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INDUSTRIAL LAW:

CASE STUDY

The Indian Rico strike and the aftermath:

when capital wants to "de-risk"

SUBMITTED BY:

KRATI SARASWAT

NIHARSATSANGI

NIKITA KHANDELWAL

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The Indian Rico strike and the aftermath: when

capital wants to "de-risk"

The report of a Rico auto worker of a strike in 2009.

Aftermath of the Rico strike

Based on conversations with a permanent worker, Rico Auto Industries, 38 kilometer Delhi-Jaipur

National Highway, Gurgaon:

Its a big factory. After casting in iron and aluminum through machining, various parts of vehicles aremade. The company has factories in Ludhiana, Dharuheda, Manesar. Rico Auto, Continental Rico, Magna

Rico, FCC RicoIn these factories, work of Hero Honda, Maruti-Suzuki, Honda, Ford, General Motorsetc is done. Work has to be performed standing and after 8 1/2 hours duty, they force you to keep working.

Even on weekly rest day, shift workers have compulsory duty. Payment of overtime is at single rate. Theykeep increasing the production target and for not completing the production target, they harass us. Wages

are said to be 5,500 but really 4,200 are given. Basic wages are low and there are various allowances.Leave Travel Allowance (LAA) money is cut from the wages each month and given at the end of the year

when LAA is supposed to be provided by the company. In the canteen, bad food for more money. Noarrangement for transport. Despite many efforts, workers get tired of asking but many of the permanent

workers also are not given ESI card. In this situation, permanent workers keep quitting jobs and new onesbecome permanent. ITI & MSC are taken as trainees. Permanent workers are 2,000 to 2,500. Through 2

contractors, as many as 2,500 workers have been hired. I dont know about their conditionTo overcometheir difficulty, permanent workers put in 1,000 rupees each, that is 20 lakh rupees collected and joined

the union. The big leader of the union converses with the Chief Minister-Prime Minister. In August, things

started heating up. On September 21, when the company suspended 16 permanent workers, then nopermanent worker entered the factory.

Workers hired through contractors also stayed out. Workers sat at the factory gates all day, even cookingtheir meals there. Leaders came to give speeches. Company hires new people. Production goes on. Goods

enter and leave the factory. Sec. 144 forbids a gathering of 5 or more people at a place. Stay 50 metersaway from the gate. Police took away the tents and mats. Arrests and bail. In support of unions in

Sunbeam and Rico factories many unions together held a big meeting on September 25th. Normalproduction continues in other factories of the company. Due to prolonged time and the Diwali festival on

the 17th, there were a smaller number of workers at the factory gate. The company organized an attack onOctober 18th in which a worker died and many were injured. Unions called strikes in 50 factories on

October 20, 80-90 thousand workers did not work. Work came to a standstill for three days in the factory.One boss was beaten. Leaders did not allow the National Highway to be blocked. The company gave 5 to

10 lakh rupees to the family of the dead worker. No arrest in the murder case. Though the LabourDepartment-Chief Minister got negotiations started between the Management and union on Oct. 22nd. The

Company restarted production in the factory through new hires on October 23rd. Negotiations arecontinuing. Leaders are keeping all things to themselves. This time they are not telling anything to the

workers because In 1998, when an attempt was made to form a union, the leader had sold out, we dontknow what is there in the demand notice, what the conditions areProduction is continuing in the factory.

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Pressure on the company is decreasingConversations-negotiations are on. Workers hired throughcontractors have dispersed. Where can we permanent workers go? Despair, full of rage, enraged. This

week something is bound toUnion has started a relay-hunger strike from November 2nd.

This is a workers voice when the dispute was still on. Shortly after union and management came to an

agreement on 5th of November 2009. As per the agreement, out of the total 16 suspended workers, themanagement has agreed to revoke the suspension of eight, while one worker will be absorbed after onemonth. Seven workers will be investigated by State (Haryana) Labour Department. Management

spokespeople said incentives and other issues like salary increase will be decided, after comparing withthose of other leading companies located in and around the Gurgaon-Manesar area. At Sunbeam Auto

the other major disputed hot-spot dring autumn losses of about Rs 65 crore for this financial year wereattributed to the strike.

Legal Aftermath

Only after the dispute it shows that the legal system worked as ususal against the workers. We can see

how Rico management prepared the lock-out.The company announced a lockout on the morning of 21stofSeptember 2009.Workers who arrived for the morning shift found the gates locked and around threedozen policemen and between 200 and 250 private security guards-some equipped with firearms, others

with sticks-were inside the facility. According to a labour official, around 150 security guards were inside,mostly hired locally.

