According to the Automotive Component Manufacturers Association of India (ACMA), the job losses are happening largely because of the slowdown in the auto industry.

8-10 lakh contract employees in auto parts industry lose jobs as auto sales declineImage: Picxy.com
Money Auto Industry Thursday, July 25, 2019 - 13:20

The continuing decline in the sales of automobiles is having its impact on the jobs in this sector, particularly in companies engaged in the manufacturing of auto components. A rough estimate puts the figure of job losses in this sector at around 10-15%. So far, those hired on contractual basis, who form a major portion of the workforce have had to bear the brunt, these reports indicate. In terms of absolute numbers, some 8 to 10 lakh workers might have lost their jobs, according to a Hindu Business Line report.

With automobile companies losing sales, they have cut down on their production of vehicles which means an immediate cut in the orders being received by the component makers.

Most automobile manufacturers have adopted the hub and spoke model with the units making the components located around the main assembly plant. This has helped them hold minimum inventory at their end and follow the just-in-time policy. With a tentative monthly production schedule, daily orders are conveyed to the component making units for deliveries the next day.

Through the years, specific hubs have developed in towns like Gurugram-Manesar in Haryana, Pune in Maharashtra and Jamshedpur in Jharkhand. Pithampur in Madhya Pradesh is another location where a number of auto component units function.

These rough estimates of job losses indicated above have come from the Automotive Component Manufacturers Association of India (ACMA). The industry body has not shared the details of company-wise figures of retrenchment of contract workers due to this lean patch in the automotive sector.

It is learnt that the passenger and LCV segments have seen the maximum decline in sales. As reported earlier, the retail sales of passenger cars have not witnessed a steep decline. If at all, there is growth but of a very negligible rate and the dealers are possibly hedging their bets by not holding high inventories at their end.

ACMA is hoping that the government may intervene but the chances of that happening are quite remote.

Show us some love! Support our journalism by becoming a TNM Member - Click here.