Resumption blues post COVID-19 lockdown: Factories grapple with shortage of workers, supply chain hurdles

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Published: May 6, 2020 3:15:36 AM

Hobbled by a shortage of workers, companies are finding it hard to resume operations at an optimal scale and with migrants moving back home, it could be a while before factories hum with activity.

Honda Cars said the resumption of operations would depend on the uninterrupted supply of components especially since there are restrictions on movement in hotspots and red zones. (Representative image)

Hobbled by a shortage of workers, companies are finding it hard to resume operations at an optimal scale and with migrants moving back home, it could be a while before factories hum with activity. Companies are also grappling with a disruption in the supply chain, unable to source key inputs and components. Indeed, production levels are likely to stay relatively low until there are enough workers and also until retail sales outlets are re-opened.

As Sunil Kataria, CEO (India & SAARC), Godrej Consumer Products, pointed out restrictions on inter-district and inter-state movement could continue to hurt the availability of labour. Until workers come back from villages in large numbers – which could take many months – ramping up production looks difficult, according to MS Unnikrishnan, MD and CEO, Thermax, who explained the labour was needed at the construction sites.

“Those who go back home will return only after some time,” Unnikrishnan said. Thermax’s own factories are running at 50% capacity but unless there’s more contract labour available, it would be hard to raise the level.

At CEAT, workers have found it difficult to go to the factories since the colonies where they are reluctant to let them go out, S Venkatesh, president of HR at RPG Enterprises, told FE.

Rajesh Goel, senior VP (marketing & sales), Honda Cars, said the resumption of operations would depend on the uninterrupted supply of components especially since there are restrictions on movement in hotspots and red zones. Moreover, dealerships needed to be opened, Goel said, adding the initial production levels would likely be low given the limited workforce. RPG’s Venkatesh said the problem was not as severe at KEC International where 25,000 workers are employed during peak operations since they live at or near construction sites.

Bharat Forge Limited said on Tuesday that it is gearing up to start operations at its Baramati plant, by the weekend, having obtained the relevant permissions. Several other companies – Toyota Kirloskar, Dabur, Hero Motocorp — too have said they are resuming operations. While manufacturers of consumer goods, two wheelers and passenger vehicles aren’t looking to ramp up production to full capacity just before the festive season sets in, they nonetheless want to operate at 40-50% levels.

After zero production in April, makers of auto parts say indications are that production at OEMs could gradually go up to 20-30% by June-July, provided no additional restrictions are imposed. With e-retailers now permitted to deliver non-essential goods, in the green and orange zones, manufacturers of household gadgets, mobile phones and smaller items have got a boost.

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