FE Editorial : Auto pilots

Thu, Oct 22 11:41 AM

The Gurgaon-Manesar belt on the outskirts of Delhi, in Haryana, is the biggest hub of automobile manufacturing—particularly auto components—in India. It is in fact a symbol of perhaps India's most successful manufacturing sector in recent years—auto components is the one manufacturing industry where India can claim a lead over China. Therefore, any mass workers' strike is not only bad for the firms concerned, but also for the country's image and reputation as a quality destination for auto manufacturing. And the most recent strike has paralysed the sector for reasons that are at best flimsy. Ostensibly, the strike was called in response to the death of a worker in component maker RICO's plant. But this wasn't a typical industrial accident, which could have perhaps provoked outrage. His death was a result of a violent scuffle between two groups of workers and had nothing to do with management. In fact, a senior manager was inexplicably assaulted for taking action against workers who had taken recourse to violence. The strike, unfortunately, seems more motivated and incited by the political ambition of the AITUC, the CPI-affiliated trade union, which wants to spread its clout with auto workers in this belt and this industry.

Apart from the immediate damage and losses caused by the closing of plants for a day, the workers have unwittingly damaged their own long-term cause of securing gainful employment. New investors will hesitate to invest in this belt. They could quite easily go to another part of India or indeed another emerging economy, which has fewer problems with indisciplined workers. This sort of worker belligerence with little reason also forces manufacturers to employ more capital-intensive methods of production in a country where labour is much cheaper and should ideally be the first-choice factor of production. Strikes, coupled with inflexible labour laws, have perversely caused our industrialisation process to turn capital-intensive too early. In China, on the other hand, labour-intensive production is the norm, even in technology-intensive sectors. Unfortunately, workers are not able to see the damage they are doing to their own cause through such ill thought-out strikes. In these difficult times, when firms are struggling to make profits, workers must be committed to enhancing the profitability of the firms they work for, not lead them to more losses. The future of this sunrise industry in India—we hope to be a global hub of small car production—requires workers and unions to act more responsibly. It is in their self-interest, too.

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