Abb May Follow Parent, Downsize Locally
Rightsizing of the workforce and job cuts cannot be ruled out at the engineering major Asea Brown Boveri (ABB) India following the decision of its Swiss parent to go in for large scale retrenchment earlier this week, according to top industry sources.
The Swiss company would be slashing its workforce by one seventh during the year following slowdown in the world economy.
However, sources in ABB India sought to play down the possibility of immediate rightsizing.
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The domestic arm had trimmed its workforce by significant numbers in recent years. The last voluntary retirement scheme was offered in 2000.
When contacted, an ABB spokesperson said, "We are on the right track as far as workforce is concerned. However, possibility of further rightsizing cannot be ruled out in future."
He hastened to add that it might not be prudent to conclude that Indian operation would toe the global line. ABB India has total workforce of 3,600 after merging four operations here.
However, industry sources said as India could not isolate itself from the worldwide recession, the local arm would be forced to take measures to tighten its budget.
ABB worldwide would be downsizing by 12,000 people in a bid to reduce costs by $500 million (euro 575 million) a year.
The retrenchment will cost $500 million and would save the same amount annually, ABB president and chief executive officer Joergen Centerman said.
Company also said the cuts followed a sharp slowdown in orders from customers during the past six weeks that had hurt its profits.
Analysts said there were growing signs that the slowdown was moving to the industrial sector.
In India, the company has recently announced merger of their operation which analysts feel would help the company to reduce expenditure.
The company will be merging four companies, ABB Instrumentation, Introl India, ABB Lenzohm Service, ABB Analytical with itself.
The half-yearly result of ABB India showed slim growth in the order intake which grew by 16 per cent.
The order intake in January-June 2001 was Rs 419.1 crore against Rs 360.5 crore in the same period last year.
The net profit marginally grew to Rs 14.4 crore from Rs 11.6 crore over a turnover of Rs 434.1 crore (first half 2001) against Rs 321.2 crore in the corresponding period last year.