War on Covid-19: Major auto, electronic units in Tamil Nadu come to a halt

People-first approach marks decision with some firms saying there will be no pay or job cuts

Manufacturing activity in Tamil Nadu, especially in and around Chennai, has come to halt with large auto and electronics companies deciding to shut their plants as part of the effort to contain the spread of Covid-19 (Coronavirus).

Auto and component makers that have suspended operations include BMW, Hyundai, TVS, Daimler, Royal Enfield, Nissan, Sundaram Clayton, Tube Investments, Pricol, Flex, and Salcomp.

The six car manufacturers located around Chennai -- Ford, Hyundai, Renault, Nissan, BMW and  Mitsubishi -- have a combined capacity of 1.38 million units a year.

Luxury car maker BMW said that local production at the Group Plant in Chennai has been suspended till March 31, 2020.

Hyundai Motor India said it has suspended manufacturing operations from March 23 till further notice.

“We will await further notifications from State Government to resume plant operations,” the company said. Hyundai has two plants with a capacity of about 700,000 units a year.

Ford India has decided to temporarily suspend vehicle and engine production at its plants in Chennai and Sanand for a week, from March 23 to March 28.

Nissan has also stopped production from its facility in the outskirts of the city.

Two- and three-wheeler maker TVS Motor said as an interim measure, the company has decided to shut operations at all its plants and offices for two days effective Monday.

“The Company will take further steps after reviewing the situation,” the statement added.

Royal Enfield has suspended all operations globally, starting Monday, March 23 till March 31.

“This will include the company’s manufacturing facilities across Tiruvottiyur, Oragadam and Vallam Vadagal in Chennai, Technical Centres across Chennai and at Bruntingthorpe, Leicestershire in the UK, and all company offices and company owned dealerships in India,” said the company in a statement.

The company also issued advisories to all dealerships in India to shut down for the same time period, or follow local administrative orders, as may apply.

“During this time period, company employees will continue to work from home, and there will be no salary deduction for any permanent or temporary employees or workforce, and no reduction of workforce,” said the company.

Commercial vehicle major Daimler said that it suspending production at its Oragadam facility, where company produce bus and trucks for domestic and global markets, till March 31.

Sundaram Clayton has shut operations at all manufacturing facilities for two days, effective from March 23.

Electronics major include Salcomp, Flex are among the companies which have decided to halt production.

Sasikumar Gendham, managing director at Salcomp, the electronic manufacturing company acquired by China-based Lingyi iTech recently, said, "Our production has not been affected to date, but given the timeframe, it is absolutely essential for us to keep our employees safe. Therefore in the interest of our employees, their families and well-being of the society, we have decided to halt production this afternoon until 31 March and insist on social distancing. We have taken a People-First approach."

"Of course, there is going to be loss of production during this period which will impact sales; but most important is to safeguard its people now," he added.

The company has been operating as usual until now. It had stocks for a while and now airlifting all goods from China. In terms of its expansion in Chennai, where it has taken over the defunct manufacturing facility of Nokia, he said that probably there might be a delay of few weeks only for completion, which is not a major issue.

It has last year announced plans to acquire one million sq ft of Nokia's mother plant in the SEZ, in Sriperumbudur, near Chennai, along with 3 lakh sq ft defunct factory of another electronic component manufacturer Lite-on-Mobile. The plans announced are the invest around Rs 1,300 crore into the expansion.

A source from Flex has said that many of its employees are working from home, and its manufacturing activities has been stopped. Social distancing is the need of the hour and required to prevent the disease. It is using the best practices of how it handled the situation in its Chinese manufacturing facility, where the company has shut down operations completely to prevent the disease spreading. Now China is back to operations.

Flex, in last July, has announced the opening of its new mobile phone manufacturing facility, Flex Chennai Industrial Park 3, located in Walajabad near Chennai. Spanning 159,000 square feet, this facility will further expand Flex’s manufacturing operations in India.

While sources said that the Foxconn India manufacturing facility in Chennai are closed, company's Country Head Josh Foulger did not respond to queries related to this.