Large-scale layoffs in car, bike industry: 14 units stop work
By Aamir Shafaat Khan
KARACHI, Nov 14: The weakening demand in view of economic slowdown has forced the Chinese bike makers to cut jobs by 20-30 per cent in the last few months as 14 units are not in production since July.
In another development, a Korean car assembling unit has reduced the workers’ strength, while a leading Japanese car maker has already undertaken downsizing of workers and staffers.
A leading Chinese bike maker, who also manufactures CNG rickshaws, said that he had slashed 100 jobs involving both contractual and permanent employees out of a total of 400 person employed in bike assembling unit and its related work, while 200 people out of total 400 have lost their jobs in the rickshaw assembling unit.
On condition of anonymity, he said that the company was now producing 150-200 units a day as compared to 300 units before May, 2008. He said the company had planned production of 500 bikes per day this year but in view the falling demand the plan had been shelved now.
The other reason to increase the production was to venture in export business by tapping the markets in Sri Lanka, Bangladesh and some African countries. This plan had also been put on hold, he added.
The bike maker said that the sales of motorcycles had been dropping sharply owing to reasons like surging prices of bikes caused by devaluation of rupee against the dollar, increase in utility charges, and rising wages.
He said that sale of his rickshaw was hit due to the suspension of the previous government’s Rozgar Scheme for the last three to four months. The company, he added, was producing 30 units a day for the scheme and now the production had been suspended.
The vendors of parts and accessories have suffered a major setback since the assemblers have either suspended or slowed down their production.
A bike unit usually employs 100-400 persons for plant and office work. One can estimate the job losses at the 14 plants, which had closed down their production plus the job cuts in its vending industries, he said.
President Association of Motorcycle Assemblers Mohammad Sabir Shaikh also confirmed instances of massive lay offs in Chinese bike making units, coupled with suspension in production by 14 units. He said that the combined production of 60 bike assembling plants, including three Japanese (Honda, Yamaha and Suzuki) dropped to 65,625 units in September from 70,396 in August and 78,888 units in July this year.
He said the industries were waiting for the good output of various crops like rice and cotton, when growers would make heavy bike purchasing after getting money. The sales may slightly improve in the next one or two months.
Besides, other factors he said the increase in prices of Chinese bikes by 15-20 per cent and 25-30 per cent in Japanese bikes since March have dampened consumers’ buying sentiments.
CAR INDUSTRY: Dewan Farooqui Motors Limited (DFML) is reported to have cut 167 jobs from the month of Ramazan till now, while Pak Suzuki Motor Company (makers of cars and bikes) is reported to have cut over 300 jobs involving employees on contract, ad hoc and daily wage basis.
However, officials of the car assembling units are now observing complete silence on revealing exact financial health of their companies, besides hesitating in giving the current sales and production data. Many of them avoid talking on the unemployment issue as they think that any bad news would raise the eyebrows of their shareholders and their bankers.
The market sources said that the makers of Toyota Corolla and Daihatsu Cuore and assemblers of Honda Civic and City have so far not undertaken any drastic steps to downsize the workers’ strength despite drop in their production.
Sources said that most of the assemblers were working on single shift basis. The makers of Honda cars are reportedly making production on only three days a week instead of a full week as the company is only producing Civic. It plans to roll out a new City model in January next year.
A car dealer said that usually November and December are regarded slow months for car sales as the buyers prefer to buy a car in January owing to the change of year of purchase, but the current period is said to be the worst compared to previous years.
Many dealers are sitting idle as the prospective buyers are not turning up in large numbers.
He said that the car sales had suffered a severe jerk from the suspension of car financing by many banks, which used to contribute 70 per cent of the total sales. Now its share has come down to 10-20 per cent. After increase in interest rate the car financing rate will further go up.