Toyota Kirloskar Motor Private Limited : Toyota Kirloskar Motor Private Limited IR Problems at PRESENTED BY
MONOYARA BEGUM(44) INTRODUCTION : INTRODUCTION Toyota Motor Corporation (TMC), the world’s second largest automobile manufacturer, had entered into the Indian market in 1997 through a joint venture with Kirloskar Group.
The new entity was called Kirloskar Motor Private Limited (TKM).
TKM established its manufacturing facility at Bidadi near Bangalore in the Indian state of Karnataka.
The case deals with the labour unrest in the Bidadi plant.
On January 08, 2006, the workers of the plant went on strike, which was followed by a lockout by the company. The conciliation process failed to resolve the dispute.
Hence, the government, in order to maintain its investor-friendly image, prohibited the strike. INTRODUCTION : INTRODUCTION On receiving the news, the company lifted the lockout, but placed the condition that workers resuming duty will have to sign a good conduct declaration.
The declaration stated that the workers would, henceforth, maintain discipline in the plant and ensure full production.
The union agreed to call off the strike, but declined to sign the declaration.
The company, however, strictly mentioned that if the workers did not sign the declaration, they would not be allowed to enter the plant. According to the union representatives, if both the parties remained rigid on their stands, it would again lead to lockout. TKM management was in a dilemma over handling the situation.
The case discusses in detail, the dispute between the TKM management and the workers’ union and the developments with respect to it. BACKGROUND NOTE : BACKGROUND NOTE TKM, a joint venture between Toyota and the Kirloskar group, established its plant at Bidadi on October 06, 1997, with an initial investment of Rs. 7 billion.
76%stake was held by toyota and 26% was held by Kirloskar group. In 1999, Toyota increased its stake to 89%.
The Bidadi plant began production in December 1999.
1999: 20,000 units
2000: 35,000 units
2004: 50,000 units BACKGROUND NOTE : BACKGROUND NOTE Launched a MUV into Indian Market: Qualis (January 11, 2000)
In first year, TKM sold 21,785 units n grabbed a market share of 35.1% in MUV segment.
Introduced Carmy and Corolla. On April, 2002 , Toyota Industries Corporation (TICO) and Kirloskar Systems Limited (KSL) established a plant to build mannual transmissions. 64% stake was held by Toyota, 26 by TICO and 10% KSL.
The plant began production in June 2004 , with capacity of 160,000 units per unit.
400 employees were employed (220 new and 180 of KSL). BACKGROUND NOTE : BACKGROUND NOTE In February 2005, TKM phased out Qualis from Indian Market and launched Innova (premium segment) in the Market.
By October 2005, the company sold 26,800 units of the vehicle.
December 2005, Toyota’s investment in Indian joint venture was Rs. 16 billion, the plant (Bidadi) operated at a capacity of 60,000 vehicles per year.
Estimated turnover was more than Rs. 30 billion in 2005.
In 2005, market share was 5% in the Indian automobile market.
Eying a market share of 15% by the year 2015 Labor Relations at TKM : Labor Relations at TKM Prior to strike and lockout in January 2006, the plant has experienced three other strikes.
First strike: April 2001, went for 2 days.
Second strike: June 2001.
Third strike: January 2002, followed by a lock-out (both went for 53 days). Labor Relations at TKM : Labor Relations at TKM In 2002, the company decided to call the workers in two shifts to meet the increased demand for the company.
First shift: 8AM-4.PM
Second shift: 8PM-4.AM
Workers were asked for overtime between 4PM -8 PM and 4AM -8 AM.
TKM wanted its workers to conform to Toyota Production System (TPS).
In TPS, the JIT is followed to respond to the changing demand.
Based on Toyota’s standard, TKM’s plant was supposed to produce one vehicle in every 4.5 minutes. Labor Relations at TKM : Labor Relations at TKM TKM send its employees to Toyota plants located in Japan, Indonesia, and Thailand to attend training.
Toyota also assigned master trainers from these plants to the Indian plant to ensure 100% implementation of TPS.
75% of TKM workers aged between 20-25 years, refused to work overtime despite it being mandatory by the management.
Workers of TKM demanded to allow them form a trade union, but opposed by the TKM management.
Workers however, decided to go ahead , and TKMEU was born. Labor Relations at TKM : Labor Relations at TKM Management of TKM dismissed 2 office bearers of TKMEU on the ground of bad performance as per Toyota’s global human resource policy.
January 2002 : Protesting against the shift system and dismissal of the workers, the employees went on strike and TKM had to declare a lockout (went for 53 days).
Company changed the shift system and hike salaries.
The matter of dismissal of workers was still pending before the Industrial Tribunal as of January 2006. Labor Relations at TKM : Labor Relations at TKM February 2004: the TKM management suspended 15 workers.
2005-:TKMEU was affiliated to the CITU. The rift between TKM’s management and workers intensified.
