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Labour issues hinder GM efforts to find buyer for Talegaon car plant

GM hasn’t been manufacturing any vehicles at its Talegaon plant since 2020 (Bloomberg)Premium
GM hasn’t been manufacturing any vehicles at its Talegaon plant since 2020 (Bloomberg)

Potential suitors such as Mahindra & Mahindra and Tata Motors are unlikely to take over the plant if GM India’s more than 1,000-strong unionized workers become a non-negotiable part of the deal, the people said requesting anonymity.

NEW DELHI : General Motors Co.’s plan to make a full exit from India is facing a fresh setback as the Detroit automaker has yet to find a buyer for its second and last remaining factory in the country. Potential buyers of the 300-acre facility located at Talegaon on the outskirts of Pune are unwilling to take on the cost of GM’s retrenched labour force at the plant, even as the Maharashtra government has invited top automakers to evaluate the facility, multiple people said.

Potential suitors such as Mahindra & Mahindra and Tata Motors are unlikely to take over the plant if GM India’s more than 1,000-strong unionized workers become a non-negotiable part of the deal, the people said requesting anonymity.

GM’s employee union and management are currently locked in a legal battle, as the former has demanded employment with the new owners of the plant, and full wages in the interim. The Union has termed their retrenchment illegal, even as GM has previously argued it had held extensive negotiations with the union to arrive at a consensus.

GM has stopped vehicle production at the Talegaon plant since 2020. The company has already sold its Halol factory in Gujarat to MG Motor India, a unit of China’s SAIC Motor.

“This plant is good for small vehicles and going in for a deal will mean significant investments to get it ready for production of bigger vehicles. The advantage for OEMs like M&M and Tata Motors is proximity to their supplier base. But labour costs could be a deal-breaker," said a person close to the discussions.

Another person said a global delegation from South Korea’s Hyundai Motor Co. had visited the Talegaon factory but didn’t eventually show any interest to takeover the plant.

“Hyundai will not consider a greenfield project for India but it is unlikely the Pune factory will be a good deal for them because they’ve been operating out of Tamil Nadu for very long, they’re familiar with the state, and even if they decide to go to another geography, setting up their supplier base--25-30% of it is still Korean suppliers in Chennai— will involve significant investments," the person said.“We’ve not heard that H yundai is looking to add more capacity in India at the moment. A potentially good deal from GM could have trigged the thought process as recently Suzuki has also started to manufacture in the South (Karnataka), but I doubt they’ll be looking to add anything beyond an additional 100,000 - 150,000 units annually from their new E-GMP EV platform 2-3 years later, which will not justify investments in a new plant. They are far more likely to continue adding capacity at their existing factory at the moment," the person added.

Hyundai can currently produce up to 850,000 vehicles a year at its plant near Chennai.

Earlier this year, China’s Great Wall Motors decided to abandon its Indian operations after failing to get necessary approvals from the Indian government for its $1 billion foreign direct investment proposal at Talegaon amid tense political ties between New Delhi and Beijing following a deadly border clash between the two armies in June 2020.

In January, an industrial court in Pune had directed GM to pay 50% salary to the retrenched workers numbering more than 1,000 from April this year till the Union’s dispute with the carmaker is resolved. GM challenged the order in the High Court, which dismissed its plea. The Supreme Court, too, held up the dismissal in October. GM, however, hasn’t been paying these salaries as directed and has sought data on how many retrenched employees are still unemployed.

In July 2021, GM retrenched 1,086 unionized workers after they refused to accept its voluntary separation scheme (VSS).

ABOUT THE AUTHOR

Alisha Sachdev

Alisha Sachdev is an assistant editor with Mint based in Delhi. She reports on the auto and mobility sector, with a special focus on emerging clean mobility technologies. She also focusses on developing multimedia properties for Mint and currently hosts the 'In A Minute' series and the Mint Primer podcast. Previously, she has worked with CNBC-TV18 and NDTV.
Catch all the Auto News and Updates on Live Mint. Download The Mint News App to get Daily Market Updates & Live Business News.
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