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Demonetisation: Foxconn sends about 1,700 of its Indian workers on forced leave
The cash crunch caused by the demonetisation of high value currency notes has sent demand in Foxconn factories slumping by 50 percent. This has caused the company to send about a fourth of its 8000 strong work force in India on a forced paid vacation, according to a report in the Economic Times. The workers will be paid for the leave, but the number of leaves will be cut from the earned leaves.
Foxconn is one of the world’s largest contract manufacturer, with plants in Andhra Pradesh, Noida and Haryana. Foxconn makes devices for Xiaomi, Oppon, Gionee, InFocus, Nokia, Lava, Intex, Karbonn and Micromax, which account for 50 percent of the handsets sold in India. A majority of mobile phones in India are purchased for cash, and are in the low end segment, with a typical purchase being less than Rs 5,000.
The four plants in Sri City, Andhra Pradesh are running at half capacity. The production is directly linked to demand. Lava and Intex have shut down their factories for a week, and are not producing any smartphones or feature phones. Sources at Karbonn have told ET that they may even consider permanently laying off workers if demand does not rise. Industry experts have indicated that the impact on the manufacturing sector because of demonetisation will continue for two to three months.