industrial relationship in hindustan motors

8/14/2019 Industrial relationship in hindustan motors

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HM is just that elephant that is still valuablefor many. Surprisingly, CITU, the CPM unionthat took over the reign of this industrialestablishment many years ago has lost it to

some splinter group and presently fightingto take back the control. At one time, the plant had about 15,000

workmen and engineers at one time. Today

the number must be hardly couple ofthousands.

And who were responsible for this conditionof HM?


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CITU, the trade union of CPM played the major role.Neither the Birla management had the guts andwills to make it a great automobile plant of thecountry, nor the government helped it out.

Surprisingly HM never gave any dividends to itsshareholders.


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We know about the significance ofWorkersParticipation Management (WPM). Ithas the following levels:

Information Sharing Problem sharingJoint Consultation


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In this case, there were some problemsin successfully implementing all theaspects of WPM. The main causes are:

The political environment. Inability of the management in

successfully implementing WPM. Authority of the trade unions was very

much higher than what is required tocreate a healthy relationship betweenthe management and employees.


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Uttarpara plant had a workforce of14,000 employees and the wage billalone constituted 22% of plantsexpenditure.

Against the standard output of 8-10 cars peremployee per annum, the plants outputwas as low as 3 cars per employee.

As per the fact each employee 8 cars,

therefore with 14,000 employees =1,12,000 cars

Analysts claimed that with the 1999production level of 2500 cars, the plant

should have been staffed with no more than3000 ersonnel.


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Annual production at the plant declinedfrom 30,822 cars in 1995-96 to 26,684 carsin 1996-97.

November 1997 2835 Ambassadors, 146Contessa were produced from the plant andultimately the numbers came down to 1385Ambassadors and 33 Contessas by

October, 1998. HM invested around INR 750 million to

modernize the assembly line, building newbody and paint shops and even purchased

new equipment.


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Company also embarked on a cost cutting exerciseand announced a Voluntary Retirement Scheme(VRS) for workers in April 1998 and in November1998. Offering a package of 0.1 Million.


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VRS was not received well by the strong Center ofIndian Trade Union (CITU) and Indian NationalTrade Union Congress (INTUC)

Problems raised by Union:

Similar segment VRS offered by FIAT wasaverage of 0.35 million per worker. (FIATManagement at Kurla)

Workers / Union were totally against the

VRS schemes and company managementwas finding it tough to convince workersabout VRS.

It was one of the worse Situations in the

history of HM.


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CITU and INTUC refused to accept the VRS

schemes offered by the company. Unions were confident that the West Bengal

State Government would back them on theissue.

Employee protests intensified. HM approached the state government with

a proposal to run the plant.

Company also promised to pay theworkforce full wages for an entire week .even though workers were working only for3 days in a week.


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Government rejected HMs proposal, following

which the company decided to seek legalrecourse.

1999, January, HM filed a writ petition in theCalcutta High court, claiming that its decisionwas not prompted by industrial relations, but bythe companys poor financial position.

Company stated that the layoff in Uttarparaplant was temporary in nature and thecompany would resume normal production as

soon as demand pick up in market. (High courtordered the state government to reconsider theissue)

May 1999, Instead of reconsidering the issue,the state government filed an appeal before thedivision bench of the Calcutta High Court.


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July 1999, in response to the division bench'sorder, HM moved to Supreme Court for furthermovement of the situation.

During all this time, productivity at plant

suffered and other expenditures alsoincreased rather than cost cutting.


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Thank You

industrial relationship in hindustan motors

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