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Auto companies going all out to overcome talent shortage

Auto companies going all out to overcome talent shortage
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First Published: Wed, Jun 13 2007. 12 06 AM IST
Updated: Wed, Jun 13 2007. 12 06 AM IST
Recruit the good people that you spot and worry about what project to put them on later,” says Vinod Dasari, chief operating officer, Ashok Leyland Ltd, one of the largest players in India’s commercial vehicles industry. This statement is indicative of the challenges in India’s fast-growing automobile industry.
Faced with shrinking sales in markets such as the US, global auto players are zeroing in on India where sales are soaring across categories. But for the auto manufacturers, both Indian and foreign, that are planning to invest $5 billion (Rs20,500 crore) to set up new plants and ramp up operations by 2012, the key to success will likely be employee acquisition and retention.
Ashok Leyland has aggressively upped compensation levels to benchmark with competition. It has also added many incentives for employees, including a graduate engineering training programme and the lure of letting high-performance employees pick projects?of?their?choice.?It’s also benchmarking its compensation package against a basket of competitors and its goal is to be better than 75% of its peers.
“Talent acquisition is a huge challenge in the last two years and it’s worsening now,” says Dasari, whose company operates in a state where at least two large new auto projects—BMW and the Mahindra-Renault-Nissan—are coming up soon. Besides, Hyundai Motor India Ltd is putting up additional capacities as it plans to make Chennai the global hub for the its small car production.
Ashok Leyland has acquired a new director of sales and marketing, Rajive Saharia, who had quit his last job at an auto component firm. Mahindra International’s managing director Arun Pande quit last year. Pande’s position didn’t remain vacant for too long with Eicher Motors chief executive, group affairs, Rakesh Kalra stepping into his shoes.
Mahindra International is a joint venture (JV) between Mahindra & Mahindra Ltd and US-based International Truck and Engine Corp. It’s gearing up to take 15% share in India’s fast growing commercial vehicles market. The JV is developing its first two offerings, including a 25 tonne truck, at its Pune research centre.
The shortage of manpower is more critical on the shop floor where every company is chasing the same limited pool of skilled technicians and workmen says, Satish Sekhri, managing director of Bosch Chassis Systems India, one of the key suppliers in the auto industry. Sekhri says that while attrition rates have been hovering between 10% and 15% in the last two years, the arrival of Volkswagen AG, General Motors, Mahindra International and DaimlerChrysler AG will make matters worse, especially in the Pune belt, which is evolving as a major auto hub.
Bosch Chassis is trying to contain potential exodus by offering industry-beating salary hikes—more than 20%. “It’s a great time to be an employee, but if you are the CEO or the owner of a company, it is not a great place to be,” Sekhri says. Luxury car maker DaimlerChrysler, scaling up its operations with a new Pune plant, is more than aware of the manpowr shortage. It has recently flexed a long-standing rule of staff increments every other year by offering increments two consecutive years in a row to all its employees, says a senior executive of the firm who does not wish to be identified.
General Motors India Ltd is believed to have lost its key HR personnel to German car manufacturer Volkswagen, setting up its first plant in India to make more than a lakh cars at Talegaon,?near Pune. However, this could not be confirmed.
Racing to expand capacities to meet the demands of the original equipment manufacturers (OEMs), auto component and ancillary units in western India are perhaps the worst hit by the sudden drying up of suitable candidates in a region otherwise known as the engineering hub of India. Cash-strapped and unable to meet the lucrative salaries being offered by OEMs themselves, auto component manufacturers are up against the wall. “Candidates normally appear for an interview with at least two offer letters in their pocket and bargain hard for a better offer,” says one such manufacturer who supplies to more than half a dozen OEMs in the country.
“Yes, for certain positions it is true, but not for all positions,” says P. Balendran, vice-president, General Motors India. “Overall, there’s a shortage of trained manpower in the industry, but as of now we aren’t facing any problem. We’ll need more people as we come closer to start of production. If the present trend continues, the shortage can cause problems.”
According to Madhav Sharan, senior client partner and regional leader, global industrial markets Southeast Asia and India of executive search firm Korn/Ferry International, there’s significant talent shortage in the auto sector, combined with a rapid increase in salary levels. Explaining the trend, he says, “About three years ago there was a new wave of international automotive companies setting up R&D centres as well as manufacturing operations in India. Due to increasing domestic demand, as well as growing exports, both domestic and international automotive manufacturers have rapidly increased their production volume in India in the past couple of years. Today a lot of design support is provided to R&D centres in North America and Europe.”
Industry and company sources maintain that one of India’s oldest auto manufacturer, Tata Motors Ltd, is losing people across categories to Mahindra International, among others. While the situation has not yet reached senior managerial levels, it’s losing people from ancillary development and its research centre, a key element of its operations.
A company spokesperson, however, downplayed this, saying: “Just like any organization in any industry, Tata Motors does have attrition. However, it’s less than the industry rate. As a preferred employer, we continue to retain the desired talent and also attract the desired talent… This is also reflected in the response that we have received to recruitment advertisements for our expansion plans.”
General Motors is in the process of recruiting people at various levels currently, mainly for technical positions. Replying to a query if it is becoming difficult to find people, Balendran of General Motors, says, “We have just started the process and it is little early to talk about the position now.” The car manufacturer has currently close to 80 people at Talegaon in their direct employment at various levels in project, maintenance, purchase, accounts, HR and other support functions. Construction of the plant, which will manufacture more than 100,000 cars, is in full swing and it will be operational by the last quarter of next year.
According to Sharan of Korn/Ferry International, one of the biggest challenges facing automotive companies is that they have to compete with information technology and related service companies for talent. In those sectors, not only are salaries much better, but often engineers find the working environment more attractive than in conventional industrial companies.
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First Published: Wed, Jun 13 2007. 12 06 AM IST
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