Automotive Sector News: After surviving pandemic, auto cos look to shed flab – The Economic Times

Clipped from: https://economictimes.indiatimes.com/industry/auto/auto-news/after-surviving-pandemic-auto-cos-look-to-shed-flab/articleshow/81398551.cms

SynopsisThe recovery since the lockdown has been swift in the passenger vehicle sector, but the market is still far from reaching the peak hit in 2018. The situation is worse for two-wheeler and commercial vehicle makers, as sales are still at levels last seen five to 10 years ago.

Automotive manufacturers are shedding jobs, shutting unviable operations and adopting new management structures, under what the industry calls “rightsizing” to emerge leaner, stronger and nimbler from the pandemic and a prolonged slowdown.

The recovery since the lockdown has been swift in the passenger vehicle sector, but the market is still far from reaching the peak hit in 2018. The situation is worse for two-wheeler and commercial vehicle makers, as sales are still at levels last seen five to 10 years ago. For three-wheeler and bus manufacturers, sales have dropped to multi-decade lows as public transport has been hit hard by the pandemic.

Close to 5,000 people have taken voluntary retirement, or in the process of doing so, at Honda Motor, Tata Motors, Ashok Leyland, General Motors India and Apollo Tyres since the beginning of the pandemic. The industry has also fired a similar number of employees, even as companies have cut salaries and withheld bonuses as they negotiate weak demand and an uncertain business environment. Companies are also restructuring roles and responsibilities of employees and management, and shrinking office spaces and shutting unviable factories, as they review fixed cost structures while ensuring employee welfare and wellbeing, say industry sources. Job rotations and redeployments have become the order of the day to improve efficiencies.

At Mahindra & Mahindra, Tata Motors and Maruti Suzuki, organisational structures are being realigned.

In December, Tata Motors announced a VRS for its permanent employees and workers. Mahindra recently completed what it called an organisation “simplicity” initiative with consultancy firm BCG helping it in the project. With the new management set to take charge from April 1 — Anish Shah taking over as the managing director from Pawn Goenka — Mahindra is seeing a host of changes from job rotations to shutting down of departments and functions.

According to people in the know, Vikram Garga, head of marketing at the company’s automotive division, has been moved to the farm sector to oversee the strategy function. Departments like events and institutional sales have been shut down and the employees from there have been reassigned to other businesses.

“In the context of some recent and ongoing movements of people and changes in the organisation structure, we are working to create a futuristic organisation which is more empowered and agile. The focus is to move resources closer to the business operations and the market and customer,” Mahindra chief HR officer Rajeshwar Tripathi said.

There was pruning at the premium or luxury end of the market too, with volumes almost halving in 2020. According to people in the know, Mercedes-Benz and Jaguar Land Rover have lowered headcount in the past year.

After Surviving Pandemic, Auto Cos Look to Shed Flab

Jaguar Land Rover recently cut its India workforce by a third. “We are in the process of creating a flatter structure designed to empower employees to create and deliver at speed and with a clear purpose. We need to reduce the cost base to achieve a lean foundation, which will allow us to transform most effectively into a more agile organisation,” said a JLR spokesperson.

In December, Honda Cars India announced plans to stop production at its Greater Noida plant. The Japanese car major initiated a voluntary retirement scheme to employees across manufacturing and related operations from January 2020, to streamline its workforce as it slowly moved ahead with the ceasing of operations at the 1,00,000-unit capacity plant, established in 1997, and moving those to Tapukara in Rajasthan.

In November 2020, commercial vehicle maker Ashok Leyland announced a VRS for permanent employees across its offices and factories. This was the second time the company announced VRS in the past two years.

Component maker Bharat Forge completed a VRS scheme last year for employees at its flagship plant at Mundhwa in Pune and a unit at Satara, and 20 workers opted for it. The forging maker announced a second VRS in November 2020 for workers with 10 or more years of experience.

Other companies like TVS Motor always keep the VRS option open. “We always have a scheme where people can take early retirement with good benefits,” chairman Venu Srinivasan said.

–With inputs from Ashutosh R Shyam

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