Chapter - 5

INDUSTRIAL DISPUTE SETTLEMENT IN AN ORGANISATION

HERO HONDA
Glimpse on the structure of Hero Honda Company:

The Hero Group, directed by the industrial dynasty Munjal, started as a supplier of bicycle components in the early 40s. Over the years, the Hero Group had entered multiple business areas, largely related to the transportation industry. The group bought into multiple areas of raw material processing, such as steel rolling, to the manufacture of subassemblies and components. In 1984/85 Hero Group started a joint-venture with Honda. Both partners held 26% of the equity with another 26% sold to the public and the rest held by financial institutions. Hero Honda became a public company listed on the Bombay Stock Exchange (BSE). In 1999 the joint-venture with Honda became critical, because Honda set up 100% subsidiary Honda Scooter and Motorcycles India (HMSI). The Honda HMSI plant is only 15 km down the road from the main Hero Honda factory. At the day of the announcement of the entering of HMSI into the market, Hero Hondas share price dropped by 30%, given the outlook of fierce competitions in the two-wheeler segment. But Honda was ready for concessions. First, Honda agreed to delay entry into the motorcycles segment until 2004. It also agreed to form a four-person committee with two members from Hero Honda to examine any new motorcycles that it would release post-2004. Lastly, it offered an opportunity to Hero Honda to share in the equity as a minority holder in

HMSI. The fact that both companies also tap into a similar pool of suppliers should make clear that only from a very legalistic and formal view can they be seen as two separate companies. The same is true for the composition of capital of the seven main suppliers of Hero Honda, which are basically subsidiaries of the Munjal Group (for example: Munjal Showa Ltd., Sunbeam Auto ltd., Majestic Auto Ltd. Shivam Autotech Ltd.). The Munjal Group has set up a range of firms to supply components, not just to Hero Honda, but also to other automobile companies. These operations range from the manufacture of shock absorbers and wheel rims to aluminum castings and plastic products. Apart from Honda, the Hero group has jointventures with Universal Cycles Plc. from the UK and Bombardier-Rotax from Austria. In 2006 Hero Honda sold 3,336,756 motorcycles in India, which means that Hero Honda has a major market share in India (still around 40 to 45 percent) and is the biggest motor-cycle and bicycle producer in the world. In 2007 Hero Honda laid the foundation stone of a third plant in the Gurgaon area (the other two plants are located in Dharuhera and Haridwar). The Gurgaon plant has a daily output of about 6,000 bikes per day and a major dispatch department for spare parts. Spare parts are a big business, given the 42 million running bikes in India (2000). Hero Hondas management has been very paternalistic towards its work-force, a mixture of tight social control and employee family outings, of enforced discipline and company cricket teams. This is expressed, for example in the companys suggestion scheme: All employees who make a suggestion are given a ballpoint pen. Further, the best suggestion of the year is given the annual award of cash prize and the family is given a plant visit along with a free lunch in the factory cafeteria. At the Gurgaon plant the permanent workers were put in a position very distinguished from the rest of the casual work-force, distinguished due to their supervising function and also visually distinguished by differently coloured uniforms. At the time when the strike kicked off at the Gurgaon plant the general division between the 1,400 permanent workers and the 5,500 workers hired through contractors

became blatant. The company sent the permanents into holiday, and they went. Interesting is the fact that, like the suppliers, the contractors at Hero Honda are also related to Hero Honda managing Mujal Group. They sub-contract the contracts to other smaller contractors (Sehgal Brothers, Prakash Contractor and Ram Mehar Mann of RSV Enterprises).

