CASE STUDY 4 HONDA UNREST
The above case study depicts the critical labour problem of Honda Motorcycles and Scooters India Ltd in the year of 2005. It was a situation which the company had to face and which became like a nightmare for the senior managers and the directors. It was a labour srtike which costed honda a loss of about three billlion yen ($27milion) , a heavy decline in the number of workers resulting in a decline in the total output. The company had been in a grip of a majour labour unrest for over a month.The unrest saw the company, a fully-owned subsidiary of Japan’s auto major Honda Motor Co., suffer huge losses due to production being scaled back.Honda's Gurgaon plant has 2,000 workers on its rolls and once produced 2,000 scooters and motorcycles a day. But Bu t after workers began agitating for a wage hike since December 2005, production fell to 400 vehicles a day. Slowly and slowly things started heating up and trouble used to simmer in honda factory for over eight months, and finaly things came to a head when the workers demonstratred and were brutally beaten up by the police. Honda Motors Company L.t.d, japan set up its factory in the techno city of india 'gurgaon' known as Honda Motorcycle & Scooter India India (Pvt.) Ltd. (HMSI). Gurgaon can be considered as the auto hub of India with factories of Honda, Hero Honda, and Maruti Udyog based here.Honda is the world's largest manufacturer of 2-wheelers. The HMSI factory is spread over 27 acres, at Manesar, in Gurgaon district of Haryana. The foundation stone for the factory was laid on 14th December 1999 and the factory was completed in January 2001, in a record time of only 13 months. It has a capacity of 100,000 scooters per year. Its initial investment stands at Rs. 200 crores. It has facilities like gravity die-casting, steel and aluminium machining, heat treatment, press and fabrication shop, paint shop and frame and engine assembly. The HMSI paint pa int shop is among the most advanced in the world with automated lines and a robotised paint booth. The honda unrest started with the workers protest which started in the month of july. Honda management suspended some 50 workers and dismissed 4 others, replacing them with contract laborers and raising the daily output to 1,000 motorbikes. These actions were deeply resented by workers, who saw the move to replace permanent staff with temporary laborers as a cruel violation of their rights. The strike commenced after a few workers were suspended and dismissed for creating trouble and damaging products at the plant. Many more involved companies especially auto component makers were affected by these strikes in the region. About 1,700 of the total 1,800 'Line ' Line Associates' of HMSI joined ranks with the strikers and the company co mpany tried to make up for lost labour by taking help from vendors and involving contractual labour, apprentice and trainees in the process. After that, things started heating up. The workers of the company, along with their union leaders who were the members of a political party started a protest march.As they tried to cross the national highway, the police tried to stop them but were beaten b eaten up by the mob. The DSP and the constables were injured severely. The mob then marched off to the Mini Secretariat where they again started pelting stones at the police. Reacting to this, the deputy commissioner ordered a lathi charge ch arge in which the police went berserk and beat the mob black and blue leaving about 100 injured. Honda motorcycle and
Scooter India (HMSI) denied not reinstate any of its suspended workers without completion of an inquiry. It did condemn the lathi charge on them but at the same time categorically stated not to take back any of the suspended employees till a third-party inquiry against them is completed. The company had been in the grip of a major labour unrest for over a month. The company mangement termed the clash with police as an event that took place outside its factory premises. However, it expressed to consider to provide financial assistance to those injured in case a specific request came in. Slowly and slowly, this concern started becoming a political and national issue and the problens for Honda Motorcycles and Scooters India Ltd started incerasing.
The misgivings between the Honda management and employees find roots in the demand for a union to protect workers' interests. Though the demand for a union did not go well with the management, the government and other companies in Gurgaon, the workers applied for registering the union. And even after the union was registered, there was a lot of pressure from the management, which finally dismissed four employees in the first two weeks of May. To conclude, an idea of forming union did not go well with the management of HMSI. This finds the root in Industrial Dispute Act (IDA), 1947 which restrict the labour market flexibility. Had IDA included sections allowing labour market flexibility, HONDA would not have taken action against employees forming a union. It necessitates the changes in labour laws and calls for labour reforms in such a way to protect the interests of both employers and employees.It must be recognized that labour market reforms are not going to be easy in a situation where employment opportunities have been shrinking. Also there is a larger question of providing social security to the workers employed in the organized sector. The vast unorganized labour force, which constitutes over 90 per cent of the total, is denied fair wages and even modest levels of social security. Hence, labour market flexibility must be accompanied by some kind of insurance and social security to the vast unorganized labour force in the country. Government should make all possible efforts to dispel the fears of trade unions by enlarging the scope and coverage of the social security net.
