Forging industry warns of more production cuts, job losses

Mumbai: The uptick in automobile sales in the festive season after a double-digit drop till September has not brought any cheers to the forging industry which has warned of more production cuts and massive job losses if the situation does not improve fast. The slump in auto demand has impacted the forging industry badly, leading to a sharp decline in demand and a substantial 25-30 per cent production cut, the Association of Indian Forging Industry said in a statement on Tuesday.

However, the association did not say how many jobs have been lost since the crisis began. The auto sector is critical for the industry because as much as 60-70 per cent of demand comes from auto OEMs. "Auto retail sales during the festive period rose 5-7 per cent, which came in after a double-digit drop in volumes till September. But this was driven by huge OEM and dealer discounts.

Therefore, the overall auto components and forging industry have not seen any improvement in their order books," the association said. According to the association, October wholesale still shows a 7-8 per cent decline over the year-ago period. "If the current scenario persists, the industry anticipates further production and job cuts as some OEMs have already announced more production cuts for November," the association president S Muralishankar said.

He further said production and demand at the manufacturing level haven't seen any upward movement because of which the forging and auto component sector continue to reel under the auto slowdown. "Currently, there is a huge inventory build-up and to curb this, many forging units have been making proportionate cuts in production.

If this scenario stretches further, we anticipate more production loss and job cuts," he warned. The forging industry primarily caters to the USD 57- billion automotive industry. The association represents around 400 forging units with cumulative annual production of 3 million tonnes.