Covid19 impact: Steel companies struggle with labour shortage post lockdown

Since the lockdown, most of the major steel companies including JSW Steel and Tata Steel have cut production.
Major steel companies that curtailed operations in the wake of restrictions during the 21-day lockdown to contain the spread of coronavirus, are now grappling with labour shortage.

While the Centre and states have ensured that trucks move, one of the challenges that has cropped up, is the shortage of manual labour for loading and unloading trucks. As a consequence, both input materials and finished goods are getting stuck. Most of the major steel companies are operating at around 40-60 per cent production level or even lower, but to continue at that level is also posing to be a challenge.

Sources close to Steel Authority of India Ltd (SAIL) said the movement of trucks has now eased with the government directive but people are not available for loading and unloading trucks at the warehouses and public sidings. Last week, SAIL informed about temporary disruption at its plants due to coronavirus.

The public sector steel major is currently operating at 60 per cent production level and will be scaling down gradually, they said.

Sources in the other steel PSU, Rashtriya Ispat Nigam Ltd (RINL), said that in the unprecedented situation of Covid-19 outbreak and nationwide lockdown, the logistic movement of finished products was affected due to various reasons like placement of rakes at public siding due to congestion , restriction of movement from public siding  to stockyard or customer destination. At some places, there is shortage of labour, depending upon the regulation and restrictions put by local administration, RINL said. But on the raw material input side, as of now, there was not much problem.

With the curtailed manpower and advisory from ministry of health & family welfare and district administration, RINL, too has brought down production by temporarily putting down one blast furnace.

 
The capacity utilisation, currently, is around 60 to 65 percent, according to RINL sources,

Since the lockdown, most of the major steel companies including JSW Steel and Tata Steel have cut production. Tata Steel announced on Wednesday that it had started reducing production levels at its integrated steel facilities in Jamshedpur, Kalinganagar, Angul (Tata Steel BSL) and Gamahria (Tata Steel Long Production) and operations in the downstream facilities have been suspended and put on care and maintenance mode. ArcelorMittal Nippon Steel India is operating at a bare minimum production level.

Shutting down the blast furnace, however, is not an option as restarting would take a month or month and a half. Additionally, the cost could be Rs 250-300 crore, said sources.

However, steelmakers said with the Centre allowing movement of trucks for essential and non-essential goods, the truck movement has eased to an extent. The government of India and state governments have clarified that mines, steel, coal, power fertilisers are essential services and process industries where continuous operations of the plant facilities are important and hence exempted from lockdown measures.

Jindal Steel & Power managing director, V R Sharma, said that Centre's decision to allow movement of trucks was a welcome move. He however, said, that there was a shortage of contractors and handling agents for loading and unloading material.

"They should be allowed to work at minimum strength," said Sharma. "Gradually, some relaxations should be made to the lockdown. The time has come for targeted lockdown," he added.

Some of the industry sources also pointed out that even though movement of trucks had eased, but truckers were not available in adequate numbers.

However, apart from issues with logistics and labour, steel companies were also struggling with reduced demand, with most automakers suspending operations and construction coming to a near standstill.



Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel