FMCG firms to accelerate automation to tide over labour shortage

Companies also fear that a portion of the workforce may not return to the cities even after the lockdown is lifted as they will look to newly created employment opportunities in their home states.

Mumbai/Kolkata: Half a dozen consumer goods companies said they will accelerate automation at their factories, which will help them make products with fewer people as they deal with labour shortages and social-distancing norms in the post-Covid future.

Availability of manpower has emerged as a key stumbling block for fast-moving consumer goods companies since the movement of employees is restricted and others are refusing to come to work, worried that they may catch the disease, or have gone back home to their villages. Public transport still isn’t running in many parts of India.

“Most companies have been shying (away from) automation, which is a one-time large expense, compared to having labour at factories that needs smaller but long-term investment,” said B Krishna Rao, category head at Parle Products, the country’s biggest food company.


“But we have to invest now so that we avoid such a situation in future, similar to what most factories in the developed world adopted decades ago.”

Companies also fear that a portion of the workforce may not return to the cities even after the lockdown is lifted as they will look to newly created employment opportunities in their home states.

Many had been forced to trek thousands of kilometres back home after they found themselves without any income and buses and trains stopped running when the lockdown was first imposed in March. Factories have restarted this month as the government tries to revive the stalled economy.
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“There can be huge opportunity cost due to labour shortage once demand stabilises,” said Angshu Mallick, deputy chief executive of Adani Wilmar, which sells edible oil, atta and rice. “We will now closely evaluate each and every part of operations to see how the labour requirement (can be) drastically minimised, especially casual workforce for operations such as packaging, loading and supply chain.”

Dabur is evaluating end-of-the-line automation at its manufacturing units but needs workers now, said executive director Shahrukh Khan.

“In cases where we are unable to get local workers, we are seeking permission from local authorities for inter-state movement of labour to fill the need gap arising from migrant workers returning to their hometowns,” he said.

Unlike other consumer-facing sectors such as auto and electronics, FMCG has largely steered clear of automation. “This is due to skepticism around its effectiveness in the highly traditional, trade-dominated-business market and the abundant availability of manpower,” said Varun Chaudhary, executive director, CG Corp Global.
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However, several firms have been investing in technology with the pace picking up in the past few years. This will now be fast-tracked. “Automation along with outsourcing to third-party manufacturers can help meet production targets,” said Sunil Kataria, chief executive officer at Godrej Consumer Products.

Marico said it will explore more automation initiatives across the distribution and supply chain network once the situation stabilises. “Right now, we are operating with a much lower strength of staff at factories and third-party providers because of the strict safety norms we have deployed,” said Marico managing director Saugata Gupta.
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