Industrial dispute settlement process

Although widely ignored by media and by most of the official organisations, the strike and factory occupation at Hero Honda have been one of the most important workers unrests in the Gurgaon area. The wildcat action at Hero Honda was followed by direct actions of temporary workers at Honda Scooter and Motorcycles India (HMSI). The important features and lessons of the short period of strike and factory occupation are : * The unrest hit one of the main cores of the local industry. The Hero Honda factory in Gurgaon is the two-wheeler factory with the highest daily output in India and attached to it are over 240 official suppliers. * The strike hit with full force, and no notice was given, therefore the management could not prepare a countermove (piling extra stocks, increasing production in other plants, mobilising strike-breakers, etc.). * The strikers managed to avoid a lock-out situation and the consequent police repression by occupying the factory. * At Hero Honda the workers hired through contractors were organising the strike. This is rare in a situation where most of the official strikes are led by and mainly in the interest of permanent workers. * According to the group of workers who struck, their demands were addressing issues of hierarchy (abolishment of different kind of uniforms) as well as wage questions. The demands were egalitarian, trying to overcome differences within the work-force. * The workers mobilisation spread from the main plant to the supplier, without open or official organisational links. The impact of the strike was noticeable further down the supply-chain (truck-drivers, second-tier suppliers). * The official unions were outside of the strike. Some positive elements of the strike might be due to the absence of established unions (no strike notice, occupation, involvement of

workers hired through contractors), as well as some of the problems, e.g., that there was little support from the outside, necessary during a factory occupation. * Workers showed that they are able to organise a strike, but during negotiations workers displayed their inability to finish it in their favour. The workers at Hero Honda sent a small delegation for negotiations and they paid for this mistake. * Strike showed the volatile situation in the industry, the weak links of capital: the fragile supply-chain and the simmering anger amongst the casual and temporary work-force. In the aftermath the management debates equated the strike at Hero Honda with the suddenness of natural catastrophes.

Strike at Hero Honda:

a) Prelude of the unrest:

The workers hired through contractors at Hero Honda had been angry for various reasons : * Although 50 percent of these workers have worked in the plant for more than six to seven years, they are not offered permanent contracts. * There is a huge wage difference: after six to seven years a permanent worker will receive up to 30,000 Rupees per month while a worker hired through a contractor gets between 2,200 and 6,200 Rupees. * Most workers have all kinds of trouble because they do not receive a company card, which is necessary for dealing with authorities (e.g., when applying for medical care or other benefits). They are not enrolled in the register, which means that they will not receive PF or ESI.

* Casual/workers hired through contractors are not given work periodically as production targets change. When that happens, Rs 500 is cut from their monthly wage. * There have been cases of physical harassment of the workers hired through contractors by supervisors and managers of Hero Honda. There is no idea of what finally triggered the dispute. Some people said that a bigger group of workers was not taken back after they returned from holiday (a lot of workers come from far off places in Bihar or Orissa). This is said to have been the final straw. Other sources say that there were some informal gatherings taking place during the week before the 10th of April 2006 where workers agreed on taking action.

b) Chronology of the unrest:

10th of April 2006 Strike and factory occupation begins when workers refuse to leave the factory after the end of their shift. 11th of April 2006 Most of the workers have confined themselves within the factory premises demanding regularisation of jobs while another 500 are waiting outside, giving moral and physical support to the workers inside. The police have prevented us from standing near the gate or raising slogans, says Sushant, a contract worker from Orissa, who was not allowed by the management to go inside the factory. Hero Honda starts negotiating with the strikers. In a public statement made by Hero Honda, it says: A section of workers hired by contractors have raised demands on their contractors and have irresponsibly stopped working. Reply of a worker during an interview with a newspaper: We want all the 4,000 contract workers to be absorbed in the company as regular employees, so that we do not have to deal with contractors any longer. The article presented this worker as a strike leader, then as a spokesperson, while adding that there is no union inside the plant.

