Hit by a pile up in inventory of its popular models Duster and Lodgy, Renault Nissan is reportedly planning massive layoffs in India and may cut nearly 3,000 jobs at its plant near Chennai.
The job cuts come in the wake of growing inventory levels over the past three months at the factory and dealers' outlets due to falling sales. The company has decided to cut the output by 50% at the plant, which will produce only 20 cars per hour instead of 40 cars an hour.
"The company has planned to disengage trainees, casual labour and apprentices, but the other workers will not be affected," a company source told The Economic Times.
The plant has an inventory of 5,140 vehicles of its popular SUV model Renault Duster and 4,100 vehicles of its recently launched Multi-Purpose Vehicle Lodgy. In addition, its nationwide dealers still have 10,500 cars that need to be sold.
The company's sales division is expected to be the first to see the layoffs. As many as 71 of the 112 employees in the sales unit have quit in the past few months.
"RenaultNissan alliance strongly believes in fair and ethical employment practices across the globe. Our employment conditions are in line with the prescribed labour laws of the country. We have not indulged in any wrongful dismissal of employees or trainees," a Nissan spokesperson said.
"As a responsible corporate, we regularly take trainees under various training schemes and impart necessary skills and knowledge. RNAIPL is under no obligation to offer full-time employment to these trainees. Full-time employment is offered only on availability of specific roles and performance of the individual trainee," the spokesperson said.
A senior executive of Renault has said that "it would not be appropriate to comment now. The factory has had labour issues in the past".
The factory had fired a few trainees last year when they were about to receive their confirmation letters "as permanent employees approached the state labour department against the company," he said.
Earlier, Renault and Nissan were sourcing about 12,000 cars a month from its plant at Oragadam, near Chennai, but now they have reduced it to 4,000.
The factory had started manufacturing cars for the Renault and Nissan alliance in 2010 and it now produces popular models such as Micra, Duster and Terrano.