Gurgaon still on boil, Honda stops output

The Economic Times: "Less than 24 hours after the striking workers of the Japanese two-wheeler company Honda Motorcycle and Scooter India clashed with the police, the mood across the Gurgaon-Manesar belt was tense. HMSI today stopped production entirely as a ‘precaution.’ Throughout the day, an overwhelming police presence was visible in the old city and Parliament was rocked by the impact of yesterday’s violence. Already, CEOs of companies with manufacturing facilities in the region are antsy about what will follow.

The event also had a diplomatic fallout. Angry over Japanese ambassador Y Enoki’s attempts to project the labour dispute in HMSI’s Gurgaon plant as a benchmark for judging the investment climate in India, New Delhi said that much should not be read into an isolated incident. In response, an MEA spokesman said the country has efficient systems to deal with such situations. Interestingly, there seemed to be a difference of opinion between Japanese and non-Japanese MNCs on whether yesterday’s violence will affect India’s FDI reputation. While Japanese companies maintained that India’s investment image will take a knocking, others saw this as an aberration.

“The incident has serious implications for industrial peace and may affect industrial investment in Gurgaon,” said Surinder Kapur, chairman and MD, Sona Koyo Steering Systems. Others feel the issue has now turned into a law and order problem with larger implications. “Workers have no right to incite violence and vitiate the working atmosphere in Gurgaon,” said AK Taneja, executive director, Shriram Pistons and Rings. Indeed, the general feeling among local manufacturing units is that yesterday’s incident could have a ripple effect.

“It will create a wave of sympathy among the Gurgaon working class, and industrial unrest and shop floor indiscipline will spread to more units in the area,” said Jagdip Singh, MD of Sigma Group, which has many units in the Gurgaon-Manesar belt. According to sources in fellow-subsidiary Hero Honda, everything will now depend on how the central and state governments handle the issue. “Since it has become an emotive issue, unless things quieten down, it could have long-term repercussions on foreign investment into this auto hub,” said Hero Honda officials.

Says KK Swamy, deputy MD, Toyota Kirloskar Motor: “This will certainly impact India’s reputation. The way it has been handled so far is not the right way. Nobody seems to be speaking on behalf of the employers and they are being made to look like the bad party. But the truth is unless there is discipline on the assembly line, you cannot have smooth production.” Toyota had faced a 42-day strike in ’01 which severely hit its production and profitability for that year.

While low-grade labour unrest is common in most industrial hubs, yesterday’s violence has surprised most MNCs. Kiyomichi Ito, MD, Toyota Kirloskar Auto Parts, for instance, wonders what triggered off this clash. Some like Naohiko Munakata, CMD, Mitsubishi Corporation India, feel that communication gaps between international managers and local workers need to be bridged to prevent such an incident from recurring. “However, if incidents like this continue taking place, investors would start thinking about shifting base,” said Ito.

A part of the problem could be the difference of work culture between Japan and India. According to Vikram Kirloskar, CMD, Kirloskar Systems, Indian workers are not accustomed to working in a strictly deadline-driven environment, where strong emphasis is laid on standard of work, process orientation and quality management. On the other hand, the management needs to understand the aspirations of young workers, he said. Back in Gurgaon, police picketing continued for the maintenance of law and order in the old city. The company, for its part, is extending “open-ended medical support to the hospitals in the area,” said HMSI HR head Vivek Vishwanath.

Its medical team and doctors are assisting in efforts to treat the injured and are coordinating cashless medical treatment for those on its rolls. However, the medical insurance will not cover the large contingent of contract labourers, also part of the agitation, since they are not on the company’s rolls. HMSI officials, though, have not changed their stand on the suspension issue that sparked off the labour unrest. “We maintain that the result of the independent enquiry will determine the suspension orders,” said Vishwanath. "