Automobile unrest in Gurgaon

Gurgaon Workers News

Three main disputes about recognition of unions (Auto Rico and Sunbeam) and a three-year wage agreement (Honda HMSI) expressed some of the unrest in Gurgaon, India’s main automobile cluster. The disputes lasted for more than a month between mid-September and end of October 2009. After a Rico worker was killed the CP affiliated AITUC union called for one-day-strike – allegedly 80,000 to 100,000 car workers did not work on 20th of October 2009. Last but not least, the dispute at Rico caused factory closures at GM and Ford in the US due to lack of parts.

The main political significance is the international character and set-up of the unrest in Gurgaon. Workers in India in a dispute for higher wages cause car plants in the US to come to a standstill. The workers at Ford and GM are currently under pressure to agree on wage cuts in return for dubious job guarantees. Their union UAW has already signed a deal, but the workers are unsure if to confirm it. In this moment a combative signal from the ‘low-wage-end’ of the global supply chain might help to reassure the US workers in their collectivity. That they cannot rely on their representatives in order to form a global proletarian alliance is demonstrated by the way in which the Rico dispute in India is presented by the UAW. “We are experiencing the effects of outsourced suppliers, and we hope they would be able to resume production as quickly as possible so we can in turn resume production”. Brian Fredline, president of the United Auto Union Local 602, representing 2,700 workers at General Motors plant in Delta Township, Michigan who were sent home due to lack of parts manufactured by Rico. We try to provide a short glimpse at the international context of the automobile industry in the part ‘What crisis?’ – see below.

We cannot say much about the internal dynamics of these disputes. There have been various conflicts at automobile companies in the last years – see summary below. In most cases a wider unrest amongst permanent and temp workers had simmered long before the official dispute started. The urge to establish a union or long-term wage agreements often resulted in: firstly, dividing the work force (mainly permanent workers, who represent only 20 per cent of the work-force, are attached to the union and long-term contract sphere); and secondly, to channel the conflict into open, legal and therefore controllable paths. There is also a long regional tradition of industrial disputes during which lock-outs / strikes are used to re-structure the work-force – given the current global ups and downs of the car industry this aspect of ‘engineered conflicts’ has to be taken into account when analysing the Rico dispute.

Two noteworthy details about the outcome of the current strikes: a public debate in the main stream media about the unstable situation due to such a large share of temp workers employed; and a rather empty threat of Honda HMSI management to shut-down the plant in Gurgaon and re-open it somewhere else if the political class should not be able to guarantee industrial peace in the region. The first point hints at a true core of unrest – at the same time the current disputes can be seen as a proof that the division in permanent (unionised) and temporary workers still works well. The second point is an arbitrary one. In summer 2005 Honda management issued a similar threat and the political class reacted by organising a police massacre on several hundred workers. In itself it is an empty threat to re-locate the factory from a global low-wage region like Gurgaon given that Honda HMSI relies on a huge web of suppliers and a scattered but regionally concentrated workforce. Such concentration of proletarians will always re-create the conditions of unrest. In Gurgaon four major assembly plants, churning out two thirds of India’s passenger cars and two-wheelers depend on more or less the same suppliers.

These contradictory tendencies – a work-force divided into permanents and temps on one side, but an intertwined supply net connecting work-shops with modern assembly plants on the other – is reflected in the statements of managers from various companies about the impact of the local general strike on 20th of October 2009. According to the media 80,000 to 100,000 were on strike: “Except for the two factories (RICO and Sunbeam which supplies to the Hero group) where there was a problem, I don’t think any other factory was closed. About 4,000 to 5,000 workers from various factories joined in the prayer meeting to show their sympathy for those who died,” says Surinder Kapur, chairman of the Sona group, which has many factories based in the belt. But factory managements admitted production was disrupted. “The assembly lines are not working,” a senior Honda Motorcycle and Scooter India (HMSI) official said to agencies. Others say that if the agitation is not resolved, the impact could be huge. “These are major component manufacturers, and we do not carry very much inventory,” says Chairman of Maruti Suzuki, which was not, however, impacted by the strike because of the high percentage of contract workers – some estimates put it at 80 per cent of the labour force – in the area. Many of them lost income during the dispute.”

