Shekar Viswanathan is Vice Chairman and Director at Toyota Kirloskar Motor Private Limited. He spoke to Goutam Das in March, when his factory workers had stopped work - irate workers demanded salary hikes beyond what Toyota was willing to pay and spent all their time lobbying ministers and labour officials of the state government. Viswanathan talks about what went wrong. Edited excerpts:
Q. Karnataka was by and large a peaceful state. Did you have trouble in your factory before?
A. We had trouble in our factory in 2006. At one level it was about wages. At another level it was about employees wanting to make their presence felt, demanding things and then getting it. That incident did end in a lockout because they threatened violence. Then we took in the boys and they gave a good conduct undertaking and we did not have a problem after that. We did not have a problem is probably not true - every factory has problems and we are able to manage it down. Show me a factory that does not have problems with its labour and I can show you a liar. Since then we had relative industrial peace. In 2006, a union was formed, they created trouble and then they apologized and reformed. They were not anti-company - I don't mind a union leader being pro-worker, but I cannot tolerate a union leader being anti-company.
Q. Tell us about the current strike.
A. In 1999, we started with plant No. 1. We finished constructing Plant No. 2 in 2010 and in 2010/2011 we took a number of boys for plant No. 2. These are all youngsters who fell into the trap of listening to the new union office bearers who promised the moon to these guys. In 2012, there were elections and a new internal union came to power. They voted Prasanna [Prasanna Kumar, head of the labour union at the company] into power - the source of our troubles. His aim is certainly not pro-company. I am not even sure it is pro-worker though overtly it seems to be.
What is important is how the workers are doing. In our experience, we provide them with a lot of facilities. There is free transport. We spend Rs 4,000 per employee per month in bringing him from his home. We give them canteen facilities. It must be emphasised that 80 per cent of them do very well. They are also aspirational, want to improve their standard of living. Some of them have been promoted from worker to being a team leader and from team leader to a group leader. Team and group leaders form part of the supervisory staff. They give directions on how work is to be done. We believe in bottom-up - you can start at Grade A and even become a director. Has anybody become a director? Not yet. Some of them will make it to assistant manager or manager. The idea is you can't always reward people with money. Our experience in Karnataka has been very good.
So why are we having this problem? That is because of a small group of chaps who don't believe in working, who are societal misfits, they pick up arguments on the shop floor. You have to enforce some rules and restrictions to maintain discipline. That's what we have been trying to do.
Q. What was the inflection point?
A. We do an annual wage settlement. Every year an agreement is hammered out between the union and us. Generally, the union goes away happy. We have been giving handsome increases in the range of 14-20 per cent every year. When we made profits we gave 20 per cent. The wage negotiations kept on for 10 months. Then we moved for conciliation to the labour department. Initially, they demanded an increase of Rs 7,000-8,000 over what they were getting. We were prepared to give Rs 2,000-2,500 on average. The government requested if we can increase it to above Rs 3,000. The union was stuck at Rs 3,500. But instead of coming down, they went up again. So we said sorry. That's when the talks broke. (The company is now willing to pay Rs 3,100).
Q. There were reports of bad behaviour and sabotage. What were those?
A. When talks failed, to pressurize the management, 100-150 guys started doing line stops. If you stop any part of the assembly line, the whole line comes to a standstill. If you stop welding, which is done partly by robots and party by human beings, you stop the line. They were deliberately stopping the line, going to the washroom intermittently every hour, did minor scratches and said it was a quality problem, deliberately walked in front of the motor and said it is a safety issue. Our company is one of the safest to work in. We discovered there was a pattern to it. There were strikes and our output was falling. The efficiency came down dramatically.
Q. Were managers threatened?
A. They were abused in the most vulgar terms. The moment they walked in, they were abused. Before they went for lunch, they were abused. At break time, they were abused. It was getting ugly. We feared an ugly atmosphere was being created deliberately. They wanted to provoke managers. But there was no physical violence.
Q. Did Toyota's supervisors misbehave as well?
A. In this case the answer is clearly no. We have a process of enquiry. There are witnesses.
Q. What has been your learning from the incident?
A. We haven't had the time to introspect. We have been told we have pampered these boys with too much money and facilities. They do not realise the value of what they have. I will take a long and hard look. Should we give them money which is out of sync with what others in the community are getting? We need to be more circumspect before giving them additional benefits.
There has to be a work culture that puts a premium on discipline. If they were striking on account of the wages, that's fine. But for them to engage in illegal stoppages of work, that's not on. Second, we want them to understand what is happening to the company. We have a capacity of 310,000 vehicles and we are barely producing 1,40,000 vehicles. Demand for our products has fallen. With the rupee depreciation, we had to push up the price of our products and when you push up the price, volumes suffer. So we have not been able to recover our fixed costs. Therefore, we are headed for losses this year. We explained it to the workers but they are not in a mood to understand this.
Q. What is the solution to such strikes? There was a lull after the Manesar incident but the strikes have resurfaced...
A. The solution is in the hands of the workmen. Also, on some amount of social pressure that strikes don't pay. No work, no pay. This needs to be understood by the working class. It is one thing to strike when you don't have basic facilities. We can understand need, but not greed. These guys have got everything, but they want more. This is not a management problem, not a government problem. The government has done everything that is humanly possible. This is purely in the hands of those few workmen who are holding to ransom the majority of the workmen. They get threatened, we have heard of beatings happening.
Q. When you talk of the government's role, what interventions do we need in labour laws?
A. Hire and fire is not a solution. That is not what I want. What I want is a commitment that when I take disciplinary action, that's not negotiable. If I don't have the power to suspend, or if that power is questioned, that is wrong. I think suspensions have a tonic effect. The principles of natural justice have to be followed. Carry out enquiries. Give him an opportunity to be heard. Then take a decision. Instead, there is enormous pressure from the unions among others. This is also what the state labour department needs to enforce. Politicians must say we will not question what is industry's right.