Foxconn sends workers on leave, puts many on bench as sales slump by 50% post demonetisation

Demonetisation has hit the mobilephones sector hard and this has led to slowdown at many manufacturing plants. One of the worst affected due to note ban is Foxconn, the world's largest contract manufacturer.

Post demonetisation, it has send its workers either on paid leave or have put many on bench because of slowdown in activity.

As per reports, Foxconn has sent around one-fourth of its 8,000 factory workers to go on paid leave for two weeks as the production has been slashed by half.

Foxconn makes devices for Xiaomi, Oppo, Gionee, Infocus, Nokia, Micromax, etc.

“It has kept nearly 1,700 of its workforce on the bench, or on forced leave for two weeks during which they will get paid but the number of days would be cut from their earned leaves. Benching may continue if production - directly related to consumer demand - does not come to the 2 million a month levels by January,” a senior industry executive aware of Foxconn's manufacturing details told ET, asking not to be named.

As majority of the mobilephone purchases are made through cash, the note ban and cash crunch has affected the sales.

Mobilephone companies such as Intex, Lava and Karbonn are planning to cut around 10% of their workforce as inventory is piling up.

As per reports, Lava is shutting down its plant.

"The four plants in Sri City (Andhra Pradesh) are operating at 1.2 million capacity a month, down from 2.5 million that it has," said the same senior industry executive.

Foxconn did not respond to ET's query seeking confirmation.

"The first week of December has been really bad and now we're thinking of cutting production and deferring imports of semi-knocked down (SKD) kits," Unnikrishnan M Thazhath, product head at Intex Technologies, told ET.

Sources at Karbonn told ET the company may fire 1,200 to 2,000 people soon.

Micromax has already slowed production in Rudrapur and Telangana facilities.

As per IDC, feature phone sales were set to drop 24.6% in Oct-Dec quarter sequentially, while smartphone sales are expected to fall by 17.5%, expect demand to normalise by mid-February to March.