Slowdown in auto sector hits auto ancillary units in Ggn, Manesar hard

Gurugram: Slowdown in auto sector has hit auto ancillaries of Gurugram and Manesar hard. According to official reports, there have already been 50,000 jobs that have been shed for the purpose of cost cutting.

Most of the cost cutting has been done in the contractual labour force. There have also been 15 small automobile units that have been closed due to mounting losses.

In terms of job losses, various estimates have put the number of workers affected, across production, logistics, and dealership chains, at over 3 lakh nationally.

Workers unions claimed almost a third of this would be in Delhi-NCR, primarily Manesar, though there are no official numbers on this. Manesar accounts for almost 50 percent of the national auto-component production.

Moreover, the auto sector belt supplies automotive components for companies like Hero, Maruti and Suzuki.

At present, the automobile industry has been dented the hardest by the slowdown which is a culmination of several factors like high GST rates, farm distress, stagnant wages and liquidity constraints.

Besides, inventory pile-up at the dealership level and stock management of unsold BS IV vehicles have become a problem for the sector.

The sales downturn assumes significance as the auto industry contributes to around half of manufacturing GDP and 11 per cent of the total GST revenues. It is estimated that the sector also supports almost 37 million direct and indirect jobs.

Industry insiders at the auto cluster said that around 50,000 to 1 lakh temporary employees across the entire value-chain, including those from ancillary industries, logistics and raw material suppliers, have been sent on unpaid leave or have been sacked.

The Gurugram-Manesar belt has more than 650 ancillary companies that produce automotive components for the three of the largest automobile companies based here —Maruti Suzuki Ltd, Hero Motocorp Ltd and Honda Motorcycle and Scooter India Pvt Ltd (HMSI).

The total number of people employed in this manufacturing hub is around 6 lakh, according to labour department data.

However there is also a view that sales revival due to the upcoming festive season might aide the industry to temporarily buck the downsizing trend.