Cash Crunch and End of Year Slow Down are Possible reasons
Renault-Nissan Automotive India (Pvt) Ltd shut down its night shift beginning Dec 15th, 2016, at its factory in Oragadam near Chennai. According to media reports it will impact over 2000 workers, including over 800 contract workers who might lose employment. The company has maintained that the production was reduced as back logs of Kwid cars were cleared. But industry reports indicate a significant fall in bookings due to effects of demonetization as well as year closure.
Workers said that the night shift (12am to 7am) was started in March 2016 to cope with increasing demand for the Kwid brand of cars. Only one assembly line (Line 2) was operational during the night shift and production averaged about 500 cars a shift. Around 2000 workers including 600-800 contract workers and a significant number of apprentices (under the Apprentice Act) were employed along the three major shops (Body Shop, Paint Shop, and Assembly). With falling orders it was decided to wind down production of Kwid and shut the line entirely.
Incidentally, the Body Shop, where the cars’ frames are produced, has three internal lines. Line 3, which was installed to increase production, has not been fully mechanized. Workers on that line complained that this has meant working with very heavy loads, moving vehicles manually through the line and also working under very hazardous conditions that in other lines were automated using robots.
“Line 3 also has more apprentices who are not given proper training. They have around 2-3 days of classes, about half a day of training on the assembly line, and then are asked to work with regulars in production. This leads to a lot of minor injuries and cuts due to inexperience and handling heavy loads. There is also a lot more splatter from welding that causes eye injuries,” said a permanent worker who was working the night shift on Line 3 in the Body Shop. While the line was due to improvement, the worker was doubtful if the improvements will be carried out now with a dip in demand.
Workers representatives said that while the permanent workers have been temporarily moved to other lines producing ‘Go’, ‘Go plus’ and ‘Mirca’ brands, the contract workers have been retrenched. “presently we have been reallocated to the General shift and 1st Shift. The production of Micra has also been increased by about 5 units. But we are heading towards year end maintenance closure. One line shuts down on 24th evening and another line shuts down on 25th morning. They will only be reopened after New Year. This is a usual practice. We will only know about the actual reduction in jobs after the New Year,” he said. Asked about apprentice workers, he said that they have not been asked to leave but a fresh batch might not be recruited this year if sales volumes are down. The office bearers of the United Labour Front union have not approached the management regarding the retrenchment of contract workers.
While automobile sales usually slumps at the end of the year, many companies have reported partial closures and lay-offs due to significant fall in demand. This has been attributed to the cash crunch in various media reports. A worker at Renault Nissan said, “People don’t buy cars this time of year as it will be dated a ‘2016 make’, but in a month you can have a ‘2017 make’ car.” But reports indicate a significant drop in demand. Even electronic and garment industries have seen a significant hit with many companies laying off over a quarter of their total work force.
While workers said that the company had organized for mobile ATM’s at the work site, and therefore accessing cash has been much easier, they remained divided on the value of the demonetization drive. “While the intention is good, the execution has not been proper, they should have planned better, and it is difficult transacting with these new notes,” said a worker who resonated the views of most others.