TKM finally recognized only TKMEU but not its affiliation to CITU.
April 2005: the management agreed to hike salaries by 15%, to avoid another row with workers. THE DISPUTE : THE DISPUTE On 5th Jan,2006- Three workers dismissed out of out of fifteen that had been suspended in February.
Reasons-They were guilty of misconduct which include violent behaviour, disruption of work and assault on a supervisor Slide 13: TKMEU’s Statement
The workers began their strike on January 06,2006
Heavy workload and unfavourable working conditions.
Ill workers were forced to work.
Workers suffered from spinal cord problems and respiratory problems.
Management failed to provide safety equipment to protect workers against paint and dust.
Workers have to obtain permission from supervisors to visit the toilet.
No proper and fair investigation conducted by management before dismissal of three workers. TKMEU’s Statement : TKMEU’s Statement 15 workers who had been suspended includes:
Two office bearers
Four executive committee member
Remaining nine were active members of union.
Reasons for suspension
Not participating in five minutes warm-up exercise before commencing their work
Wages were cut if they talk with their co-workers TKM’s managements statement : TKM’s managements statement Described TKMEU’s allegations as baseless
Complete job security
Well established safety and health guidelines
Jobs at plant had been well analyzed
Safety Commitee once a month to review and take corrective measures in case there were any accidents or injuries. Slide 16: The TKM management declared a indefinite lockout at the plant on January 08,2006 under Sections 22,23 and 24 of the Industrial Dispute Act 1947.
Workers turned violent and misbehaving with those who had not joined the strike.
Workers had threatened to blow up the LPG tanks at the plant. Slide 17: Strike by the workers was illegal(without notice)
Lockout declared by the management was also illegal(without notice) THE NEGOTIATIONS : THE NEGOTIATIONS On January09,2006,representativesof TKM and TKMEU were asked to present their case before the office of the Deputy Labor Commisioner (DLC) at the conciliatory.
TKM representatives were not present.
Reason-workers were protesting and raising slogans against the management in front of the DLC office.
DLC decided to call for a meeting on January 12,2006. Slide 19: After the meeting the DLC gave the following suggestions:
The dismissal order for the three employees should be kept in abeyance until the Industrial Tribunal gave its judgement.
The lockout should be lifted.
No disciplinary action should be taken against the protesting workers.
The workers should withdraw the strike in order to maintain a peaceful work atmosphere. Slide 20: THE DISPUTE CONTINUES
On JANUARY 20,2006, TKM’S management announced the local newspaper that it would lift the lockout.
The management announced that the lockout would be lifted from JANUARY 21,2006 onwards.
TMKEU, the union also pointed out that the advertisement did not contain any statement about whether the management had accepted their demand for keeping the dismissal of the three employees in abeyance. THE DISPUTE CONTINUES : THE DISPUTE CONTINUES ON JANUARY 21,2006, the Government of karnataka banned the strike by TKM workers and referred the matter to the third additional labour court.
On JANUARY 22,2006, local newspaper reported that about 60 workers resumed work on the first day of the lockout being lifted.
On JANUARY 23,2006 after a union meeting, the TKMEU announced that it was withdrawing its strike, they declared that THE DISPUTE CONTINUES : THE DISPUTE CONTINUES Th
They will not tender any good conduct under taking as insisted by the management.
The management said that it wanted the workers to give the undertaking to ensure that they did not indulge in destructive activities.
On JANUARY 24,2006,TKM’S workers and management entered into talks. The union sought removal of the lockout clause from the undertaking, which stated that the strike is illegal and that the management would take disciplinary action in case of the THE DISPUTE CONTINUES : THE DISPUTE CONTINUES occurrence of such incident in future.
The management accepted the proposal made by the union and decided to remove the clause.
And with this tussle between TKM’S management and the workers came to an end.
On FEBRUARY 03,2006,TKMEU announced that from FEBRUARY 05,2006, they are going for hunger strike without affecting the production.
The hunger strike didn’t continue long. THE RESULT : THE RESULT TKM did not face any major problems due to the strike of the workers and the lockout at its plant.
TKM had made appropriate arrangement to meet the market demand for its cars if the talks between the management and union fails.
It had trained about 700 people to work on the shop floor in case of emergencies.
The company produced 30 vehicles per day. THE RESULT : THE RESULT The production was carried by those employees who are not part of the union.
They produced 30 vehicles per day.
Toyota had earlier planned to set up another plant in Karnataka near the existing plant, but analyst expressed doubts about it.
Analyst felt that the growing political disturbances in the state were affecting industry and society
According to an article published in the Economic Times on FEBRUARY 02,2006 THE RESULT : THE RESULT t
the company sources were reported that TKM had given up their plans to start up a second plant.
The major reason is the dispute between the TKM’s management and the employees.
Analyst opined that this would lead to a loss of employment opportunities. Slide 27: THANK YOU