For the current political background of the situation in Gurgaon it has to be said that in Haryana state elections took place in September / October period. Unions are closely linked to political parties and most of the company and contractor hierarchy is intertwined with the political class. Some of the dynamics of the dispute have to be understood as power plays between various political/representative factions.

We lack proper insight voices of workers who took part in or observed the unrest. In that regard the report published by CEC is probably the most accurate one.

In the following we first want lay-out a chronology of the current dispute, then summarise the dispute at Rico, Sunbeam and Honda HMSI in more detail and finally we give a short over-view on recent car workers’ conflicts in Gurgaon area.

Chronology of Unrest

4th of August 2009
Rico workers’ representatives start negotiating with management, seeking an annual salary increase of 10,000 Rs plus freedom to form a union with AITUC. The management is not heeding their demand saying the workers have had pay hikes and the unit is continuously seeing low productivity. The union submitted their application to the labour department, Chandigarh, for its formal recognition.

9th of September 2009
Rico Employees Union calls for an open meeting of its members at Kamala Nehru Park, Gurgaon. 3,000 workers attend.

20th of September 2009
Another Rico union meeting in Kamala Nehru Park.

21st of September 2009
Rico Auto Industries Ltd. declares a lockout. Security Guards, police and goons stop workers from entering the factory by force. Previously 16 workers were suspended for indiscipline.

22nd of September 2009
Sunbeam Ltd. locks out workers after dispute over union elections. Company goons or truck drivers attack them at night, workers have to flee, some get injured. Ten workers are submitted to hospitals. Other sources say that workers were attacked by 300 police.

23rd of September 2009
Union solidarity rally in Gurgaon for attacked Sunbeam workers. Some other component makers, including Hema Engineering, AG International, Microtek and even Sona Koyo Steering Systems, Endurance are said to be in current legal disputes between management and unions.

25th of September 2009
Around 15,000 workers gather in Kamala Nehru Park in Gurgaon during union rally. A memorandum is admitted to the DC Anurag Aggarwal, demanding his immediate intervention on the issues at 14 automobile factories in Gurgaon.

1st of October 2009
Police detains Gurudas Dasgupta, the general secretary of All India Trade Union Congress (AITUC) and the AITUC national secretary DL Sachdeva when coming to Gurgaon to address Rico workers. Union mobilise workers for protest march in response to arrests. Workers sit down at Rajiv Chowk, blocking the traffic for nearly three hours. Haryana Labour Court declares Rico strike illegal.

2nd of October 2009
Maruti Suzuki announces that production in Gurgaon plant is “marginally hurt” by the strike at Rico and Sunbeam. Unrest also has affected TI Metals, Microtech, FCC Rico and Satyam Auto.

4th of October 2009
Police arrives in buses at Rico and Sunbeam workers rally ground, pick up the workers, drive away, and drop them around 12 kilometres away. Tents and utensils are taken away by the police. Twenty-six Rico workers are arrested.

9th of October 2009
Honda HMSI publicly threatens to re-locate production to other country or region not being able to open third assembly line due to dispute with Honda union over wage revision. 17 workers have been suspended at HMSI

18th of October 2009
Ajit Yadav, Rico worker gets killed in clash, several more workers injured. Union officials state that they were attacked by a group armed with iron rods. Police fires shots, workers throw stones. Rico factory gates are blocked by workers in response.

19th of Otober 2009
200 workers sit-down in front of Rico factory in protest. Communist Party of India MP and All-India Trade Union Congress (AITUC) general secretary Gurudas Dasgupta has urged Prime Minister Manmohan Singh to intervene in the trouble. He also asked the Haryana government to disband “private armies” engaged by the management bodies in the industrial hub to take on the workers.

