Auto Industries lose talents to major OEMs

Concerned over the alarming rate at which auto companies are directly hiring from their pack, auto component manufacturers are working on a first-of-its-kind anti-poaching agreement with the former. Though unlikely to take formal shape soon, the vendors hope that such a measure would deter big OEMs or original equipment manufacturers to increase headcount at their cost.
"In the last one year, most auto component manufacturers have lost at least 10-15 of their employees to the bigger OEMs. This is a disturbing trend especially because we enjoy a long business relationship with our customers," an executive of an auto component company who did not want to be identified told FE. He said that if the trend goes unchecked, it could weaken the supply chain in the longer run.

Take for instance the country's largest headlamp producer, Lumax Industries. In just three months it has lost at least three of its engineers to Mahindra Group subsidiary Mahindra Engineering and the automotive engineering arm of the Tata Group, Tata Technologies. "We feel that in the coming weeks two more offers are likely to be made to our engineers. We have raised the issue with the senior management of the two companies already," said PSVS Raju, senior general manager of Lumax Industries.

Srivats Ram, the president of apex auto component body Automotive Component Manufacturers' Association (Acma), said the matter has already been taken up with the OEMs. "Within Acma, we have an OEM committee on HR where issues such as this have been discussed. By directly recruiting from suppliers, the OEMs are weakening their supply chain," Ram said. He added that while Acma cannot prevent stray instances, it would be a concern if vendors were targeted for recruitment.

Surinder Kapur, chairman of the Sona Group, the country's largest component maker that supplies to leading OEMs including Maruti Suzuki and Hyundai, argued that the trend is restricted only to the new OEMs.

"Poaching is mainly done by the new auto companies," he said. "In a democracy, we cannot stop individuals, but because there are existing business relations it should be addressed. Companies can explore an informal understanding to stop this," Kapur said. Jayant Davar, vice-chairman and managing director of Gurgaon-based components manufacturer Sandhar Technologies, which manufactures a wide assortment of auto parts including rear view mirrors, door handles and sheet metal components, said that owing to shortage of talent in the market, OEMs are opting to recruit directly from component makers. "While the growth in auto sales have been tremendous in the recent past, it is also pushing OEMs to increase their headcount," he said. What has caused more consternation in the ranks of auto component companies is that the trend cuts across junior and middle management level employees. "We have invested time and money in imparting the training to our middle-ranked management.

Since the pockets of our OEMs are much deeper, we cannot match their salaries," another vendor said. Typically OEMs can offer up to 50% more salaries to executives of component companies. Raju of Lumax Industries said that while a fresher with around two to three years' experience gets paid anywhere between R35,000 and R40,000 per month, the OEMs offer a salary of close to R 60,000.