Coronavirus impact: Hero MotoCorp, Fiat, Tata Motors suspend production; others likely to follow suit

India's largest two-wheeler manufacturer Hero MotoCorp and Italian auto major Fiat have decided to suspend production at their factories till the end of this month in the wake of the Coronavirus pandemic that has affected more than 340 people in India so far. Hero MotoCorp has said apart from India, it has also suspended operations in its other factories in Bangladesh and Colombia.

"With the safety and wellbeing of its employees as the top priority in view of the escalating COVID-19 situation, Hero MotoCorp has decided to halt operations at all its global manufacturing facilities - including in India, Colombia and Bangladesh - and the Global Parts Centre (GPC) at Neemrana with immediate effect until March 31, 2020," the company said in a statement. "Employees at all the other functions and locations including the Centre of Innovation and Technology (CIT) in Jaipur in the northern Indian state of Rajasthan will continue to work from home, except for those whose physical presence is necessary to run the day-to-day essential services."

Fiat Chrysler Automobiles that makes the Compass SUV in India and Fiat Automobiles Pvt Ltd have also announced to suspend operations at their Ranjangaon factory till the end of this month.

"Fiat Chrysler Automobiles (FCA) together with Fiat India Automobiles Private Limited (FIAPL), FCA's joint venture manufacturing facility in Ranjangaon, announced today that it will work with the Government to temporarily close operations and suspend production to protect the health and safety of employees. FIAPL will continue to be staffed with a small number of employees, who are engaged in emergency services," read a statement released by the company. "There will be no retrenchment of any plant employees as a result of the plant closure and all will continue to receive their salaries during this closure period."

India's biggest automaker Tata Motors has also said it was winding down its main Pune factory to skeletal operations by the end of March 23, Monday in preparation for a full shut down Tuesday onwards should the need arise.

"As a manufacturing organisation, we have a complex situation at hand. A large part of our workforce operates in plants and at our Engineering research centre. Their work cannot be done remotely and therefore we have people working on-site in these locations with a heightened degree of personal hygiene and safety," said Guenter Butsheck, managing director and CEO, Tata Motors in an internal note to the employees of the company.

"We have been monitoring the situation closely and all data seem to point out that Maharashtra has been the most impacted. In the interest of the safety of our employees in the state, we have decided to rapidly scale down activities at Pune site to get to skeletal operations by end of Monday, March 23, 2020, and be ready for plant closure by end of Tuesday, March 24 if the situation warrants. We shall remain in this mode till March 31 and review it in due course," he added.

Other companies are likely to follow suit in the next two days. A senior executive in a Gurgaon based company said they are likely to announce plant closure soon and arrangements are being made. Another executive who works in a Chennai based firm said operations in his factory has been significantly reduced with only half of the workforce allowed to work.

"In any case, the production schedule for March was very lean in the run-up to the transition to BS-VI regime which meant we had to completely stop making BS-IV models. So even if we shut the factory for the next 10 days, it does not make any significant material impact to us," he said. "The real impact of Covid-19 on our operations in financial terms will only be visible from mid-April onwards. If things do not improve, it will be very substantial."

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