Toyota threatens to move out of city over poor industrial climate

Toyota, workers ink pact for 15 pc more wages — Co urges Govt to improve industrial climate
The Hindu Business Line

TOYOTA Kirloskar has signed a fresh wage pact with its workers but has warned that it could set up its next plant in North India if the industrial climate does not improve in Karnataka.

"We are keeping our options open. Even though our wish is to expand our operations in Karnataka itself, the options are closing down," Mr K. K. Swamy, Deputy Managing Director, told Business Line.

The wage agreement signed this week gives the 2,000-odd workers an increase of 15-18 per cent.

Mr Swamy said that the Karnataka Government should take tough action against those who are trying to disrupt the industrial climate in the State.

He added that no decision had been taken on setting up another plant elsewhere or on the type of model the new plant will build.

Sources in the company said that the management was worried about certain `outsiders' who are trying to influence the workers to disrupt the working of the factory.

Toyota has over 4,000 acres at its Bidadi plant and has used just about half of it so far.


Toyota-Kirloskar Auto Parts as well as some ancillary units are near the plant. The company has also received certain incentives from the Government to set it up.

Mr Swamy said that the sale Toyota's latest top-end model, Innova, had outsold other variants.

Hence, the company is trying to change the product mix to increase the production of the top-end model.

"We have ironed out the supply problem now," he said.

Nearly 7,000 Innovas have been sold so far in the first two months after the launch.

The plant has a history of labour unrest. It is the only Toyota factory worldwide which has experienced strikes.

The workers went on strike in 2001 and again in 2002, hitting the production of the popular Qualis model.

Automobile companies in India work on extremely thin margins and any disruption in production can have an adverse impact on their growth.

Toyota-Kirloskar vehicle sales dipped because of the workers' strike and its effect showed up in the balance-sheet.

However, during the last two years, the relations between the management and the employees improved considerably.