Pak Suzuki shuts plant indefinitely over CKD kit delay

Industry appeals for govt action as plant closure hits workers, tax revenue

KARACHI:

Pak Suzuki Motor Company Limited (PSMCL) has halted production at its Karachi plant indefinitely due to a delay in the approval of Completely-Knocked Down (CKD) kits, which have been stranded at the port for the past 45 days. This is the first closure of the plant this year.

The shutdown has caused significant financial strain. PSMCL is struggling to cover billions of rupees in detention and demurrage fees, while the government loses out on taxes and duties due to the lack of production and sales, according to Shafiq Ahmed Shaikh, PSMCL's Corporate Affairs Head.

Industry associations, including the Pakistan Automotive Manufacturers Association (PAMA) and the Pakistan Association of Automotive Parts and Accessories Manufacturers (PAAPAM), have urged the government to adhere to the auto policy for 2021-2026. They warn that continued delays and service disruptions will deter new investors and worsen the situation for existing foreign investors in the auto sector.

The broader auto industry has already faced severe challenges, forcing numerous local parts manufacturers to lay off thousands of workers due to reduced production at their plants. High taxes, interest rates, and steep energy tariffs have led many industrialists to cut back on factory shifts and reduce staff over the past two and a half years. Auto expert Mashood Khan supports the company's position, stating, "The government needs to take decisive action to address the issues at hand. Industrialists should be consulted to resolve these problems swiftly. Any irregularities should be corrected within 24 hours, as prioritising the industry is crucial for the country's overall interest."

Khan also highlights that the shutdown affects around 140-145 vendors, potentially jeopardising their ability to pay workers on time. Both workers and factory owners are burdened by high taxes and exorbitant energy costs. "The cost of doing business is a complex issue that the government must address to ensure the industry's survival," Khan adds. The Pakistan Automotive Manufacturers Association (PAMA), Pakistan Association of Automotive Parts and Accessories Manufacturers (PAAPAM), and all auto industrialists appealed to the government to follow the auto policy 21-26.

They warned that prolonged delays and service interruptions could discourage new investors, as they may not be eager to make investments in the country. Moreover, existing foreign direct investors of the auto industry are also already in a critical situation.

The struggling auto industry forced several local parts manufacturers to lay off thousands of factory workers due to halted production at plants in recent times. In addition, the cost of doing business following high taxes, interest rates and unbearable energy tariffs, have already coerced many industrialists to reduce shifts of the factories and scale down staff of their units over the two and half years.

Supporting the point of the company, auto expert Mashood Khan said, "The government must take aggressive initiatives to address the issues being faced by the company. Industrialists must be called to fix this problem. If there are some abnormalities, they must be removed within 24 hours.

The PSMCL bristles with around 140-145 vendors (parts manufacturers) which would be ultimately affected and would not be able to pay salaries to workers on time. Both workers and factory owners are facing the high taxes on salaries and exorbitant energy tariff respectively."