Swedish commercial vehicle major Volvo is facing trouble in India as production at its bus manufacturing facility near Bangalore has been severely impacted. Workers at the plant have been on strike for a week, but now it has begun to cripple operations.
If the current crisis continue for some more days, the company may not only able to fulfil the domestic demand. It is also expected to postpone export plans, sources closed to the development told FE.
Over 500 employees attached to Volvo Buses Workers Union (VBWU) in Volvo Buses India Pvt Ltd (VBIP) have resorted to an indefinite strike after a three-month go-slow, demanding wage hikes and reinstatement of a few suspended employees.
Volvo Buses, in which the Swedish parent holds 70%, is a joint venture with Bangalore-based bus body builder Azad Group.
The company had initiated wage negotiations with the trade union early this year, with 25 sittings so far. ?However the discussion have reached a stand-off since the union now seeks to link this discussion to revoking the suspension of four employees,? said a Volvo spokesperson. The company had placed four workers under suspension in April on allegations that they assaulted management staff, besides keeping them hostage for eight hours. A police inquiry in this connection is still underway, he said.
?This has caused serious damage to the company. This situation is not sustainable in the current business environment,? he said. At present manufacturing at the plant level is being undertaken with the help of management staff and non-union staff.
He refused to quantify the loss due to strike, but sources in the company said the production could have come down by half in the past three months. Each of Volvo bus cost in the range of Rs 65-70 lakh. The spokesperson confirmed that the company do not maintain any inventories as it manufacture buses against orders.