Study of labour productivity levels in manufacturing industry in India and in Toyota Kirloskar Auto Parts Pvt. Ltd.

Abstract

This project focuses on the study of labor productivity levels in manufacturing industry in India and TKAP in particular – Past, Present and Future expectations considering the competitiveness and the automation level and propose quick measures to enhance it India stood at fourth position in terms of size of auto market in 2018 and automotive sales rising year on year at the rate of 8.3%. India also was the 7th largest commercial vehicle manufacturer at that time. Despite the downturn due to the Covid-19 pandemic, increasing disposable income and growing middle class population make India an attractive market for the automotive industry. However, there has been a significant change in manufacturing industry, especially in auto industry in the last decade due to changes in markets, consumer behavior and technology that have disrupted the traditional ways and thus, the traditional definition of productivity is also starting to look outdated. The manufacturing industry in India measures productivity on the basis of a spectrum of parameters and we often see the employees’ wage is highly correlated with their productivity. However, the technological disruption has changed everything in the landscape that makes it extremely important to understand the effect it has on labour productivity in general and TKAP in particular. Our study tries to understand labour productivity as a macro statistic and the trends that it has undergone in India as well as benchmarked with USA, China, Japan, and the European Union. The study looks at an in-depth understanding of the manufacturing value chain and what role human resources play in it. Then it aims to define productivity and labor productivity and look at various trends in the last 2 decades. Through this project, we aim to identify the problem of labor productivity in India and the gaps along with the impact of gender diversity of workforce on productivity. Looking at National productivity council reports, and understanding ILO and factories act, the study tries to understand how policy and legislation can impact productivity. It will factor in the concept of automation and the improvement in productivity it has brought about to the country. With the increased automation levels, it will try to redefine the current definition of labor productivity since with increasing cost of labor in organized sector in India, companies can no longer claim to be competitive compared to other emerging economies of the world. Using the collected data from various reliable databases, we will study the gaps with respect to global and local levels and suggest measures to close the gaps in the shortest time. This report also looks at TKAP in detail and its practices in terms of measurement and improvement in labor productivity. It aims to analyze the productivity enhancement activities, their effectiveness and identify gaps, if any and provide recommendations. It also looks at labor cost inflation and compare it with investment in automation to understand the cost benefits that automation brings into the system. The common definitions of labor productivity will be reanalyzed in the context of automation and TKAP manufacturing environment and other various Indicators (KPI) adopted in the Toyota Production system or the Lean manufacturing. The study will throw light on the challenges of labor productivity from the mid to long term perspective and suggest a road map to overcome the same.