14th of April 2006 Allegedly the water supply for the workers inside the factory has been cut on the 13th of April. Hero Honda says in a statement that the ongoing strike at its Gurgaon plant will not impact the companys annual profitability or production targets. Hero Honda aims to make up the production loss by stepping up production from the current 5,800 units per day to 6,500 units per day, post commencement of operations at its Gurgaon plant, the company said in a statement in New Delhi. The company would also like to clarify that this is a flash strike and there is no formal workers union at its Gurgaon plant. Also, the permanent workers are not supporting this strike, it added. The canteen stopped providing food for the strikers after the third day of occupation. Some local unionists said that they started collecting money for food. 15th of April 2006 Production at the manufacturing plant in Gurgaon remains suspended for the fifth day in a row. Meanwhile production at Hero Hondas other plant at Dharuhera is going on as usual. At the retail level some dealers complained of supply problems for a few specific motorcycles. Only a small police force is stationed at the factory, most of them sleeping in the shade. Workers hold assemblies on the factory lawn and put up self-painted posters. Some call centre workers on the other side of the street watch the scene. No one is allowed to enter the factory, the security guards are still in place. Allegedly the police refused to enter the factory premises and management was afraid of creating dangerous situations (dangerous for their factory and machinery). 16th of April 2006 The rather miserable end of the strike. After representatives of the Labour Department refused to enter the factory, both the Labour Department and company management asked for a delegation from the workers. About six to seven workers went to a meeting outside the factory; other people, amongst them local unionists, were not allowed to attend the meeting. The delegation returned and said that the strike was over, promising that some of the demands were met. The workers called off the strike, but those workers

who went as a delegation to the negotiation disappeared. People assume that they have been bought off. Allegedly, out of the 5,500 workers hired through contractors only 4,000 went back to work the next day, angry about the fact that a lot of the demands were actually not met. A contract worker at the gate said that they were granted an Rs 1,000 monthly wage rise. Hero Honda management announced that in order to compensate for the loss of production, output at the Dharuhera plant had been stepped up.10

Machineries of this Industrial dispute

Workers demands and outcome of the dispute:
Some demands of the workers have been agreed to: * A 30 percent hike in wages of casual workers. Workers hired through contractors used to get Rs 4,000 - 4,500 a month for an 8 hour shift. That will now be Rs 5,500. In comparison, ITI graduates (skilled workers hired through contractors) get Rs 6,500. * Besides this 30 percent hike, there will be no difference in dress colour between helpers and ITI graduates. The initial demand to abolish the different uniforms for permanents and temporaries has not been met. * The wage of the contract workers will go into a bank and they will have ATM accounts. * They too will get a gift annually. This was told by workers at the gate one day after the end of the strike. However, workers seeking casual/contract work at the Gurgaon plant of Hero Honda report that ever since the strike at Hero Honda during April-May 2006, workers hired through contractors are now being hired only at the Haryana rates of Rs 2,400 (this is the minimum wage valid in April 2006). During short conversations in May 2007 workers hired through contractors working at Hero Honda say that those amongst them with ITI qualification get 6,000 Rs per month, those without get 4,800 to 5,000 Rs, which would mean that the strike resulted in a pay hike. Apart from that they tell that there has been little change since the strike. They say that the major changes after the strike were that they received ATM bank accounts and

that now all skilled workers, disregarding their contract situation, got white uniforms. Nowadays the helpers hired through contractors have to wear the blue uniforms and the burden of visual minority.10

Chapter - 6 INDUSTRIAL RELATION SCENARIO IN A COMPANY

INDUSTRIAL RELATION SCENARIO IN HERO HONDA

Industrial relations have remained cordial throughout the years in Hero Honda. The company is committed for safety and health of its employees and other persons who may be affected by its operations. Company believes that safe working practice leads to motivated workforce and higher productivity and to that end, all possible safety measures are put in place to eliminate accidents at the factory. Employees are encouraged to report the incidents. Even small Incidents are investigated and analysed to prevent reoccurrence and improve upon safety record. Safe working culture across the Company is ensured by: - Integrating safety and health in all activities. - Ensuring compliance with all applicable legislative requirements. - Encouraging employees to ensure safety at their workplaces.

- Continuous improvements in safety performance through precautions besides participation & training of employees.