Transcript
The above case study depicts the critical labour problem of Honda Motorcycles
and Scooters India Ltd in the year of 2005. It was a situation which the company
had to face and which became like a
nightmare for the senior managers and the directors. It was a labour srtike which
costed honda a loss of about three billlion yen ($27milion) , a heavy decline in
the number of workers resulting in a decline in the total output. The company
had been in a grip of a majour labour unrest for over a month.The unrest saw the
company, a fullyowned subsidiary of Japan’s auto major Honda Motor Co., suffer
huge losses due to production being scaled back.Honda's Gurgaon plant has
2,000
workers on its rolls and once produced 2,000 scooters and motorcycles a day. But
after workers
began agitating for a wage hike since December 2005, production fell to 400
vehicles a day.
Slowly and slowly things started heating up and trouble used to simmer in honda
factory for over
eight months, and finaly things came to a head when the workers demonstratred
and were brutally
beaten up by the police.
Honda Motors Company L.t.d, japan set up its factory in the techno city of india
'gurgaon' known
as Honda Motorcycle & Scooter India (Pvt.) Ltd. (HMSI). Gurgaon can be
considered as the auto
hub of India with factories of Honda, Hero Honda, and Maruti Udyog based
here.Honda is the
world's largest manufacturer of 2wheelers. The HMSI factory is spread over 27
acres, at Manesar,
in Gurgaon district of Haryana. The foundation stone for the factory was laid on
14th December
1999 and the factory was completed in January 2001, in a record time of only 13
months. It has a
capacity of 100,000 scooters per year. Its initial investment stands at Rs. 200
crores. It has
facilities like gravity diecasting, steel and aluminium machining, heat treatment,
press and
fabrication shop, paint shop and frame and engine assembly. The HMSI paint
shop is among the
most advanced in the world with automated lines and a robotised paint booth.
The honda unrest
started with the workers protest which started in the month of july.
Honda management suspended some 50 workers and dismissed 4 others,
replacing them with
contract laborers and raising the daily output to 1,000 motorbikes. These actions
were deeply
resented by workers, who saw the move to replace permanent staff with
temporary laborers as a
cruel violation of their rights. The strike commenced after a few workers were
suspended and
dismissed for creating trouble and damaging products at the plant. Many more
involved companies
especially auto component makers were affected by these strikes in the region.
About 1,700 of the
total 1,800 'Line Associates' of HMSI joined ranks with the strikers and the
company tried to make
up for lost labour by taking help from vendors and involving contractual labour,
apprentice and
trainees in the process. After that, things started heating up. The workers of the
company, along
with their union leaders who were the members of a political party started a
protest march.As they
tried to cross the national highway, the police tried to stop them but were beaten
up by the mob.
The DSP and the constables were injured severely. The mob then marched off to
the Mini
Secretariat where they again started pelting stones at the police. Reacting to
this, the deputy
commissioner ordered a lathi charge in which the police went berserk and beat
the mob black and
blue leaving about 100 injured. Honda motorcycle and Scooter India (HMSI)
denied not reinstate
any of its suspended workers without completion of an inquiry. It did condemn
the lathi charge on
them but at the same time categorically stated not to take back any of the
suspended employees till
a thirdparty inquiry against them is completed. The company had been in the
grip of a major
labour unrest for over a month. The company mangement termed the clash with
police as an event
that took place outside its factory premises. However, it expressed to consider to
provide financial
assistance to those injured in case a specific request came in. Slowly and slowly,
this concern
started becoming a political and national issue and the problens for Honda
Motorcycles and
Scooters India Ltd started incerasing.
The misgivings between the Honda management and employees find roots in the
demand for a
union to protect workers' interests. Though the demand for a union did not go
well with the
management, the government and other companies in Gurgaon, the workers
applied for registering
the union. And even after the union was registered, there was a lot of pressure
from the
management, which finally dismissed four employees in the first two weeks of
May.
To conclude, an idea of forming union did not go well with the management of
HMSI. This finds
the root in Industrial Dispute Act (IDA), 1947 which restrict the labour market
flexibility. Had
IDA included sections allowing labour market flexibility, HONDA would not have
taken action
against employees forming a union. It necessitates the changes in labour laws
and calls for labour
reforms in such a way to protect the interests of both employers and
employees.It must be
recognized that labour market reforms are not going to be easy in a situation
where employment
opportunities have been shrinking. Also there is a larger question of providing
social security to
the workers employed in the organized sector. The vast unorganized labour
force, which
constitutes over 90 per cent of the total, is denied fair wages and even modest
levels of social
security. Hence, labour market flexibility must be accompanied by some kind of
insurance and
social security to the vast unorganized labour force in the country. Government
should make all
possible efforts to dispel the fears of trade unions by enlarging the scope and
coverage of the social
security net.