Lower job order rates threaten small units’ survival in Coimbatore

Coimbatore: Micro and cottage industries are staring at the risk of closure as manufacturing companies continue to reduce job order rates amid a sharp rise in costs of raw materials.More than 30,000 entrepreneurs engaged in job work across the Coimbatore district are facing mounting pressure as manufacturers continue to cut hourly rates for three years despite rising costs, Tamil Nadu Association of Cottage and Micro Enterprises district president J James said. These units undertake machining and component work using raw materials supplied by larger industries, catering to sectors such as automobiles (two-wheelers, cars, buses, lorries and tractors), pump and motor manufacturing, wet grinder production, textile machinery, compressors, and even defense components. While manufacturing companies have increased prices of their products by 10% to 20% to offset the surge in raw material costs, the benefits have not been passed to job workers. Instead, the hourly rates for job orders have been steadily reduced, putting small entrepreneurs under severe financial strain, he added. He said a steep increase in rent and a sharp rise in workers' wages have created an unsustainable situation for small units. He added that the prices of essential production materials such as toolbars, inserts, drills, tips, oil and waste have surged by 50% to 100% over the last two years. At the same time, entrepreneurs who have invested several lakhs through bank loans to procure high-cost machinery including lathe, CNC, VMC, GD Wailer, radial drilling and turn milling centres are facing severe financial distress. Taking advantage of the limited availability of job orders, manufacturing companies are significantly reducing hourly rates paid to job workers, he said. According to him, CNC machining units that should ideally receive ₹350 per hour are being paid as low as ₹150. Similarly, for VMC operations, where the standard rate is around ₹550 per hour, companies are offering only about ₹250.
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