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JCB India bites the retrenchment bullet, sacks 400 permanent employees

The Indian industry may be in an unlock 1.0 but for some corporates, retrenchment of manpower seems to be of primary importance. JCB India, India’s largest construction equipment major has laid off almost 400 permanent employees as part of its rationalisation of workforce citing falling business volumes as well as the Covid pandemic.

The retrenchment includes 80 to 90 persons ranging from a DGM till Vice President level over the last fortnight. JCB India has a total workforce strength of 8000 people, which includes 4000 permanent employees...The employment of a sizable number of contractual and temporary workers has also been discontinued. The contractual and temporary workforce fluctuates with demand, said the company.

Employees who have been laid off said that they have been given a 6 month notice period (pay-outs) with the reason given the current business slowdown and that their positions have become redundant . " We have tried our best to minimize the impact of this transition through a special severance package. This includes continuity of extended medical insurance and out placement services to help them find alternative careers, among other benefits, " said the company.

Many of them, who have been laid off, have been with the company for more than 15 years and have seen the company grow from a turnover of Rs 1500 crore to Rs 10,000 crore in CY 2019.


"The order book is still very strong and JCB is a zero debt company with huge cash reserves”, said an official who was asked to resign on condition of anonymity. Sources say JCB India has stopped payments to vendors and contractors in India in the recent past.


"As soon as we were notified , our phones and mails were disconnected," said another senior official who got laid off. None of the employees had been forewarned or provided with any opportunity of consultation, he added.


While confirming the development, the company in an email response mentioned that there was around a 80% decline in demand for products in May and June as compared to the same period last year with capacities currently at 20%. “After having taken a re-look at all our expenses and allocations, unfortunately we have also had to take the difficult and painful decision of re-organising our staff strength across levels to tide over this extraordinary situation to ensure safeguarding the organisation for the coming decades” said Subir Kumar Chowdhury ,MD,JCB India.

Thus, it was critical for us to realign our business. Apart from a massive organisation wide cost reduction programme, all new product launches have been delayed and new programmes been halted, Chowdhury added.

JCB India has more than 50% market share in the construction equipment sector, with leadership position in backhoe loaders and has a healthy order book for the rest of the year, say sources. It is significant that the company has been focusing on exports over the last five years in order to reduce its dependence on the domestic business. In December 2019, Vipin Sondhi the company’s MD quit to join commercial vehicle major Ashok Leyland and was replaced by Subir Chowdhury.
Even at the JCB Group level in the United Kingdom, where we are headquartered, almost 950 job losses have been announced, Chowdhury said

JCB India contributes roughly about 40% of its revenues to the group’s global turnover with 45% contribution towards net profits. The company is a wholly owned subsidiary of JCB UK , and owned by the Bamford family and has five manufacturing capacities in three locations namely, Ballabhgarh in the National Capital Region (NCR), Pune and Jaipur. JCB has a significant share in backhoes, and has consciously shifted stance from backhoes to a full range infrastructure equipment player including excavators, road equipment and material handling machines.

Employees in India are still hoping that good sense prevails and the mass retrenchment of the company is stopped for it to be in the public eye, albeit for the right reason.