Auto sector woes may intensify under stringent lockdown in Tamil Nadu

Companies start booking accommodation in hotels, college hostels and wedding halls near the factory for their workers and vendors, in order to keep the show going

The impact on auto manufacturing and other factories in and around Chennai is likely to intensify once the 12-day lockdown anounced by the Tamil Nadu government comes into effect on Friday. Companies are booking rooms in hotels and college hostels near their factories to ensure production isn't impacted completely.

State Chief Minister K Palaniswami had, on Monday, announced full lockdown from June 19 to June 30, covering Chennai, Kancheepuram, Tiruvallur and Chengalpattu. There would, however, be some relaxation made for essential/emergency services.

While private offices will remain closed in these districts, as far as manufacturing is concerned the Government has asked companies to do RT-PCR tests for factory workers, who will have to stay inside the factory premises for the next 12 days. They won't be allowed to travel to their factories from Chennai Metropolitan area. Continuous process industries and factories making essential items can function with adequate safety measures.

A Hyundai Motor India Ltd (HMIL) spokesperson did not respond to emails from Business Standard on the impact of the lockdown on the company's operations. However, sources in the company have said that HMIL signed up two college hostels with a combined capacity of 2,000 beds, near to the factory to accommodate workers and some of the company's suppliers. The sources agreed that there would be some production loss (at least 50 per cent) due to the lockdown.

Commercial vehicle maker Daimler India spokesperson said, "Of course, the lockdown will affect business because it impacts supply, production, delivery, sales and more. Having said that, we knew this was a possibility in the light of rising infections and were well-prepared. The government has deemed this a necessary measure to protect people's health and we support that. Adapting to the ever-changing situation of the Covid-19 pandemic requires agility and creativity. Although the renewed lockdown poses challenges for business, Daimler India Commercial Vehicles will continue to move forward as a team, devoted to delivering the best possible products and services to our BharatBenz customers."

The company is also providing accomodation for the workers in and around the factory.

Some of the auto components makers have decided to hire wedding halls in and around the factory.

"We have just resumed operations and are seeing some kind of orderliness with great difficulty. Demand is picking up in the rest of India and we are not able to meet the requirements of our customers outside Tamil Nadu," said A N Sujeesh, president of Ambattur Industrial Estate Manufacturers Association (AIEMA). The Industrial Estate manufactures components for the industries across the country and this will have an impact in those facilities outside Tamil Nadu also. 

"Whereever possible, the customers are going to shift the orders to some other company and will never come back to us. The customer isn't going to wait for a particular supplier from Tamil Nadu to start operations, and may replace us with somebody else. Once that happens, where do we fit in," he asked.

The government has directed a complete lockdown and allowing only people within the factory to work. There are certain office works which are essential to carry out the smooth production activity. The worker cannot take permit to a vehicle to dispatch the products, a lot of systems to be followed in an engineering unit, which a worker cannot do and the industry needs the quality control teams. These technical workforce are mostly local people and they stay with their family, companies cannot expect them to come and stay in the factories. The government could have permitted the e-passes, which has already been issued, to be used by the staff to travel within the district.

Last month only 10 percent of the sales took place as things were lukewarm. Maruti Suzuki is planning to produce more cars and there are a lot of positive developments there. For the last five to six days, the industry has been seeing very good improvement in sales, he added.