The global economic meltdown has started taking its toll on the steel capital of Punjab, Mandi Gobindgarh, and on Ludhiana, an industrial city.
A large number of steel units have been closed down in recent months, while the textile and knitwear industries seem to be hurtling towards chaos.
A cross-section of industry associations told FE that factors like recession in the global markets, the constant fluctuation of the rupee, high production costs, the lack of skilled workforce and infrastructure have forced some medium- and small- scale industrial units to down shutters. The associations say that a majority of the export houses in Ludhiana were working at one-third their capacity as orders from overseas customers were drying up.
SK Jain, chairman, Knitwear and Apparel Exporters Organisation, told FE, ?A short summer season in 2008 had affected the T-shirt and shirt market, while the brief winter of 2008-09 spelt disaster for the knitwear market.?
The steel hub of Punjab, Mandi Gobindgarh, has seen about 100 scrap units closing operations due to the fall in the demand for steel from sectors such as automobiles and real estate, forcing workers to return home in Uttar Pradesh and Bihar, from where a large chunk of the migrant workforce in Punjab come.
Vinod Vashisht, president of the Mandi Gobindgarh Steel Re-rolling Mills Association, told FE, ?While steel rates have fallen drastically over the past few months, most of the secondary steel producers here bought the raw material, iron scrap, at high rates. Moreover, the cost of making ingots or rolled products was also high. Given that, industrial units had no option but to close down.?
The sluggish demand has meant that steel furnaces and other steel rolling mills that produce TMT, angles and structures have had to slash production by more than 50% or close down the units to survive in what they call the worst-ever slowdown