IR Problems at Toyota Kirloskar Motor Private Limited

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Case Details:

Case Code : HROB088
Case Length : 16 Pages
Period : 2000-05
Pub Date : 2006
Teaching Note :Not Available
Organization : Toyota Motor Corporation, Toyota Kirloskar Motor Private
Industry : Auto and Ancillaries
Countries : India

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Introduction Contd...

Industry analysts opined that the strike at TKM raised doubts about the success of the Japanese style of management in the Indian context. They also recalled the July 25, 2005 incident at the Gurgaon6 plant of Honda Motorcycle & Scooter India Private Limited (HMSI), a wholly-owned subsidiary of Honda Motor Company Limited (HMCL)7, when there were violent protests from workers, disrupting production at the plant (Refer to Exhibit I for the labor unrest at HMSI). These incidents served to underline the fact that it was essential to ensure sound industrial relations for the smooth continuation of operations and the safety of management, workers, and the plant of 

companies (Refer to Exhibit IIA and IIB on statistics regarding the number of strikes during 2002-2006and lockouts and a list of industrial disputes in 2005 in India).

Commenting on the growing incidents of discord between management and workers, Surinder Kapur, Chairman of the Sona Group, an automotive component manufacturer, said, "This incident has brought to light the need to look at labor laws afresh. We cannot have archaic labor laws in a liberalized economy. Compare China and India not just on infrastructure but also on labor laws. It is much more liberal there (despite the Communist regime).8 Liberal labor laws are not about hire-and-fire at will but about more room for contract labor with a tenure of, say, three years or so, and more temporary workers. If there is a feeling that minimum wages are low, the government must work toward increasing them."9

Excerpts >>

6] Gurgaon is a satellite town near New Delhi, India.

7] HMCL has its headquarters in Tokyo. As of 2005, it is the largest manufacturer of two-wheelers in the world and has more than 120 manufacturing facilities in 30 countries worldwide.

8] China had less rigid labor laws when compared to India according to the 'Doing Business' study conducted by the World Bank in 2005. India was rated among the countries with most rigid employment regulations (difficulty in hiring & firing workers and rigidity in hours) with an overall score of 62 whereas China scored 30 and Singapore scored zero. (Source: Ranjit Devraj, "Japanese Investors Learn Indian Labour Laws the Hard Way,", August 04, 2005).

9] S Kalyana Ramanathan, "India: Is Labour Trouble Resurfacing?", August 06, 2005.


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