Reference no: EM133094353

Bosche

The Bosche Group, India, manufactures world-class hydraulic brake systems for 2- wheelers, 3-wheelers, passenger cars, utility vehicles, light commercial vehicles and agriculture tractors. The corporate office is located at Pune, and various modern manufacturing plants at Chakan, Jalgaon, Manesar (Haryana) and Sitarganj, Uttarkhand. The group employs about 15,817 countrywide and registered consolidated sales of Rs.50,087 million in 2005-06 (Bosche Website). The company claims that its regular employees are paid above average salaries. However, this does not appear to stem the tide of strikes at its various units in India.

The Mico Bosch Labour Union (MBLU), Jaipur Plant, went on an indefinite strike from November 10, 2008, (Bosche Press Release, 21/1/09), even though a four year wage agreement with the Union was valid till 31.05.09. After repeated appeals by the management failed to end the strike, management raised a dispute with the Rajastan Labour Department and claimed that the Union resorted to violent means to prevent movement of vehicles to the plant and scuttled the production process.

The timing of the strike synchronized with a continuous market decline for the Automobile Industry. On December 5, 2008, the Labour Department, vide its Order under section 10 (3) of Industrial Disputes Act 1947 prohibited the strike by MBLU and ordered all striking employees to report for work immediately. A fresh Memorandum of Settlement was signed, the indefinite lock out was lifted and workmen associates were allowed to return to their duties with effect from 21.1.2009.

Established in 1982, Robert Bosch India Chassis Systems Ltd (RBIC), Pune, is a wholly owned subsidiary (stake of 95.87%) of the Bosch Group in India, employing about 2020 personnel (Bosche website). The Union was established after Bosch Chassis Systems took over the plant in 2006. On July 18th, 2009, workers at this plant went on strike demanding pay rise as agreed to earlier and equal pay for equal work. 'Precariously employed' workers such as trainees and non-permanent employees earned only 25 - 30 % of regular wages. The strike was led by Bosch Chassis Systems Kamgar Sanghatana (BCSKS) and supported by the International Metalworkers Federation affiliates in the region (IMF website), despite a 3-year agreement signed on November 3, 2007, giving average wage rise of around 60 per cent and stipulated rises for each year. At that time Bosch had informed the Union that the two wheeler brake unit was being handed over to Brembo, an Italian company, and that 50 workers were to be transferred to the new company. The workers had protested and signed an agreement with Bosch and Brembo, only after a clause was included stating that, in the event of closure or relocation of Brembo, the transferred workers would be re-employed by Bosch.

After Brembo failed to implement wage rises in 2008 and 2009 and Bosch in 2009, and the Union's General Secretary was suspended, the Union served a notice of 'stoppage of work'. But instead of negotiating with the Union, company management lodged a complaint against the Union with the local Industrial Tribunal, which, however ruled that the strike was not illegal. The IMF Regional Representative felt that "The success of the struggle will have far reaching benefits... (on) wages, working and service conditions of precarious workers and trainees,...for Bosch ...and the Pune region and strengthen the efforts of unions to tackle the widespread use of precarious workers by the companies" (IMF 2009).

On March 8, 2010, Bosch Limited, Bangalore declared a 'Lock Out' at its Naganathapura Plant. The decision was taken (ostensibly for safety) because workmen associates of the plant resorted to physical intimidation of managers and officers of the plant during their agitation. After the wage settlement had expired in Dec. 2008, a new Charter of Demands was submitted by the recognized Union of the plant, Mico Karmikara Sangha - Naganathapura (MKS-N), on 29.07.2009, demanding substantial increase in wages, enhanced medical facilities for family members etc. The average cost to company (CTC) of a workman associate at the plant was claimed to be about Rs. 37,000 p.m (Bosche Press Release March, 2010). During the 14 sessions of negotiations, the company offered revision of wages equal to what was offered in the last negotiations, substantial improvements in hospitalization facilities and transfer of around 45 indirect workmen to direct production areas, without reaching conclusion. MKS-N resorted to a Go Slow and subsequent Tool Down from Feb. 2010 which continued till 6.3.2010. Revenue loss for the plant was claimed at Rs. 60.4 million in the month of February, 2010.

Management requested its managers and officers to man the assembly lines for three Sundays, in order to partially make up the shortfall in production and claimed that office bearers of MKS-N physically intimidated and threatened the managers when they were entering office. Thereafter the MKS-N declared a Tool Down from 8.3.2010 onwards.

Questions

1.Although technical excellence is demonstrated by multinational companies in India, there cannot be conclusions about 'best practices' since many of the managerial actions have led to poor employee relations. Identify the key actors in the case whose actions led to IR problems at Bosche. What are other reasons for poor industrial relations at MNCs like Bosche.

2. What are the main reasons due to which negotiations failed between the involved parties? How can negotiation impasses be managed