20th of October 2009
60,000 to 100,000 workers of 60 to 80 factories in Gurgaon on one day strike called for by AITUC. Workers from Sona Koyo Steering Systems, Hero Honda Motors, Bajaj Motors and Lumax Industries joined Rico workers in a sit-down protest outside Rico and demonstrations in the streets. Workers’ representatives reject a company offer to pay Yadav’s family compensation of 500,000 rupees and provide a job for Yadav’s wife. “It is illegal in all respects. It has also been declared illegal by the labor department,” said Jagdish Nagar, a deputy commissioner of police.

21st of October 2009
Talks between union, management and Haryana labour department.

22nd of October 2009
Rico management agrees to take back two or three suspended workers and announces that management will accept the formation of a union. Honda HMSI has made a “final” wage increase offer as part of a Long Term Settlement.

23rd of October 2009
Rico management states that 900 workers have turned up for shifts and that 2,000 more workers are expected during the next days.

26th of October 2009
Due to lacking transmission parts supplied by Rico in India Ford has to shut-down production in Oakville plant in Canada for a week, losing several thousand vehicles, sending home about 3,000 workers employed in the plant. The shutdown comes during conflict regarding contract changes to lower Ford’s Canadian labour costs.

27th of October 2009
Honda HMSI and union find three year agreement including productivity related bonus payments. Management hopes that third line will take up work. At Rico the lock-out continues.

28th of October 2009
AITUC calls for Gurgaon wide strike in solidarity with Rico workers. GM in the US announces that two plants (Delta Township and Warren, Michigan) are affected by lack of parts from Rico. Production at Delta Township plant is supposed to be resumed on 9th of November 2009 – 2,700 workers are sent home.

Summary of Unrest

We focus on the three main companies involved: Rico, Sunbeam and Honda HMSI – all situated in Gurgaon. In order to understand the wider background of the situation at Honda HMSI we suggest to re-read the text in GurgaonWorkersNews no.7. For a general summary of the company situation at Rico and Sunbeam we rely on information of CEC.

Dispute at Rico

CEC: “Rico Auto Limited started its Gurgaon branch in 1994. It is one of the largest ferrous and aluminium foundries supplying die-cast components to the automobile sector. The company makes auto parts for brands like Hero Honda, Honda, Suzuki, Bajaj, Maruti Suzuki, Ford, General Motors, Nissan, Volvo, Jaguar, Tata and Land Rover. In the case of Ford US Rico ships the brackets to a Ford transmission plant in Detroit, Michigan, from where they are sent to assembly plants across the region. In the disputed plant in Gurgaon Rico has 3,600 permanent workers and around 1,500 casual workers. There are 500 workers as management staff. Around 76 workers are women. The salary structure of the employees is very low. Permanent employees with 2-6 years’ experience are paid Rs 4,500 a month, whereas the casual workers with same experience are paid Rs 3,800-Rs 4,000 per month. The permanent workers with 6 to 9 years’ experience get Rs 6,500 monthly, and those with 9-10 years get Rs 8,000-Rs 10,000.”

The conflict involved demands for higher wages etc., but by end of September 2009 the official point of tension was the demand for registration of a trade union affiliated to the All India Trade Union Congress (AITUC). According to CEC, the workers felt the need for unionization when the company, in the name of economic recession, threw out large numbers of workers without prior information or economic benefits. The situation inside the plant became tense. “The demand for the formation of a union has been sent for verification to the Labour Commissioner and we have no objection against it,” said Mr Surinder S. Chaudhury, Vice-President, Human Resource, Rico. He added that production since September 2009 has dropped 40-50 per cent. Rico reacted by suspending sixteen workers. “We had to suspend them because they were going slow. They had slowed the production line by around 30 per cent for the last 45-60 days,” a company official said in late September 2009. In order to control the situation management was forced to look for a head-on collision. The suspension of sixteen ‘union reps’ was a save means to provoke a reaction and to get the ‘trouble-maker’ out of the plant:

“On 21 September, those workers who came to work faced the wrath of the management and were forced to sit outside the gate of the factory. ‘Around 5,000 employees had to sit outside the company gate, since the company said it was on lockout from 21 September 2009,’ says the Rico employees. The employees came to know about this undeclared lockout only on the same date, when the first batch of around 1,500 workers had gone to work at 6 am. The security guards at the gate did not allow the workers to go inside. When they refused to listen, the police force, along with the security guards and bouncers (the musclemen employed by the company), lathi-charged the workers. ‘Many of us got minor bruises, but major causalities did not happen,’ says Ranjan Pande, a Rico employee. The workers have been in front of the factory gate since September 21, 2009. ‘We are not on dharna (protest assembly); we are sitting here because the management does not allow us to go inside,’ emphasize the workers.” (CEC-report)

There are divergent information about the strike’s / lockout’s impact on the companies’ production. Some state that Rico’s management had been able to mostly maintain production and meet schedules as, out of a total of 3,000 employees, around 1,700 were reporting for work. Rico has been forced to operate two 12-hour shifts against the normal practice of running three shifts of 8 hours each.

Dispute at Sunbeam

CEC: “Sunbeam Auto Ltd is a unit of the Hero Group of Industries, and was established in Gurgaon in 1987. The company has 650 permanent workers, 800 staff members, 600 trainees, and around 2,500 casual workers. The concept of trainees at Sunbeam is worth mentioning, as people with numerous years of experience remain trainees here. One such trainee is Hansraj, who is an operator of the gravity dye casting, and is a trainee for the last ‘eight’ years. According to the workers, there are trainees with even 13 years of experience. Same is the case with the casual workers. Mangaram is a casual worker for the last 12 years, and works for a basic salary of Rs 3,510. The company gives meagre wages to its staff. Subhash Babu’s take-home salary is Rs 9,000 only, in spite of his 23 years of work experience as a quality inspector”.

“The case of Sunbeam Auto Ltd is not much different from that of Rico. The only difference here is: the workers have asked for revival and election of the existing union. Sunbeam has had a registered union – Sunbeam Shramik Union – since 1996. A “management friendly” union. In May 2009 the term period of the current office bearers got over, and the workers demanded an election and a change in the leadership. (…) The tactics of the management consisted of calling workers independently to the concerned department head’s room and making him forcefully sign a letter that was taken on a 10-rupees stamp paper, stating his willingness to acknowledge the current union. The management could collect signatures of around 200-250 workers, since the threat was to terminate them. But when a majority refused to do so, the management prevented the entire workforce from entering the factory premises on September 22, 2009, without any notice. Like Rico, the gates were not opened for them for the 6 am shift. The management version of the incident is different. According to SK Sharma, the DGM of Sunbeam, the company is not on lockout and is functioning with 30 per cent of its workforce. He emphasized that the workers are on an illegal strike.”

Dispute at Honda HMSI

HMSI currently has 1,872 regular workers and another 2,500 on contract. Honda HMSI plant was affected by the disputes at Rico and Sunbeam due to lack of parts – but there was a ‘home-grown’ conflict going on, as well. The Honda workers union and Honda management were in process of negotiating a three years wage agreement. The management accused the union of using a go-slow tactic at the new third production assembly line, involving 40 permanents and 100 casuals, in order to put pressure on the management.
On 10th of October HMSI management announced that production at the plant is down by more than 50 per cent and that the new line for vehicles – the third one since production began – has failed to take off. “This means a production loss of almost 600 two-wheelers per day. Overall, we are equipped to roll out 4,350 vehicles a day but we are doing only a little over 2,000 units because of the workers’ attitude,” an HSMI official said. While no concrete figures are available, it is estimated that the company has suffered a loss of around 250 crore Rs.

Mohan Deepak, VP for Industrial Relations at HMSI, said the average cost-to-company (CTC) for a shop-floor worker is currently around Rs 25,000. According to HSMI management the wage demands of the union will push their CTC higher than shop floor workers at Hero Honda, the current market leaders with stronger business and production figures.

On 27th of October 2009 union and management enter an agreement on 3-years wage contract including “performance reward scheme”.