At 3pm, the company verbally communicated that 16 workers had been suspended for instigating workersto go slow, while the rest could rejoin work the next day. In the conciliation meetings that went on through

the night, workers argued that they had met weekly production targets, so the suspensions could not bemade on that ground. No show-cause notice was served on the suspended workers, which was illegal.

The company was prepared for the confrontation. Four days before declaring a lockout, it filed for an

injunction in court not to allow workers to strike within 200m of the factory, which the court limited to50m. This is the general practice of all managements in Haryana when they want to have a showdownwith workers.

After the violence, the Rico management chose to file the first information report through one of their

security guards; two workers were arrested for the murder while the private security guards disappeared.

While all of Ricos complaints to police have been registered as first information reports, those filed by

the strikers have not been accepted by the police.

De-Risking

It is one thing to use the legal repressive apparatus against individual workers a paper tiger in the end.

The main problem is that capital cannot escape from a socially more and more spread out labour force.The Rico strike showed the supply chains are global. Automobile companies in the global north sourced3.6 billion USD worth of parts from India between March 2007 and March 2008, compared with 330

millionUSD a decade ago. Now Rico and Honda management talk about de-risking and re-location amyth of an escape from the living.In the press in November 2009 Rico Auto management announced that

it will set up two new plants outside Haryana. A Rico spokesperson said that the move was in line with a

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demand raised by key customers who were affected by the 45-day strike at its Gurgaon factory. Theywant us to de-risk our operations to ensure uninterrupted supplies in case of any labour or industrial

dispute in future. Ricos major production comes from Haryana while also has some new facilitiescreated in Uttarakhand and at Sanand where Tata Motors Nano car project is coming up just for

demonstrating the global character: 15 percent of the value created of a Nano car is from German car parts

manufacturers. In contrast to this a manager of a German company said at the recent Delhi Auto Expo thatnowadays nearly 90 per cent of parts manufactured by German companies in India are sent to othernational markets and production units outside of India.

In December 2009 Honda Motorcyle and Scooters announced that it could set up new plant outsideHaryana. We do not rule out the possibility of moving to the south or west, but ideally, we should stick to

north India where we have a fully developed supplier base and logistic set-up. Industrial unrest iswidespread in India and we can face similar problems anywhere in the country, HMSI president & CEO

Shinji Aoyama said. When asked what exactly are the factors which will determine a new location (if itmoves out of Gurgaon), Aoyama said, The key determining factor would be cordial industrial relations in

the area. This is one of the important factors we will keep in mind while deciding location for a newfactory. In an interview, managing director and chief executive of Hero Honda Motors Ltd, Pawan

Munjal answered the question: Labour issues have tripped up the auto industry in the last few months.Why is this happening repeatedly?

In my view, it is purely a (labour) union-driven activity from the outside and theyre doing a huge

disservice to this belt of Gurgaon, Manesar and Dharuhera. I only hope it doesnt go the Faridabad way. I

wish and I pray to the government of Haryana to take strict action otherwise it could become a huge

problem. (livemint, 7th of January 2010)

Never mind the Aftermath, here is the Prelude: Unofficial Action at

Napino Auto and Electronics Ltd

Only days after the solution of the conflict at Rico a spontaneous strike action was reported from a

different automobile supplier in Gurgaon/Manesar industrial area

Gurgaon, 19th of November 2009: It seemed like a trivial incident at the time-an overzealous shop-floor

manager meting out punishment to a worker for a fault on the assembly line at Napino Auto andElectronics Ltd near Gurgaon.

The worker was asked to get on a table, hold his ears, squat, and then stand up again-a form of disciplineacross northern India and known as the murga (rooster) employed mostly on errant schoolchildren by

teachers and by policemen on small-time criminals.The incident, which came to be perceived as a public humiliation, ignited the discontent that had been

simmering among the 900 or so workers at the company that makes electronic parts for auto makers suchas Hero Honda Motors Ltd and Suzuki Motorcycle India Pvt. Ltd. The workers, surprised by their own

show of solidarity since there was no union history at Napino, went on a snap strike demanding action ona list of demands, including the payment of long-pending dues.

They also pushed for full overtime pay, salaried leave and, most critically, equal wages for contractworkers doing the same job as the regulars. They sought a wage hike and wanted those who had been on

contract for a lengthy period to be made full-time employees and thus eligible for employee benefits. Ofthe workforce, 852 are contract workers, 48 are permanent. Napino has a partnership with Japanese

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company Shindengen Electric Mfg Co. Ltd.The uprising at the Manesar plant, 16km from Gurgaon, stalled production for two days. As word spread

to other Napino units in Gurgaon and Haridwar (in Uttarakhand), workers served similar notices on themanagement: The Gurgaon factory was shut for two days, while in Haridwar, output was hit for a week.

