Labour shortage may break supply chain in Coronavirus lockdown extension

New Delhi/Mumbai/Bengaluru/Kolkata/Pune/Chandigarh: India’s supply chain may again be strained to the breaking point if the strict national lockdown is extended — unless policymakers take steps to mitigate the acute labour shortage, in factories, in warehouses, in transportation and in distribution, that’s already evident and is set to worsen. ET spoke […]

New Delhi/Mumbai/Bengaluru/Kolkata/Pune/Chandigarh: India’s supply chain may again be strained to the breaking point if the strict national lockdown is extended — unless policymakers take steps to mitigate the acute labour shortage, in factories, in warehouses, in transportation and in distribution, that’s already evident and is set to worsen. ET spoke to businesses, both offline and online, across the value chain for this story. Some people spoke off the record.

Firms say unlike in the first few days of the lockdown, it’s not shuttered production facilities or even inter-state transport difficulties that are the biggest constraints. With millions of migrants either locked in or back home, and with every government statement on containment increasing the fear factor among workers, businesses are struggling to deploy even 20% of the required labour force.

Some of the biggest FMCG and essentials producers are among the worried as lockdown extension looms. Godrej Consumer Products MD Vivek Gambhir said labour constraint is the biggest challenge for production, transportation and distribution. “We will need more support from the government to get people back to work,” he said, “otherwise supplies will remain low”.

Piyush Patnaik, MD of Cargill’s oils business in India, said the company is running at about 30-40% of its capacity, and in factories that are open, there are restrictions on the number of workers. “There are no stocks in the warehouse,” he said.

India may be looking at an edible oil shortage. Praveen Khandelwal, general secretary, Confederation of All India Traders, said Tamil Nadu already has seen some shortage. Angshu Mallick, COO of Adani Wilmar, said “if the lockdown is extended…supply of edible oils will get affected”

India’s largest biscuit manufacturer by volume, Parle, is making do with only 15% of its total required labour force. Products category head Mayank Shah said while the capacity utilisation has improved from 10-15% to about 25%, logistics too has improved, but on the labour front there is major concern. The situation “will not improve until trains and buses start operation”.

It’s the same story across bluechip companies in consumer-facing businesses. An ITC spokesperson said: “Essentials factories have been operating with restricted hours and reduced workforce”, and that “manpower shortages and availability of trucks” are major challenges.

Online businesses in some cases are in a worse position. Egrocers, ecommerce players and retailers said movement of supplies has improved but labour shortage can cripple supplies again.

“Ecommerce is struggling because of labour shortage…demand is insanely greater than capacity, we have to plan how many orders to take based on how many people will come to warehouses to pick and pack,” said Albinder Dhindsa, cofounder, Grofers.

“As opposed to 10% on-ground staff attendance the day the lockdown began, today we have around 20% attendance, but that’s a far cry from what we need”, said a senior executive from one of the large online marketplaces.

Etailers said they are now planning for a situation where the lockdown goes on beyond April 14. But additional complications have come up. Local deliveries in Maharastra, Uttar Pradesh, Tamil Nadu and Telangana are becoming difficult again.

Mumbai, firms say, is a tough place for delivery staff. Government advisories have heightened apprehensions among on-ground workforce… only one-tenth of retail shops are open,” said Sourjyendu Medda, cofounder of a social commerce startup Dealshare.

And the news is as grim in commodities markets – from chai to chawal to tinned food. J Kalyanasundaram, secretary of Calcutta Tea Traders’ Association said if the “lockdown is extended supply will dry up from last week of April”. Processed food, too, may soon hit a supply snag. Subodh Jindal, president, All India Food Processors’ Association, said “units are running at 30% to 40% capacity” and a lockdown extension “will further lower supply”.

(Writankar Mukherjee, Jayashree Bhosale, Alnoor Peermohamed, Prashant Krar, Aditi Shrivastava, Madhvi Sally and Sutanuka Ghosal reported for this story)

Source Article

Lois C. Ferrara

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