PETALING JAYA | In what is seen as the first sign of impending massive job cuts, manufacturers have said they may resort to layoffs or retrenchments.
A survey conducted by the Federation of Malaysian Manufacturers (FMM) on the impact of the movement control order (MCO) showed that 63% of respondents would employ such drastic measures, with 47% doing so within the next three to six months.
Majority (78.7%) of the companies would have to lay off or retrench up to 30% of employees, with 27% indicating that they would lay off between 21% and 30% of employees, followed by 22% laying off between 11% and 20% of employees.
“Forty-four per cent of the respondents indicated that they would only be able to sustain their business with the current workforce for three months while 34.1% only managing to sustain business for one month,” FMM president Tan Sri Soh Thian Lai said.
The survey, conducted from April 6 to 10, received responses from 419 companies, with a majority (89.5%) from manufacturing and manufacturing-related, and support services.
Of this, 53.7% were from the non-essential product sectors and were not able to operate, while 63.9% of those from the essential product sectors managed to obtain approval to operate during the MCO1 and MCO2 period.
Sixteen per cent of the respondents were in a unionised environment.
“Working from home proved to be a challenge for many companies as either work processes were unable to be performed remotely or companies were not prepared for the necessary infrastructure to support employees working from home,” Soh said.
“It was evident from the survey that the 30% that obtained approval to operate were able to work with 50% staff strength or less,” he added.
However, the majority 70%, comprising some essential product manufacturers who were not granted approval and all the non-essential product manufacturers, were unable to work or faced difficulties working from home, he said.
McMillan Woods entrepreneur tax accountant Datuk Seri Raymond Liew said most manufacturers were badly affected as the supply chain, not only nationally but also globally, was now at a standstill.
“I believe everyone’s biggest fear is the third wave,” he told theSun. “If the MCO is further extended, which I believe it will at least till May 2020, more casualties are expected.”
Liew said many companies have no standard operating procedures in place to deal with the current situation.
“Many have enjoyed successes too early and now they are either financially over-committed or their over-expansion plans are killing them,” he said.
“As a matter of fact, the successes of many of these younger entrepreneurs came too early for them to prepare themselves for this pandemic with no strong fundamentals to back them up.”