Only a couple of weeks later, on 7th of December 2009, DNA business magazine reported sporadicincidents of work disruption have again been reported from Munjal Group company, Omax Auto, over the

last two days. No wonder that the management think-tanks have to notice these developments. Some ofthem even recognising that the core problem is the unruly nature of the unrepresented temp work force,

which became the majority workforce ofShining India. They acknowledge the dual role of unions for thecompany management on one hand an extra expense for representatives and certain distributive gains,

but on the other hand a negotiation partner valuable in times of general unrest. The probably best articlepublished about Gurgaon industrial turmoil actually comes from aWall Street Journal. From a social

management point of view the article criticises the uncooperative attitude of the managing class towardsthe representatives of workers, calling for better dialog. The following paragraphs are taken from the

article, reflecting some of the union developments in Gurgaon.

Workers of at least 35 companies in Gurgaon are now members of the Communist Party of India-affiliated All India Trade Union Congress, while the Hind MazdoorSabha has members in at least 38

companies.While unions compete with each other for membership, they also realize the value of presenting a united

front. About 35 of them came together in June this year to form a federation under the banner 4S, orSanyukt ShramikSangharsh Sangh (Joint LabourStruggle Union).

Its not clear what 4S exact long-term strategy is, but its immediate goal, says secretary Harish Sharma, aHero Honda union leader, is to build a platform for joint decisions on issues relating to suspension,

termination and union registration. At least two contractors have been removed from companies formisbehaving with workers as a result of efforts by 4S, he said. The federations representatives also sit

in on conciliation meetings to settle disputes.

Three weeks after filing for trade union registration, Ram Niwas Yadav, a worker at Hema EngineeringIndustries Ltd (Gurgaon), was waylaid by half-a-dozen men on the morning of 29 September. Yadav said

he was beaten up by the men, who threatened to kill him if he did not resign from the company. As Yadavlay in hospital recovering from his injuries, the workers went on a one-day strike in protest.

In August, Hanif Mohammed, employed at Bajaj Motor Co. Ltd, was slapped several times by seniorsupervisors inside the factory before being forced to resign, prompting a production halt for a few hours.

The incident took place a week after workers filed for union registration.In the same month, workers at QH Talbros Ltd, which makes car steering systems, registered to form atrade union. The companys first reaction was to transfer Mahesh Singh, a union leader, to Pune. After the

factory was shut for two days owing to industrial action, it promised to reinstate him if he withdrew thepapers for forming a trade union. The management eventually retracted the transfer order.

The Union government doesnt seem to be fully abreast of the trouble brewing on this front, going by the

figures. According to its records, four industrial strikes had taken place till September in Haryana, but aninvestigation by Mint found at least 15 labour upheavals in the Gurgaon-Manesar industrial belt alone,

each stopping work for a few hours to 52 days (see graphic).

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So whats different about this wave of trade union activity? Timing. It comes as the world is emerging

from a financial crisis that marks an inflection point in its industrial development. As the worlds fastest-growing economy after China-and one that sailed through the economic crisis relatively unscathed-India is

poised to become one of the powerhouses that pulls everybody else out of the trough.

Take Indias automobile sector-its helping to define the future of the global car industry by churning outthe low-priced models that are propelling growth as markets elsewhere lose steam. Its also one of the keyfronts on which workers are fighting companies, which explains why the stakes are so high.

Anger on the backdrop of a boom: short reports of workers employed by

automobile suppliers in India

The Indian car industry currently experiences an upswing due to orders from EU and to special credit

schemes on the Indian market, which is likely run out in the near future. Our sales grew 49 percent in

September and 15 percent in October 2009.

We would have done much better if it wasnt for a seriousparts supply constraint because of which we couldnt ramp up quicker to meet the increase in demand,

said Karl Slym, president and managing director of General Motors India in December 2009.

The industry projects this boom into the future and adds new capacities. Despite all the talk of de-risking, the main assembly plants in Gurgaon are set up for further capacity extension. Not only

passenger car makerSuzuki, but also its two-wheeler branch.Suzuki Passenger Cars will also renovate the production facilities at its all three manufacturing units and

add new capacity of at least 70,000 90,000 units by December 2009. A new production line is likely tobe set up at the Manesar unit, which will have a capacity of 3 lakh units per year. The capacity addition is

expected to be done in phases. The company has 600 acres of land in Manesar. We can make two plantsproducing an additional 600,000 cars in Manesar itself, Nakanishi said.

Suzuki Motorcycle India (

SMIPL) plans to double production capacity of its two-wheeler plant inGurgaon news from December 2009. The companys vice-president Atul Gupta said, With robust

demand in the past few months, we will increase our monthly production capacity to 25,000 two-wheelersby March 2010 from the current 12,000 units.