Chennai/Bangalore, July 4: Reeling under severe labour shortage and increasing overheads in cities, apparel and textile firms are moving capacity to tier-2 towns and rural areas where plenty of labour is available and is cheaper too.
According to industry sources, 50-60 per cent of manufacturing units operating in the garment hub of Bangalore have shifted parts of their operations to smaller towns such as Shimoga, Hassan, Tumkur and Bangarpet. Some units are moving to Andhra Pradesh and Tamil Nadu as well.
Says Mr Thiagaraj Valliappa, Executive Director, Sona Valliappa Textiles, “There is severe labour shortage in Bangalore and textile companies have to compete with malls and restaurants, forcing us to look at smaller towns where wages are also 25-30 per cent cheaper and more stable. Wages in Bangalore are around Rs 6,000 a month.”
“Rentals in Bangalore are also high. Rural areas and small towns are at least 40-50 per cent cheaper,” adds Mr Valliappa.
Sona Valliappa, which had four spinning mills and a large garmenting unit in Bangalore, today operates only one mill and a finishing unit in the city. It has set up mills, weaving and garmenting units in the rural areas of Gugai and Attayampatti in Salem. “We intend to completely move out of Bangalore soon as we don’t see any future here,” said Mr Valliappa.
In a recent report, Assocham notes that the emergence of retail chains, call centres, courier and security agencies in the urban areas has thrown up fresh opportunities for a large number of un-skilled, semi-skilled and skilled workers.
According to Mr Gautam Chakravarti, CEO, Gokaldas Exports, each time a mall comes up in the city, the industry loses 1,000 people. The attrition in the industry is estimated at around 8 per cent.
Gokaldas has a workforce of 38,000. It plans to consolidate operations and move capacity outside Bangalore to its new factories in the nearby areas of Tumkur, Bangarpet, Madanapalli and Mysore and Chittoor in Andhra Pradesh. Currently, Gokaldas has 60 per cent of its operations in Bangalore but this figure could well go down in the future, says Mr Rajendra Hinduja, founder, Gokaldas Exports.
“For workers who come from villages, house-rent and transport costs in Bangalore are proving to be high. It makes more sense for them to return to their villages and opt for the NREGA scheme. Even with the market reviving, units in Bangalore are functioning at half their capacities,” says Mr Hinduja.
Sriperumbudur, near Chennai, is also facing severe labour shortage, says Mr Manickam Ramaswamy, MD, Loyal Textiles. “The government should force units to go down South,” he adds.
According to the Assocham study across 100 textile firms in Ludhiana, Amritsar, Surat, Ahmedabad and Kolkata, 45 per cent of respondents said their units are using only 50-60 per cent of production capacity due to labour shortage. And 10 per cent of respondents said they may soon move production units to interior areas where workers are available at low wages
SOURCE : http://www.thehindubusinessline.com/industry-and-economy/economy/article2159113.ece?homepage=true