Auto sector job crisis: Honda lays off 700 contract workers at Manesar plant amid demand slump, production cuts

  • It is expected that some of the axed employees may be recalled due to the forthcoming festive season

  • Falling demand for vehicles has hit most of the vehicle manufactures in the country including market leader Maruti Suzuki

  • In July this year, Nissan said it has plans to cut over 1,700 jobs in India, mostly in manufacturing operations

With the country's auto industry facing demand slump and job loss scare mounting as a result of it, Honda Motorcycle & Scooter India (HMSI) reportedly laid off about 700 contract workers recently at its Manesar manufacturing plant due to a production cut, said a media report.

The persistent slump in two-wheeler sales and a pile-up of inventories with the dealers led to production cut since December last year. This situation led to laying off workers, reported Financial Express quoting HMSI Employees Union president Suresh Gaur.

A few workers who lost the job at HMSI had been working with the two-wheeler manufacture for the past about 10 years. Some of the axed employees are expected to be recalled in the forthcoming festive season said the report quoting Gaur.

 Auto sector job crisis: Honda lays off 700 contract workers at Manesar plant amid demand slump, production cuts

Representational image. Reuters.

The declining demand for vehicles has hit most of the vehicle manufactures in the country including market leader Maruti Suzuki. Maruti Suzuki, Hyundai and three other auto majors reported a double-digit decline in sales in July as consumer sentiment remained subdued.

Maruti Suzuki, which has over 50 percent market share in the domestic passenger vehicle industry, has been impacted by sluggish offtake and has seen total sales drop of 33.5 percent in July at 1,09,264 units.

The auto major has reportedly decided to implement single shift system in its plants including the Manesar facility indicating a production cut. A slash in production also hints at hundreds of job losses in the company's different plants.

Maruti Suzuki is expected to introduce one shift at its Manesar plant in addition to Gurugram and Gujarat facilities which are operating below capacity.

With the prolonged slowdown, Maruti Suzuki has been forced to take various steps, including production cuts at its manufacturing plants, in order to adjust its inventory to market demand. It had cut vehicle production for the fifth consecutive month in June by 15.6 percent to 1,11,917 units as compared to 1,32,616 units in the year-ago month, reported PTI.

As per industry sources, the company has also reduced temporary manpower at its facilities and froze new hiring until the slowdown continues.

In July this year, there was a report about Japanese auto major Nissan's plans to cut over 1,700 jobs in India, mostly in manufacturing operations, as part of a global exercise to reduce headcount by over 6,000 across different locations.

In an analyst presentation, the company said it aims to cut over 6,100 jobs across six sites globally between FY2020 and FY2022, reported PTI.

Nissan had set a target of reducing of over 6,400 headcount over 8 locations globally in 2018-2019.

As per industry sources, over 1,700 jobs could be impacted at Renault-Nissan alliance plant in Chennai as part of the ongoing process.

With PTI inputs

Updated Date: Aug 06, 2019 12:00:10 IST