Labour row in Chennai hits Hyundais small car plans for India

Written by Yogima Seth | New Delhi | Updated: May 7 2009, 04:35am hrs
Hyundai Motor Indias dream to make India the hub of its small cars might get hit with the company planning to shift production of i20 to Europe if the labour problem continues at its Chennai plant. This comes on the backdrop of the recent strike at the plant where around 100-200 workers have gone on strike after the company refused to plead with their demand of setting up a union.

There have been worker problems at our plant over the last two years. Since Hyundai i20 is mainly catering to the European market, the company is considering to shift production of i20 to one of its existing plants in Europe to ensure the delivery of vehicles on time, says Rajiv Mitra, spokesperson, Hyundai Motor India, adding that it is an illegal strike and the company is trying to resolve it as were reporting loss in efficiency.

Hyundai already has an arrangement with the government of Tamil Nadu wherein the company has made it clear that it would not allow any unions to operate in the factory. Instead, it has a workers committee that takes care of all labour issues at the companys two plants in Chennai.

Hyundai Motor Company of South Korea has manufacturing bases in Turkey, Slovakia and Czech Republic.

According to Mitra, the company had set a target of producing 1,20,000 to 1,30,000 units of i20 in 2009 and over 65% of this (around 80,000 units) were to be exported to Europe.

India offered economies of scale for manufacturing small cars. However, if this unhappy scenario continues to exist, we might miss out on delivery schedule and hence we are considering the option of shifting i20 out of India, he said, adding that the vehicle would, however, be continued to be manufactured in India to meet the domestic demand.

Hyundai Motor India is planning to launch a diesel variant of i20, its premium hatchback, in India by the end of 2009 to grab a bigger pie of the market. While there would be no new product from Hyundai this year, we will have some variant and the diesel variant of Hyundai, which would be launched towards the end of this year, would be significant, said Mitra.