crisis

The auto component industries located in Ambattur Industrial Estate has become embroiled in serious trouble following the crisis in the automobile industry. The industry has started laying off workers, reduced the number of production days and terminating the contract and casual workers in large numbers. The industry has been providing direct and indirect employment to lakhs of workers including a large number of women. However, the recent crisis in the automobile industry has left these workers struggling hard to hold on to their jobs.

Tamil Nadu: Biggest Manufacturer of Auto Components

Tamil Nadu is one of the biggest manufacturers of auto components in the country. The cities of Chennai and Coimbatore contribute around 35% of the total auto component production. The auto component industry is contributing around 2.3% of India’s Gross Domestic Product (GDP) and stood at $49 billion market value during the financial year 2018-19.

The Ambattur Industrial estate in the outskirts of Chennai houses about 1,000 Medium and Small Scale Industries (MSMEs) spread across 1,200 acres. There are around 2,500 tiny industries around the towns supporting these MSMEs.

No Job Orders from Companies

The auto component manufacturers have lost job orders as a result of the downward trend in the automobile industry. Even the international auto component manufacturers have not found the going easy in the recent past.

“The industrial estate has been facing several issues since demonetisation and the Goods and Services Tax (GST) were implemented by the previous Bharatiya Janata Party (BJP) government. Now, the crisis has only magnified as a result of the slowdown in the automobile industry, leaving lakhs of workers in distress”, said Lenin Sundar, Secretary, Centre of Indian Trade Unions (CITU), Ambattur Area.

Also read: TN Auto Component Manufacturer on Recruitment Drive to Retaliate Against Unionisation

“Whatever crisis comes up in the industry, the workers are left to feel the pain, while the companies protect themselves by terminating workers and reducing the wages”, added Lenin. The workers of many companies have alleged that the management is forcing the workers to go on Voluntary Retirement Scheme (VRS) to reduce the operating cost of the company.

Workers Facing Retrenchment

The companies have instructed the workers of age above 45 years to avail VRS, allege the workers. A worker of MRP AutoRub Private Limited while speaking to NewsClick said, “I have been working for this company since 1994. The company was doing well for so many years, but things were stuck after demonetisation and GST. After so many struggles the company was back to normal operations and the recent slowdown has brought everything to a standstill. The workers depend only on the wages and when it stops, the day to day life of the family comes to a halt.”

Another worker said, “Our company manufactures variety of spare parts made of rubber for buses and trucks. Since the sales of these vehicles have come down, we are losing our wages and jobs. We have selected CITU as the union to represent us because of the trust we have in our union. The union is the only hope for us now to protect ourselves from the harsh actions of the companies.”

“I have worked in this company for 20 years and all of a sudden the company wants me to go on VRS. My husband is physically challenged and is not healthy enough to work. I depend on the wages from the company to run my family and educate my three children,” said a teary eyed woman worker from the same company. The situation of contract and casual workers are much worse than the permanent workers.

International Companies Reducing Production

A worker of USCI Sucira international Pvt Ltd, a Japanese company in Ambattur said, “Apart from the Ambattur plant, there are four more plants in Kakkalur. Our company manufactures about 85% of push rods for the automobile companies. We supply to leading companies like Leyland, Mahindra, Cummins, Sammy, Greaves, Simpson, Volvo, Caterpiller and Scania. Since the sales of these companies have come down, our work is getting affected. The companies worry only about profit and do not care about the welfare of their own workers.”

Also read: Over 10 Lakh Jobs in Danger as Automobile Industry Stares at Deeper Crisis

He further added, “The company is planning to reduce the number of shifts to just one from the regular three shifts. Also, the company has announced holidays on Saturdays and Sundays. There are around 600 casual and contract workers, out of which above 150 workers have already lost their jobs. If the industrial slowdown continues, the chances for reduction in production days and termination of workers are very high.”

CITU Slams Finance Minister’s Statement

Finance Minister Nirmala Sitharaman in a recent press meet had rejected the existence of any economic slowdown and had claimed that everything is good with the economy. But, the finance minister announced a slew of measures to revive the economy. A Soundararajan, state president of the CITU told NewsClick, “The claims of finance minister that there is no economic slowdown is a blatant lie. There is no need for any detailed analysis to understand the ground reality which is very pathetic. I doubt whether the finance minister is living in this country or not.”

“The permanent workers are getting their wages even though the companies have reduced the production days due to the intervention of the trade unions so far. So, the issue has not impacted them so much. But, the contract and casual labourers have already started to feel the impact. The managements terminate these workers at ease, since the casual and contract workers are not permitted to unionise.”

Corporates Sucking out MSMEs

An important announcement made by the finance minister during the stimulus package is that the corporate companies have to pay the dues to the small and medium companies which supply the components to them. “The finance minister announced that the automobile companies should pay the dues to the auto component manufacturers within 30 days. This itself explains how the MSMEs are treated by the automobile manufacturing companies. The corporates do not pay these small companies for the parts they procure. This creates a problem for the MSMEs in paying wages for the workers and since many of the companies avail loans, the repayment also becomes an issue,” Soundarrajan added.

Also watch: Auto Industry Crisis: Worst in 19 Years

“The employment loss is much higher than the actual figures show. If we consider the fact that around 400 big dealers have shut down their business resulting in a job loss of around 1 lakh. These dealers pay advance to the corporates to get the vehicles and hence they are further burdened,” he said.

Workers Suffer Impact of Crisis

The policy crisis and slowdown have hit the industry hard, thereby pushing the lives of lakhs of workers to doldrums. The reason stated for the reduction in sales of vehicles was attributed to the usage of OLA and UBER services by the general public, by none other than the finance minister herself. Such claims show the government’s attitude in handling the economic crisis. Her statement was upheld by the transport minister Nitin Gadkari too.

While these ministers come up with out of the box explanations for a serious issue concerning the economy of the country, they carefully neglect the plight of lakhs and lakhs of workers including women.