Lay-off at Carrier Aircon

Carrier Aircon has laid off a section of the workforce at its Gurgaon plant in Haryana, as part of the company's cost-cutting efforts. The reason: increasing costs, which have brought profit margins under pressure.

     The company has not been able to offset higher costs by raising product prices. The air conditioning industry has become very price sensitive in the last few years. Several multinationals and domestic consumer goods companies have entered this business, and price is one of the key factors in the competitive manoeuvres in the industry.

      The solution then was to cut costs. Pruning the labour force, which accounted for 50 per cent of the cost, was seen as a priority. Carrier Aircon has announced a voluntary retirement schemes for its 200 trainee staff at Gurgaon. The scheme, which opened on 31 December 1998, ran until 31 January 1999. Disappointingly for the management, of the 200 employees at the plant, only 25 accepted the package.

      For the rest of the workers the company had to serve notices, which led to some workers initiating  a tool-down strike. The company does not expect any legal trouble, and hopes to come to some agreement with the workers. According to the management, the scheme is expected to result in an annual saving of Rs 1 crore for the company.