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Layoffs in auto industry

October 07, 2012


KARACHI, Oct 6: As the auto industry faces a steep decline in production, car assemblers have retrenched approximately 300 workers followed by the reduction of 2,500 non-essential people in the vendor industry in the last two months.

“Many vendors are working four days a week. Retrenchment of trained workers is always painful but helpers and other supporting workforce are being reduced depending on day to day production load,” chairman Pakistan Association of Automotive Parts and Accessories Manufacturers (PAAPAM) Munir K. Bana told Dawn on Saturday.

“Obviously, we are waiting and hoping for changes in government policies. Our appeals to the president, PM and deputy PM has borne some fruit and the Industries Ministry moved a summary to the Economic Coordination Committee (ECC) for reducing the age of used cars to three years. However, this proposal was rejected by another ministry,” he said.

He said that vendors are perturbed over piling of imported raw material. The car industry and vendors are meeting secretary industry next week. On October 13, the stakeholders will meet Deputy Prime Minister Parvaiz Ilahi (who is also senior minister of industries).

“We will plead our case before the ministries to save the auto parts industry, which is fully documented, pays full taxes and provides employment to 200,000 persons directly and 1.6 million workers indirectly,” Bana said.

“Taking an average family of six persons, the industry is a source of putting food on the tables of 1.8 million families or over 10 million individuals. The employment in three Japanese car assembling units was estimated at 8,000,” he informed.

Usually the assemblers and even the vendors employ workforce depending on good sales and production prospects and they relieve them in case of sharp slow down in production and sales. Meanwhile, a leading vendor of automobile industry has said that the entire industry is on the verge of closing down because of drastically reducing demand of components.

He said that his company was supplying components to Pak Suzuki Motors Company for almost 10,000 vehicles per month which is now reduced to 4,000 to 5,000 vehicles per month. Our supplies of components to Indus Motors Company were for 3,500 to 4,200 vehicles per month which has now plunged to 1,200 vehicles per month which is alarming, he added. Moreover, demand of components for coming months i.e. November and December given to vendors is reduced by 70 to 80 per cent as compared to before July 2012’s demand.

He said from last week of September his company started closing down the factory for three days in a week which means 12 days closure in a month while earlier the company was working 30 days in a month on two shift basis and paying extra wages (overtime) to workers for work in extended hour’s to meet the car assemblers’ demand.

He linked the lingering crisis in auto sector to import of five years old used cars in large numbers. Countries like India, Thailand, Malaysia, Japan, South Africa etc protect their local industry as have imposed heavy taxes and penalties to discourage import of vehicles.—ASK