Indian automaker Mahindra cuts over half of North America workforce - sources

KG Mobility

13/01/2021 15:20

(Adds statement from Mahindra Group in India)
    By Sudarshan Varadhan, Aditi Shah and Ben Klayman
    CHENNAI/NEW DELHI/DETROIT, Jan 13 (Reuters) - Indian
automaker Mahindra & Mahindra Ltd  MAHM.NS  has cut more than
half of the workforce at its North American unit, two sources
familiar with the matter told Reuters, due to the COVID-19
pandemic and an ongoing legal tussle.
    The sources did not give a figure for the number of jobs
lost at the business, which had over 500 employees in early
2020, according to its website.
    However, one of the sources said "hundreds of workers" had
been laid off since mid-2020 as part of a restructuring, and
that the cuts were as high as two-thirds of Mahindra Automotive
North America's (MANA) total staffing. 
    Positions include engineers and manufacturing jobs at its
plant in Detroit that produces the off-road vehicle Roxor, as
well as sales executives.
    The cuts come as Mahindra reviews its businesses in a drive
to conserve capital and retain only those that make money or
have the potential to be profitable.
    MANA said in a statement it had furloughed some staff and
laid off others due to the pandemic and an International Trade
Commission lawsuit which led to an August "cease and desist"
order for the Roxor business. It did not provide figures.
    Mahindra and Fiat Chrysler Automobiles (FCA)  FCHA.MI  are
in a protracted legal battle over an intellectual property
infringement case which has prevented the Indian automaker from
selling its Roxor vehicle in the United States.  urn:newsml:reuters.com:*:nL1N2J31R0
    "This forced us to halt production and furlough our
manufacturing team and some additional people across several
functions, including the Roxor sales team," the company said.
    However, last month, the company won a favourable ruling in
its lawsuit against FCA, paving the way for it to begin selling
the Roxor again.  urn:newsml:reuters.com:*:nL1N2J31R0 
    It now expects to recall a large group of employees, it said
in the statement. 
    As part of its review which began last year, Mahindra has
pulled the plug on its U.S. electric scooter business GenZe; it
is in talks to sell its stake in South Korean automaker
Ssangyong Motor  003620.KS ; and it has called off a joint
venture with Ford Motor Co  F.N .  urn:newsml:reuters.com:*:nL4N2DP2IY  urn:newsml:reuters.com:*:nL4N2JB295
    A Mahindra Group spokeswoman in India said the company will
stay firm on implementing capital allocation norms, with a sharp
focus on financial returns, driving growth and continued
improvement in international subsidiaries. 
    "MANA has been evaluating options for making the
organisation leaner and optimising performance and
productivity," she said, adding that the company's Detroit
centre will continue working on new electric platforms and is
preparing for the launch of the new Roxor 2021.
    Mahindra's shares have surged over 60% since it announced
the review in June last year, valuing the company at over $12.6
billion.
    The automaker plans to focus on manufacturing large
sport-utility vehicles and electric models for its core India
market, where it has lost ground to competitors such as Tata
Motors  TAMO.NS  and Kia Motors  000270.KS .  urn:newsml:reuters.com:*:nL4N2JC060

 (Reporting by Sudarshan Varadhan in Chennai, Aditi Shah in New
Delhi and Ben Klayman in Detroit. Editing by Mark Potter and
Bernadette Baum)
 ((Sudarshan.Varadhan@thomsonreuters.com; +919810393152;
Twitter: https://twitter.com/sudvaradhan @sudvaradhan;))