Covid-19 may force car firms into more automation, less reliance on labour: EY

An EY report said automobile companies will now have to rebuild and reinvent a new ecosystem to accommodate the new normal that is likely to emerge post coronavirus crisis.
By : PTI
| Updated on: 11 May 2020, 10:34 AM
File photo of cars on display at the showroom of a Hyundai dealership in Russia has been used for representational purpose. (REUTERS)
File photo of cars on display at the showroom of a Hyundai dealership in Russia has been used for representational purpose. (REUTERS)
File photo of cars on display at the showroom of a Hyundai dealership in Russia has been used for representational purpose. (REUTERS)
File photo of cars on display at the showroom of a Hyundai dealership in Russia has been used for representational purpose.

The Indian automotive sector will continue to face challenges related to non-availability of labour and concerns over health and safety management on the shop-floor following the coronavirus pandemic, which may force firms to accelerate adoption of digital technologies in manufacturing, a report by consultancy firm EY said.

This health crisis will settle gradually and would leave a profound impact on people and the ways of working especially on the shop-floor. There will be several changes to existing working norms and guidelines that organisations will need to abide by in order to ensure safety at the workplace, said the report titled 'Now, next and beyond: Auto factory of the future'.

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Elaborating on how automotive shop-floors will evolve and adopt digital technologies post Covid-19, the report said automobile companies will now have to rebuild and reinvent a new ecosystem to accommodate the new normal that is likely to emerge.

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(Also read: Time to innovate: Hyundai's plans for a 'new normal' post lockdown blues)

"The auto sector will continue to face challenges related to non-availability of labor, concerns on health and safety management on the shop-floor. A digital shop-floor with specific interventions on planning and execution will become the new normal," it said.

The report further said,"Due to growing apprehensions during the lockdown, workmen are refraining from attending work. Some shop floors have been left deserted. Further, due to large scale migration of labour across India, availability and redeployment of contract labour post lockdown is a major concern."

As contract labour accounts for more than half of India's auto industry's workers, the lockdown could lead to several complexities around supply of contract labour, forcing companies to automate and thereby reducing the reliance on contract labour, it added.

Stating that the Covid-19 outbreak is having a profound impact on the automotive shop-floor, the report said, "This makes it important for the firms to expedite a well-planned journey to manage the crisis and build resilience for future uncertainties. Digital is emerging as a real option to enable manufacturing and supply chains attain strength and adapt to the new normal."

(Also read: Exclusive: Maruti Suzuki plans 'phygital' means to guide buyers post lockdown)

EY India Partner and Automotive Sector Leader Vinay Raghunath said, "In a post Covid-19 world, we do expect continued adherence to social distancing norms. Apart from demand-side variability, the auto sector will continue to face challenges related to non-availability of labor, concerns on health and safety management on the shop-floor."

He further said, "A digital shop-floor with specific interventions on planning and execution will become the new normal. Every player in the auto sector must invest ahead of the curve to achieve greater resilience and develop immunity against the future market uncertainties." 

The EY report said auto firms must adopt digital manufacturing technologies to uplift operational efficiencies in all aspects with the current constraints of manpower and resources in the automotive industry.

"Adopting these technologies, along with its modularity and infrastructural backbone in a gradual and phased manner has become imperative in preparation for the next 'Black Swan' event," it said.

The report, however, said although digital adoption on manufacturing shop-floors in India is at a nascent stage, unlike other industries, the automotive shop-floor still leads in the adoption of emerging technologies in India.

A few factories in India are using substantial automation in their production lines -- physical robots, automated guided vehicles, artificial intelligence, machine learning, and predictive maintenance.

"The Covid-19 outbreak would serve as a reminder and would force other automotive players to review their current maturity stages and embark on a journey to transform their operations leveraging digital technologies. New business and operating models will require close integration of both manufacturing and supply chain," it said.

First Published Date: 11 May 2020, 10:34 AM IST
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