Lockout at Toyota Kirloskar raises queries galore

Lockout at Toyota Kirloskar raises queries galore
The Economic Times


TOYOTA Kirloskar Motor is Japan’s showcase investment in the country. And also its largest. With about Rs 2,100 crore ploughed in to initially make Qualis and now Corolla, Camry and Innova and another Rs 1,200 crore planned for the small car project, any trouble at the company immediately raises a host of issues, as it has now. Will the lock out declared by the management in the face of lightning strike called by its 1,500 agitating employees, lead to deceleration in Japanese investment into the country? Will Toyota look at centres other than Bangalore for its small car project? Does the Japanese style of management ill suit the working mode of the average Indian worker? Is there an expectation mis-match between Japanese owners and the Indian workers? Will the labour trouble impact Karnataka’s image as an investor friendly destination, coming as it does on the heels of the infrastructure led woes of the IT/ITES sector?

Japanese auto companies in the recent past have faced labour trouble. Honda’s violent shake out is all too fresh in one’s memory. Toyota Kirloskar also has a history of industrial strife. In 2002 it faced a twomonth strike and there have been sporadic cases of go-slow at the plant. So, one theory is that this will lead to slowing of Japanese investment in the country, that Japanese capital and Indian labour make for strange bed-fellows. Logically, this makes no sense. India is one of the last, continental markets available to manufacturers and marketers of goods. No global player will delay entry or vacate the Indian market for fear of labour unrest. As for the Japanese style of management, sources point out that the Japanese literally have the ‘work is worship,’ ethic which makes them expect, perhaps, too much from foreign workforces which are not attuned to their thinking. As companies like Toyota grapple with growth and productivity issues in India, taking the labour along on the growth curve is proving to be a thorny issue. Also the senior management of Japanese companies tends o be entirely Japanese. At Toyota Kirloskar, KK Swamy, the deputy MD is the only Indian in the top echelons of the company. While Vikram Kirloskar is the vice chairman, with Kirloskars until recently having a token one percent stake in the company (recently hiked to 10%), control is entirely with the Japanese.

As for Toyota looking at options other than Bangalore for its proposed Rs 1200 crore small car project (probably with Daihatsu), the company’s official position is, “We haven’t taken a call yet, but we will have to examine it again against current developments.” For Toyota, it makes immense sense to locate this unit in Bangalore, for then, it will just be an expansion of its current plant instead of starting from scratch elsewhere. The state has already approved this investment and the company is in the process of negotiating with the government for concessions similar to the ones extended to the first plant. Also, what ever the current issues with the labour, Toyota Kirloskar has never faced quality issues with its products and it hasn’t had to recall cars from the market. The labour is obviously, upto scratch here.

While nobody — not the workers and definitely not the management — will go on record, it is understood that the matter principally boils down to ‘pay.’ The workers believe that with the company doing extremely well in the market place and with India emerging as a highly profitable operation for the world’s second largest car maker, the company should share some of the spoils with the workers. The perception in the market is that the American auto companies are the best paymasters though their operations are not as profitable as their rivals’ in the country.

Another factor, which again is in the informal talk circuit, is the role of the Left. With the Left having tremendous leverage in the Centre, the perception in the market is that Left-backed unions are flexing their muscles. The Toyota Kirloskar union on strike is Citu(CPM) affiliated and isn’t recognised by the company management. The company policy being that it will support only internal unions and not those backed by outside groups. For Karnataka, this lock-out could not have come at a worse time. Battered as it is by the huge outcry over Bangalore’s crumbling infrastructure affecting the city’s IT and BPO industries, it could have done without labour unrest at its trophy auto investment. Especially, as it tries to woo prospective investors like Volkswagen. The coalition government which is grappling with a fresh survival crisis, now has to ensure that Toyota Kirloskar doesn’t deteriorate into a Honda kind of situation and bring both the warring parties — who are involved in a who blinks first contest — to the table and hammer out a resolution to the crisis.