Labour unrest in Gurgaon belt may spoil auto party

Labour unrest along the Gurgaon-Manesar belt could prove a party pooper just when things were beginning to look up for automobile companies.

Plants producing more than half of all cars and two-wheelers produced in India are houses in this region so that widespread labour unrest could spell doom for the industry in coming months. Employee unions across some component makers and even original equipment manufacturers (OEMs) have either struck work or are observing a “go slow” for the last fortnight.

Honda Motorcycle & Scooter India (HMSI), the clear leader in variomatic scooters and fourth largest two-wheeler maker in the country, has seen its production fall to almost half in recent weeks. A company official said that there is no strike but the “go slow” has meant that a third production line - which was scheduled to begin operations from September one - has been postponed. “This means a production loss of almost 600 two-wheelers per day. Overall, we are equipped to roll out 4,350 vehicles a day but we are doing only a little over 2,000 units because of the workers’ attitude,” the official said.  The official said that the company is holding tripartite talks by involving labour unions and the state labour commissioner’s office to map out a long-term settlement (LTS) on wages for the next three years. Rico Auto and Sunbeam Auto, two major parts’ suppliers to large OEMs such as Maruti Suzuki India and Hero Honda Motors, are also reeling under a strike. An official at Rico said that almost 70% of its workers have stopped reporting for work, mainly people in supervisory and shopfloor roles. Rico supplies components such as case differentials, clutches, pumps, panels and hubs, brake discs, etc and has been forced to operate two 12-hour shifts against the normal practice of running three shifts of 8 hours each. Supplies to most OEM customers are down already and the situation could worsen unless immediate corrective steps are taken.

Sunbeam Auto, an engine parts supplier, is facing an identical situation with only 40% production. A company official said that for many critical engine components needed by Maruti and Hero Honda, his company is the sole supplier.  Some other component makers, including Hema Engineering, AG International, Microtek and even Sona Koyo Steering Systems have been facing labour unrest increasingly over the last few weeks. There appears to be a hint of political rivalry as well, with some Congress affiliated unions facing dissent from within on the instigation of Left led unions. And since this is the election month in Haryana - polls are scheduled for the 13th - not much help is coming forth from the police machinery either.

Speaking to DNA Money, officials of the Haryana Labour Commissioner’s office said that at least some labour issues could be resolved soon. “We want to be industry friendly. There are no criminal elements involved in any of the strikes…the HMSI issue is close to resolution but the matters of Rico and Sunbeam have been referred to the state government and will eventually come to the labour court.”