Sanand rises as auto hub even as it battles skilled labour shortage

Chennai/Sanand: In the 40km stretch to Viramgam from Sanand, various small and large industrial units have sprung up in the last five years. They have transformed the once sleepy town of Sanand, near Ahmedabad, into a bustling industrial enclave.

add_main_imageTouted as the next auto hub after the Sriperumbudur-Oragadam belt in Tamil Nadu, which accounts for 40% of the country’s automobile production, Sanand has attracted investments from Tata Motors Ltd, followed by Ford India Pvt. Ltd and Maruti Suzuki India Ltd.

Non-automobile companies, too, have flocked to Sanand. They include the likes of Hitachi Ltd’s Indian unit Hi-Rel Power Electronics Pvt. Ltd, Colgate Palmolive (India) Ltd, Nestlé India Ltd and Bosch Rexroth India Ltd. NextMAds

With easy availability of land, well-linked roads to the port and support from the state government, Sanand seems to have what it takes to become an auto hub.

There’s just one hitch. When it comes to availability of skilled workers, the central town of Gujarat does not boast of a pool of labour that the auto makers need.

As a fix, Ford Motor India, which is set to begin operations in Sanand from 2014, is transferring some of its trained workforce from Chennai, to meet the talent crunch.

The company aims to hire 5% of its total workforce of 5,000 in Sanand from Chennai and a few other skilled employees from Gurgaon, Indore and Pune to help train the remaining workforce, said Kel Kearns, director (manufacturing) at Ford’s Sanand plant.

Ford has already begun hiring from Industrial Training Institutes (ITIs) and diploma colleges in Gujarat.

“We are hiring and on-boarding middle managers and the front-line supervisors. We will be hiring technicians to support the shift operations in the next few months, and about 80-85% of our overall workforce will be from Gujarat when the plant is up and running next year,” said Kearns, who has worked in Ford for 18 years, and has been given the task of setting up the plant.sixthMAds

The company had initially gauged the interest of the Chennai employees who possess the experience in moving to Sanand. Almost 800 employees expressed an inclination to move, said an official at Ford, who did not want to be named.

Ford, which is building a large factory close to first entrant Tata Motors’ plant, is the biggest foreign direct investor in Gujarat. It is investing $1 billion (around ₹ 5,850 crore) to build the facility that will have an annual capacity of 240,000 cars and 270,000 engines when it is commissioned next year.

“The fact that Ford is taking employees from Chennai to Gujarat shows that the state lacks specialized skills required for these auto and auto ancillary companies,” said Nagesh Joshi, managing partner at Antal International Network, a global recruitment firm.

The lack of skilled labour stems from Gujarat, which is a traditional chemical and diamond industry hub, having 126 diploma engineering institutes and 263 ITIs, while a traditional auto hub like Tamil Nadu has more than triple the number of institutions, with 479 polytechnics and 689 ITIs.

“The auto industry always develops as a cluster. While the cluster is well-developed in the south (Sriperumbudur-Oragadam in Tamil Nadu), west (Chakan, Maharashtra) and north (Gurgaon, Haryana), Gujarat was nowhere on the map. It will take at least three to five years for Sanand to settle down as a hub,” said Abdul Majeed, who runs the automotive practice at consultant PricewaterhouseCoopers India.

Majeed said companies will have to invest additionally to provide intensive training to the available workers and this may drive up costs by an additional 2-3%.

Tata Motors, which turned to Sanand in 2008 to make the Nano after facing protests at its original site in Singur, West Bengal, has hired its entire workforce of about 2,200 people from Gujarat, according to a company spokesperson. The company has sourced its workforce from ITIs across the state, the spokesperson said.

When Tata Motors set up its plant in Sanand, it moved some workers from its Pune factory and hired others from rival General Motors’ Gujarat operations in Halol, said an automotive consultant who did not want to be named.

“Availability of skilled manpower, with more industries coming in, will be a challenge which needs to be addressed proactively through better industry-government partnership,” said a Tata Motors spokesperson in an emailed response.

Since companies like Tata Motors and General Motors hired a lot of skilled local people, new firms will initially have to bring the required talent from outside, said Ashwani Jotshi, regional secretary for the western region at the Automotive Component Manufacturers Association of India.

Besides the availability of skilled labour in numbers, the quality of the workforce that is available is also a concern.

Ford has decided to install 300-400 robots in the plant, but Kearns said these are to deliver quality products in large volumes and not because of the workforce deficit.

An official close to French car maker PSA Peugeot Citroën said that while there was no clarity yet on the company’s Gujarat project, the kind of cars it aims to introduce in the Indian market will require some very skilled workers, which could be a challenge.

Peugeot had announced a ₹ 4,000 crore investment and aims to employ about 4,000-5,000 people in Sanand, but it has put its plans on hold due to financial troubles and is waiting for the Indian and European auto markets to recover to resume work, according to the official who didn’t want to be named.

“The problem of finding trained manpower would be the same for us as well as Maruti or Ford. One of the solutions is to train the people on our own and the government has shown their willingness to support us on this front,” said the same official quoted earlier. Peugeot had also drawn up a plan to set up a skill development centre on a public-private partnership basis.

Ford, Tata Motors and Maruti Suzuki, too, are looking to improve the skill base of the technical personnel in Gujarat by partnering with educational institutes and the state government.

Maruti Suzuki, which is also setting up two factories in Mehsana district, about 80km from Sanand, was allocated 700 acres in 2012 to set up a facility that can make 250,000 units in the first phase and is expected to be commissioned in 2015-16. The plant is expected to directly employ 2,000 people initially.

A state government official, requesting anonymity, said that both Ford and Maruti Suzuki will require about 25,000-30,000 workers combined in the next two-three years. This number includes the workers required for their ancillary units.

The state government is working with the auto makers to develop an adequate pool of skilled workers, said a second government official, who also requested anonymity.

While some auto makers may turn to automation to overcome the lack of sufficient number of skilled workers, they also have to meet a norm that requires companies given land by the state government to hire 80-85% of their workforce from among local residents.