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AMW to retire 175 employees

29 Nov 2020

  • VRS offered citing financial difficulties
  • Posts Rs. 300 m net profit this year
By Madhusha Thavapalakumar Associated Motorways (Pvt.) Ltd. (AMW) has offered Voluntary Retirement Schemes (VRS) to 175 employees citing pandemic-induced financial difficulties despite making a net profit in excess of Rs. 300 million so far this year, The Sunday Morning Business reliably learns. Our sources noted that out of these 175 employees, only about 73 employees accepted the VRS after being told that the company could not ensure the payment of their full salaries going forward if they chose to remain. AMW reached out to the Employers' Federation of Ceylon (EFC) to terminate 102 employees who had refused to accept the VRS, and the process is currently ongoing. AMW is under the management of Al-Futtaim Engineering, a wholly owned subsidiary of Al-Futtaim Group, a multinational based in the United Arab Emirates (UAE). An insider who wished to remain anonymous told us that during the initial lockdown in the first half of this year, AMW selected 289 of its employees across all divisions, based on their Key Performance Indicator (KPI) ratings to issue VRS. According to our sources, AMW rates its employees on a scale of 1-5 by the end of every year based on their KPIs, with number 1 denoting poor performance and number 5 denoting excellent performance. The 289 employees who were selected for the VRS were at the lower tier of the rating scale, which means they were assigned numbers 1 and 2, even though up until this year, employee ratings were done merely to improve individual performance through a three-month performance improvement programme. We learnt that out of these 289 employees, 114 employees are attached to the AMW Factory Complex in Kalutara and are part of a trade union. According to the insider, fearing potential union action, AMW retained these employees and issued VRS to the other 175 employees in June this year. The reasons provided for the termination to the EFC was again “non-profitability” of the company coupled with proof of division closures at AMW due to lack of business as a result of the pandemic. However, our sources alleged that AMW closed down a few of its divisions including Piaggio, an Italian motor vehicle brand, much prior to the local outbreak of the pandemic in Sri Lanka. The reasons for closure were that they were not performing at desired levels, and these old closures are allegedly being shown as evidence for lack of business by AMW. It is learnt that even before the local outbreak of the pandemic, Al-Futtaim was making structural changes at AMW as Al-Futtaim wanted to take more control over its Sri Lankan arm by conducting most of the operations from its headquarters. This is because they wanted to increase AMW’s profitability, which, up until last year, was a minimum annual average of Rs. 1.5 billion in net profit, according to sources. As a part of these structural changes, Al-Futtaim appointed a person who was working at Al-Futtaim UAE, as the new Director of Human Resources (HR) at AMW in mid-2017. Reportedly, the new appointment had made several changes in AMW HR including initiating the VRS scheme, and flew back to the UAE in June this year as he was appointed to a regional HR role. For clarification on this matter and to know the company’s side, The Sunday Morning Business contacted AMW Group Managing Director Brandon Morris. He stated that like many industries around the world, the automotive sector had to adapt to an unprecedented and uncertain environment and the continuing global medical emergency has placed strain upon citizens, employees, and business. “As a family business, people are our most important asset and we had to take action that protects our people in the long term as well as ensure business continuity. We remain optimistic and it is our sincerest hope that our business returns to normal operations as soon as the regulations allow.” AMW did not respond to our queries about the number of employees who were offered VRS by it nor the net profit it has made this year. In July 2008, Al-Futtaim acquired majority shareholding in AMW for 300 million UAE dirhams. AMW’s core business sectors are tyre retreading, automotive sales and after-sales services, lubricants, batteries, tyres, and financial services. AMW represents a number of brands including Nissan, Yamaha, Maruti Suzuki, and Renault. Al-Futtaim is a family-owned business and has expanded its business in 20 countries. It employs over 42,000 people in about 200 companies.  


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