The Hindu Business Line : Attrition haunts auto parts makers

The entry of global vehicle manufacturers in India and the expansion or diversification of the Indian automobile companies may have spurred business for the domestic auto component industry, but on the flip side, the original equipment manufacturer (OEM) talent hunt is proving to be their undoing.

As companies like Nissan and Volvo along with domestic companies such as Ashok Leyland and Tata Motors expand their base of engineers and trained personnel, the auto component industry is haunted by serious top-level attrition, with a lot of its skilled staff moving to these high-compensating OEMs.

For instance, Sriram Pistons and Rings Ltd, which supplies to major domestic and global OEMs, is already bearing the brunt of this phenomenon wherein it has lost many of its employees to global vehicle manufacturers.

“There is a migration of skilled and senior-level trained engineers to domestic and global OEMs. The industry is losing almost 15- 20 per cent of its trained and senior-level engineers to vehicle manufacturers,” said Mr A.K. Taneja, President, Sriram Pistons and former President of the Automotive Components Manufacturers Association.

Similarly, AVTEC, part of the CK Birla Group, has lost about 5-7 per cent of its employees to OEMs.

“While for our company the attrition numbers have been one-third of the total employees who have left, it is certainly becoming a major industry issue,” said Mr Sudhir Rao, Chief Executive Officer, AVTEC, which supplies to General Motors, Hindustan Motors, Mahindra and Ashok Leyland.

Domestic component makers find it difficult to match the compensation that global and large Indian OEMs are able to offer key senior staff.

Besides, with opportunities in the sector peaking, executives today are willing to explore new vistas, according to industry watchers.

“The only way to address this issue is to increase the intake of fresh engineers, train more people, assuming that some of them will migrate. Besides, there is a need to enhance low cost automation,” said Mr Taneja, adding that one of the initiative that his company had taken was to intensify the effort of transferring skills to associates or workers since the attrition at that level was low.

It is not only OEMs that are losing skilled staff, but the component industry too is finding its senior employees on the move, said Mr N.K. Minda, Managing Director, NK Minda Group. Though the numbers are not very high as yet, there is clearly a shift to IT and OEMs, he said.

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