Slump forces auto parts makers to hit brakes

Slump forces auto parts makers to hit brakes


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The current economic slowdown has landed a heavy blow to nearly 400 auxiliary units that manufacture automobile spare parts in the Belur Industrial Area (BIA), near Dharwad.

Insiders say that nearly all of the auxiliary units in BIA that used to run round the clock are now functioning only for 20 days a month as production has taken a hit anywhere between 30-70%.

BIA, which employs over 60,000 direct, indirect employees today, initially struggled when it was set up 20 years ago. But this changed after the Tata Group established a series of manufacturing units here. This gave a much-needed fillip to the BIA as small auxiliary units were set up to provide raw materials and spare parts to companies like Tata Marcopolo, Tata Hitachi and Tata Motors. But since many of these units have been rendered inoperative due to economic slowdown and downfall in the production of automobiles, some entrepreneurs fear by next year, they will be functioning only for five days in a month as the owners of these units are struggling to repay the loans. 

“As the big companies have cut down the production drastically, the smaller units which supply spare parts are undergoing a huge loss. There is no chance of recuperating from the loss unless the demand grows in the domestic and international market,” said Srikanth Hulmani, president, Dharwad Growth Centre Industries Association.

In the last one year, 10,000 contract employees have lost their jobs, according to sources. Now even permanent employees are fearing job cuts. 

Under normal conditions, workers were hired to work in three shifts but now the units are functioning only on one shift. With no work in production units, the workers are being asked to clean the roads leading to units, take up tree plantation, gardening work and the like.

Vendors are now pinning hopes on the state and central governments to announce some package to safeguard the interest of entrepreneurs as well as employees.

“If the government does not propose plans to rejuvenate the ailing industries, it will be very tough for the automobile sector to bounce back,” Hulmani said.