Mumbai: Just as Indian automotive manufacturers are curtailing production and struggling with excess inventories, labour unrest is starting to surface at some units.
At least three companies have already declared lockouts at their units in recent weeks. These include tyre makers MRF Ltd and Apollo Tyres Ltd, and auto components maker, Bosch Ltd. The MRF lockout, for two days, followed an alleged suicide by a contract worker. Lockouts at Apollo and Bosch stem from long-simmering issues between management and workers and are continuing.
Facing a sharp downturn in the automotive sector, neither management seems to be in a hurry to agree to the labour union demands.
A lockout or a strike does not only take care of excess inventory problems while reducing operational costs, notes C.S. Venkat Ratnam, an industrial relations expert and dean of the Delhi-based International Management Institute.
Troubled sector: A worker stacks Apollo truck tyres at an outlet in New Delhi. The financial slowdown has hit the automotive manfuacturing industry and companies such as Apollo are facing labour unrest. Amit Bhargava / Bloomberg
“When there is a recession, a lockout has the benefit of having the worker on a leash, keeping the input prices low, while maintaining the output prices,” he says. “With one weapon, you can have three ends met.”
Indeed, says Praveen Sinha, a labour adviser to the German Foundation, “companies are looking at an excuse to go for lockouts these days as they have to cut costs. There’s a slight hint of any disruption and they resort to (a) lockout”.
The foundation acts as an intermediary between unions and managements at German companies in India.
Satish Sharma, chief of India operations at Apollo, which declared a lockout at its Kalamassery unit in Kerala on 6 December, concedes that managements are in a stronger position during a downturn.
“When markets are up and running and you are selling every tyre produced, you take certain things lightly,” he says. “But in times like these, one can have some say.”
Sharma is quick to add that a lockout is never the “natural” choice for a company. “There were cases of violence in the factory premises, forcing us to resort to a lockout,” he claims.
Also See Factory Problems (Graphic)
M.M. Lawrence, secretary general of the Kerala committee of the Centre of Indian Trade Unions, or Citu, the main union at Apollo’s Kalamassery factory, blames the situation on reduced sales of tyres.
“Apollo Tyres, like any other tyre manufacturer, is facing a demand slip owing to the global recession,” Lawrence says. “It has been some time since the management of the company (started) looking at cutting production and relocating some of its machinery to other units. The piling (up) of stock forced the management to go in for a lockout at the cost of the workers.”
Apollo’s Sharma blames resistance to any kind of productivity-enhancing changes. “Time and again, we have come up with proposals to enhance productivity of the unit as it continues to be one of our costliest plants across the country, with lowest productivity,” he says.
Apollo acquired the unit in 1995 and has increased production from 35 tonnes to 90 tonnes. The company manufactures cross-ply tyres for trucks and jeeps there and employs 1,100. “You can only do so much to have peace and harmony,” Sharma claims. “Having an industrial set-up in the volatile industrial relations climate of Kerala is a challenge in itself.”
Bosch meanwhile declared a lockout at its Jaipur unit on 11 December following a strike that first began on 11 November. Sanjay Chakravorty, spokesperson for the Indian arm of Bosch GmbH, said the economic downturn had led to a sense of insecurity among contract workers. “Had the going been smooth, the company with a deeper pocket would have been more flexible in meeting (the) demands of the workers,” he claims.
Workers in Bosch’s Jaipur factory, one of four and relatively new, have been asking for increases in wages and bonuses as well as re-instatement of interns who were asked to leave after their internship ended.
“We have absorbed them (interns) in the past, but we can’t do that now in (the) face of adverse market conditions,” says Chakravorty. “The demands are unreasonable, hence (we) had to resort to a lockout.”
Another automobile company that saw labour unrest in August is Aurangabad-based Skoda Auto India Pvt. Ltd, the Indian arm of the Czech automaker. “Workers at the Aurangabad factory resisted (the) management’s charter of demands which included increasing productivity, leading to a conflict. The company suspended seven of its regular workers and the matter is in the court,” said Sinha, the German Foundation’s adviser.
“In August this year, a few members of the workers union had disrupted the operative environment in the factory and the same was taken care of by involving the concerned authorities who helped restore law and order. Currently, the matter with the expelled individuals is subjudice and the productivity and output at the factory remains undisturbed,” wrote a spokesman for Skoda.
Ajayan in Kochi contributed to this story.
Graphics by Ahmed Raza Khan / Mint