Every significant labour trouble in any major auto firm over the last two years has been witnessed in companies with a majority foreign shareholding. In contrast Indian companies like Bajaj Auto and Tata Motors have barely seen any labour trouble in the last 10 years.
Statistics on such labour disputes in the recent past are heavily skewed in favour of homegrown automobile firms. Apart from Maruti Suzuki (54% owned by Japanese Suzuki Motors) which has had three instances of labour trouble in less than five months, the countrys largest car exporter and Indian subsidiary of Hyundai Motor (April 2009 & June 2010) and Japanese two-wheeler maker Honda Motorcycle and Scooter India (October 2009) have all been plagued with labour stirs. Similar labour troubles also hit General Motors Halol facility earlier this year in the state of Gujarat, which has seen the least number of labour strikes.
To what extent does foreign ownership impact labour-management relations A top executive of a leading Indian two-wheeler company identifies the root cause being how foreign parent firms thrust their global practices in India without taking into account the local conditions. Japanese owners need to realise that societies of India and Japan are not the same. In fact societies in Japan are very individualistic which is not the case in India, he said.
Former managing director of Maruti Suzuki and currently founder and chairman of Carnation Auto Jagdish Khattar says, Anyone who wants to implement in toto the practices parent companies follow in their local markets could be a problem. They must take a middle ground whereby they should take local conditions into account before implementing their global practices.
While Indian auto firms have seen little labour trouble in the last five years, the only exception being Mahindra & Mahindra which reportedly witnessed a 15-day labour stir at its Nasik facility in May 2009, some homegrown automobile companies have almost upturned established labour-management norms on its head.
Take for instance the countrys second largest motorcycle maker Bajaj Auto. A little over four years back the company asked almost 2,700 of its workers to stay at home since it felt it had ample capacity to roll out scooters and bikes. However, interestingly the workers continued to be paid their full wages. We assured the workers that we would pay them full wages till they retire. But still they were not happy, a company official recalls. He quips: Apparently the workers were not happy because they were being given a tough time at home by their wives. The situation became even more bizarre when the laid-off workers moved a local court with little success.
Homegrown auto major Tata Motors last witnessed a minor labour scuffle back in 2005 at its Jamshedpur unit. A year later Hero MotoCorp (then known as Hero Honda) faced labour troubles for about a week which was resolved never to surface again in the next six years.
Company sources say that though Japanese Honda and Munjals promoted Hero held 26% stake each in the firm, issues concerning labour and HR were strictly in the hands of its Indian promoters. Consultant with KPMG Ravi Shingari says that many foreign companies have little knowledge as to how to negotiate with the workers.
Delhi-based Ajay Dua who advises several Japanese companies feels that often foreign auto companies fail to bridge the gap between their expectations and reality. Foreign companies set up operations in India since the cost of wages are relatively lower than most parts of the world. However, they soon realise that wages are in fact only reasonable compared to the overall productivity. This often compels them to invoke idealistic principles which are not in sync with established ways of management in India in an effort to answer their bosses back home. Management consultant Deepak Dalal says, Indian promoters are better equipped to handle situations than their foreign counterparts. Apart from that they are also in a position to anticipate problems better.