Federal-Mogul to lay off 600 workers at Bangalore plant

In what could turn out to be one of the largest retrenchments in the Indian auto sector, global auto parts major Federal-Mogul Corporation is undertaking a massive lay-off in one of its key plants in the country.

The $7-billion US-based company plans to retrench over one-third of its 1,900-odd employees in its Indian subsidiary, Federal-Mogul Goetze, at its Bangalore plant. Initially, it plans to lay off 500 workers in the factory, which is engaged in the manufacture of pistons, piston rings and pins. During the last few months, the company retrenched a few of its key managers in the factory and over 600 contract and casual workers. The Indian arm of the company makes critical parts for Tata Motors’ Nano car and other vehicle manufacturers.
Downturn effect

The spokesperson for Federal-Mogul Corporation, Ms Jennifer Rass, told Business Line that the lay-offs are due to the downturn in the automotive industry and reduction in customer orders. “As a result of the current economic climate and the downturn in the automotive industry, Federal-Mogul Corporation will be adjusting workforce schedules at its global operations to reflect the reduction in customer orders and the need to reduce costs. These schedule adjustments will impact employees in our Bangalore facility, as the company streamlines operations and adjusts to the industry outlook,” said Ms Rass.

An employees’ union spokesperson claimed that the workforce reduction will not be confined to just Bangalore; similar measures are being planned for the company’s other factories in the country. According to him, there are plans to reduce one-third of the workforce from each of these factories. The company, which has about 43,000 employees across 35 countries, has 1,900 employees in its Bangalore plant.
May cut production

Once the workforce is trimmed, the production is expected to come down by half, said company sources. They added that as per the notice filed with the local Labour Commissioner, Federal-Mogul Goetze also planned to cut down the working days by 15 days every month till December this year. It has also offered a voluntary retirement scheme to its employees, wherein Rs 2.5 lakh would be offered to workers who opt for this scheme. Besides, the workers have been asked to surrender their earned leave too.

Federal-Mogul Corporation owns over 74 per cent stake in the publicly listed Federal Mogul Goetze (India), while the rest of the stake is with the public. The company’s shares closed at Rs 34.60 on Tuesday, nearly 1 per cent lower than the previous closing price.