Guest Column: Vaccinations – the path to recovery for manufacturing sector

The Indian manufacturing sector is among the most deeply stressed and closely watched domains in the past year. According to a recent report by the Centre for Monitoring Indian Economy (CMIE), employment in the manufacturing sector in 2020-21 is half of 2015-16. While this decline can be attributed to various factors, the COVID-19 pandemic also had a profound impact. 

For instance, according to a Parliamentary Panel report submitted to the Rajya Sabha, the Indian automotive sector shed 3.45 lakh jobs in the past year. The industry, which is the sixth-largest in the world, contributes nearly 7 per cent to the Indian GDP. 

In addition, lockdowns to control the spread of the pandemic leading to labour issues, disruption in supply chains, lack of materials, and unpredictable demand have caused severe disruptions. As a result, many OEMs and component manufacturers have slowed down production and were forced to shed a section of their employees. 

The disruption caused by the pandemic is evident all around the world. The challenge for businesses, however, is an effective resumption of operations. Companies have implemented various measures in plants, including regular COVID-19 tests, thermal screening at entrances, frequent sanitisation of plants, and emergency support to their employees. Yet, the disruption continues. 

Challenges 

The manufacturing sector is already grappling with uncertain demand. For example, in 2020, while April saw near-zero sales in automotive due to the lockdown, the latter half of the year saw an unprecedented rise in demand. This kind of uncertainty is undoubtedly an impediment to business planning and continuity.  

Statements made by various companies indicate that they were not ready for the surge and had to ramp up operations quickly. However, the lack of anticipation led to another challenge – a shortage of parts required to manufacture critical components, which further disrupted operations and supply.

Secondly, the manufacturing sector is one of the few sectors that cannot function on a ‘remote work model’. It requires people to be present on location, specifically those adequately trained in the field. The pandemic also saw more companies implement Industry 4.0 practices and automation solutions, needing skilled workers to operate. 

Automation and other technologies have eased operations and enhanced efficiency. The challenge, however, remains in the availability of skilled workers. In addition, the constant disruptions caused due to rising infections shrunk the available workforce further.

Business continuity plans now have to consider multiple potential disruptions to operations due to COVID-19. For example, a single employee who tests positive results in deploying innumerable protocols across the shop floor – potentially halting operations. 

Without vaccination, people remain susceptible to infection from multiple sources. And every illness is a cause for disruption, even if other members of staff are not affected. Therefore, to ensure seamless operations, vaccination is imperative. 

Creating jobs through vaccination

A healthy economy depends on the country’s ability to create jobs and provide job security, enabling consumer spending. Currently, given the paucity of openings and uncertainty in the job market, consumer spending is low. 

Recovery of the automotive sector is imperative to create jobs and see growth in the economy. Being the sixth-largest automotive manufacturer in the world, India is home to manufacturing hubs of leading automakers in the Asia-Pacific region. It also houses Global In-house Centers (GICs) and Research & Development (R&D) Centers of several leading companies.

The automotive sector is also in the midst of a transformation, implementing new emission norms and transitioning to electric mobility. With the rollout of BS-VI norms, India is also on par with global emission standards for the first time. This evolution promises a prosperous future for the sector, regardless of the disruption caused by COVID-19. 

Vaccination becomes crucial to ensure operational continuity in automotive and manufacturing. It allows people to return to work without further fears of disruption or infection. It also allows companies to plan the ramp-up of operations as necessary more effectively. More importantly, it restores confidence in people about the security of their jobs. 

The resumption of operations also enhances consumer confidence, slowly allowing the consumer to reinvest. In addition, it will enable people to travel and increase personal spending, therefore spurring growth in other sectors. 

Of course, the recovery of this confidence to pre-pandemic levels will take time, particularly given the profound impact of the second wave in India. But it is vital to begin the journey towards normalcy. And vaccination is the first step on that journey. 

Sudhakar Balakrishnan is the Group CEO at FirstMeridian.