Tata Motors, the country's largest auto maker, cut down its workforce by almost 21 per cent at its Pantnagar plant in the first quarter of fiscal 2014. The reason cited for this move indicated economic slowdown, which has had an negative effect on the company's sales in the Indian auto market. Reportedly, the Pantnagar plant of Tata Motors is engaged in the production of its best selling light commercial vehicle Ace, which witnessed a drastic fall in its sales last year.
Along with Pantnagar plant, the company reported a reduction in employees at its other facilities as well, like Sanand in Gujarat and Hubli in Karnataka. When asked about the resources, the spokesperson of Tata Motors said that the company does not respond to such questions. “Given the market volatility, Tata Motors has been prudent in its manpower planning. It has avoided blind replacement of superannuating employees and also done some adjustments in its requirement of temporary resources. We align our production capacity with demands from the industry and our workforce is spread across markets where we are present,” she said later.
It must be noted that in fiscal 2013, the total employee cost of Tata Motors increased by almost 5.4 per cent, amounting to Rs. 2,837 crore. On the same, the company's annual report for the year said, “The company has taken steps to contain the manpower cost, by reduction in headcount, both permanent and temporary.” The statement further said that the cost ratio of workers to revenue has grown to 6.3 per cent from the earlier 5 per cent on lower volumes.
In fiscal 2013, the demand for Tata Ace crossed the mark of its highest ever at more than 3,25,000 units. The Ace line-up of Tata Motors, which includes Magic passenger carrier, is a widely appreciated vehicle in the rural market, the fact which facilitated it to surpass one-million mark in sales last year. However, between April and July 2013, the sales of Tata Ace sales dipped by 6.7 per cent with 1.02 lakh units as against 1.10 lakh units delivered in the same tenure last year. Industry experts are of a view that the slowdown in this segment clearly shows the fact that the economy of India is on a decline and it has now also started affecting the demand in rural areas.
On this, the Director General of Society of Indian Automobile Manufacturers (SIAM), Vishnu Mathur was quoted as saying, “June 2013 is the 15th successive month of decline in the commercial vehicles segment as there is overall slowdown in economy and freight movement has been affected.”
Interestingly, Tata Motors happens to be the market leader in commercial vehicle space with almost 59.5 per cent share in the domestic market as of fiscal 2013. In fiscal 2013, the Tata Motors Group employed a permanent staff of 62,716, among which 41,597 workers are based in India. According to company's annual report, last year, the average number of temporary employees was 39,009. The annual report said, “Sales in the light commercial vehicle (Ace) segment continued to drive performance, growing by a 21.8 per cent during the year to 3,93,468... market share in the segment (was) 62.2 per cent in 2012-13.”