Hosur Manufacturing Units Running Out Of Steam
The once flourishing small manufacturing units of Hosur in Tamil Nadu are facing tough times today. The global economic downturn has affected the state's industrial town that houses more than 1,500 small and tiny industrial units.
Nearly 75% of these are engaged in manufacturing components for the automotive industry. Not long ago, these auto part manufacturing units recorded healthy returns on their investments and saw steady growth.
However, this does not seem to be the case anymore. The demand has slumped drastically in the domestic and global auto market over the past few quarters, and the small and mid-sized auto part makers in Hosur are bleeding.
The Hosur manufacturing industry witnessed an impressive annual growth of around 10% between 2002 and October 2008. Besides the automotive sector, forging industry in this small industrial town also maintained a steady growth.
However, following the economic crisis and the subsequent plunge in export orders, the revenue growth of manufacturing sector in Hosur has dropped significantly to Rs 300 crore a month as compared to Rs 1,200 crore recorded in Aug-Sept 2008.
Automotive companies in Hosur, which is home to auto majors like Ashok Leyland and TVS Motors, have witnessed a 60% to 65% drop in their order books over the last couple of months.
The industry, which accounts for 40% of the total businesses in the district, has seen 4,000 job losses over the last three months. Dwindling orders and rapid closure of manufacturing units now threaten the very existence of the town's auto component industry.
In order to stay afloat, small manufacturing units in Hosur have begun exploring opportunities in other industries, especially the power sector.
Though, the recently announced excite duty cut by the Union government may temporarily revive the demand in the auto sector, there is a need for initiating additional measures to bring Hosur's manufacturing industry back on track.
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David Parks is a well known author and has written articles on Buy Trade Leads and B2b Marketplace, suppliers, Manufactures and many other subjects.