Reference no: EM133181883

Industrial Conflict and Unrest at Toyota Kirloskar Motor Company 

The management at Toyota Kirloskar Motor (TKM) Private Limited, on January 8, 2006, declared a lockout of the manufacturing unit at Bidadi, Karnataka. The lockout was in retaliation to a strike by the Toyota Kirloskar Motor Employees Union (TKMEU) three days ago. TKMEU was the recognized union in the plant. The management, in its notice of lockout stated the strike to be illegal since the union did not follow the provisions of the ID Act, 1947, requiring them to give 14 days' notice. As the name suggests, TKM was a joint venture between Toyota Motor Corporation and the Kirloskar Group with equity in the ratio of 89:11 respectively. The plant had a capacity of producing 60,000 units per annum and Toyota had invested nearly INR 15 billion in the facilities. Of the 2,400 employees, 65% were members of the recognized union (TKMEU). The unit at Bidadi manufactures models such as Innova, Corolla and Camry. The strike by the Union was to demand reinstatement of 3 employees who had been dismissed and 10 employees who had been suspended. The Union also demanded an improvement in the working conditions at the plant. The dismissals and suspensions were carried out on disciplinary grounds. Allegedly, the dismissed employees had assaulted a supervisor. This action by management resulted in a strike call by the Union and three days later, a lockout by the management. The management did not agree to the demand of the Union to reinstate the dismissed employees and revoke suspension of the others. The management, further, made it clear that it would not rehire the dismissed employees under any circumstances. Alleging strong arm tactics of the union with threats of blowing up LPG cylinders and inciting other non-striking workers, intimidating them, obstructing movement of goods to and from the plant, the management said it had no option but to declare an indefinite lockout of the plant. TKMEU on the other hand alleged that the management was trying to curb legitimate union activities by victimizing those who took active interest in union activities. The working conditions in the plant, they alleged, were inhuman and dictatorial against which it was the legitimate right of the unions to protest. The workers, allegedly, were made to work long hours without adequate compensation. In response, the employee union said that three employees were dismissed because they were actively participating in trade union activities and the company wanted to suppress the trade union. They further said that working conditions at the plant were inhuman and slave-like. They were often made to stretch their working hours without sufficient breaks and/or compensation. To resolve the conflict, when the State Labor Authorities called both parties for a conciliatory meeting, the management took a stand that the atmosphere was not conducive for any discussion since the union had vitiated the atmosphere and that they (the management) anticipated violence. TKM appealed for two weeks' time from the labor authorities but was granted three days and was asked again to be present on the 12th January, 2006. TKMEU was clamoring for the intervention of the Government for resolution of the dispute. The unions canvassed for support and gathered the same from various other trade unions. The production, in the meantime, fell to just 32 vehicles per day from the normal output of around 90 a day. TKM, because of reduced production, was losing out on sales. The skeleton production was being carried out with the help of non-striking employees and management staff specially trained for the same. The state government declared the strike to be illegal on January 21, 2006. The management withdrew the lockout saying that the workers were eager to return to work. However, the management put a condition that before lifting of lockout, workers would have to give an undertaking for "good conduct" so that the atmosphere is strife free and production could go on full stream. Since the strike was declared "illegal", the Union withdrew the strike and the matter was referred to adjudication. But the Union refused to accept the demand for signing undertaking for good conduct. This conflict had implications for attracting FDI in India. Now, TMC has reservations about investing in a second unit in the state. There has been a spate of such industrial unrest in the auto manufacturing in India, the most notable being the violent conflict at the Honda Motor & Scooters India Limited. Such incidents may mar the perception of India as an attractive FDI destination in the minds of Japanese business, one of the largest investors in India.

Questions:

1. Do you think that the "lockout" declared by the Toyota Motors was legal? Why? Do you think the strike by the workman was illegal? Why or why not?

2. How would you interpret the above incident from an employee relations perspective? Do you think that the employee relations perspective has limitations in dealing with such situations?