History of Unrest

It would be an important task to write a historical analysis of the struggles in Delhi’s industrial belt during the last decade in order to understand the current conflict in its context – for many reasons we can only give a superficial summary of some automobile workers’ disputes in Gurgaon of the last three – four years.

Hero Honda temp-workers occupy factory – April 2006
Unnoticed by most lefty groups or unions more than 3,000 temp workers occupied the Hero Honda Gurgaon plant for several days demanding higher wages and better conditions. The company cut water and electricity – the workers sent a delegation for negotiations, which was bought off. Some demands were met by the management. When the factory occupation ended workers at Hero Honda supplier Shivam Autotech occupied their plant raising similar demands.
(GurgaonWorkersNews no.4)

Workers at car parts manufacturer Amtek attacked – June 2006
After some workers close to the union were disciplined by shifting them to a different plant of the company they and some more workers joined in a sit-down protest inside the plant. After some disputes with the management they were beaten up by paid goons – other sources said that they were beaten by temp workers of the plant.
(GurgaonWorkersNews no.3)

Honda HMSI temp workers go on wildcat strike – September 2006
After temp workers were allegedly not included in a union deal they occupy the canteen of the plant supported by the next arriving shift from the outside. The company reacted by cutting water supply. The company and union asked them to go back to work. Some sources claimed that the strike was instigated by anti-union forces paid by the management.
(GurgaonWorkersNews no.7)

Wildcat strike of temps at car parts manufacturer Delphi – January and August 2007
At Delphi 250 permanents (unionised) and 2,500 temp workers were employed. The temp workers went on wildcat strike blockading the main gate in January 2007. The company threatened to close the factory and asked the union to get the temps back to work. In August the temps struck again for few hours, demanding the payment of the increase minimum wage and succeeded.
(GurgaonWorkersNews no.6)

Series of wildcat strike at auto suppliers – September 2007
After the Haryana government increased the minimum wage in summer 2007 many companies kept on not paying the wage or making workers work many more hours for it. In several companies workers – most of them with temp contracts – rejected the wage payment and laid down tools spontaneously. In most cases the management promised to pay the minimum wage in future.
(GurgaonWorkersNews no.9 and no.10)

Automax casual workers attacked by police – April 2008
Casual workers at car parts manufacturer Automax demanded permanent contracts – the management reacted by suspending ‘leaders’ in order to provoke a reaction. In a strike / lockout situation and subsequent agitations the police attacked the workers with lathis (clubs).
(GugaonWorkersNews no.11)

Wildcat strikes at car parts manufacturer Ilpea Paramounts – April 2008
About 80 casual workers of the company got engaged in a legal dispute in front of the labour department. They tried to put pressure on the company during visits of the labour inspector – the company reacted by threatenening them with goons.
(GugaonWorkersNews no.12)

Wildcat occupation of plant by temp workers at Hero Honda Dharuhera – May 2008
After not having been accepted as members by the permanent workers’ union the temp and casual workers went on wildcat strike and occupied the plant for two days. Management and permanent workers union both promised betterments of the workers’ situation. The temp and casual workers then tried to register their own union – a process which ended in a mass lock-out in October 2008.
(GugaonWorkersNews no.14)

Wildcat sit-in strike of temp workers at Honda HMSI – September 2008
Another wildcat sit-in by precarious workers against manhandling by the management.
(GugaonWorkersNews no.13)

Lock-out and killing of manager at Graziano car parts supplier – September 2008
After a longer dispute about union recognition and various unions involved (AITUC, CITU, HMS) the company suspended workers and finally locked them out. The workers continued their protest demanding their jobs back. In an escalation a manager got killed.
(GugaonWorkersNews no.14)

Lock-out of temp workers at Hero Honda Dharuhera plant – October 2008
After their wildcat strike in May 2008 the temp and casual workers tried to register a union and put forward a general demand notice. The company reacted by locking out all temp and casual workers during big market slump. The company let in the permanent workers and half of the casual and temp work-force. 1,200 workers stayed locked-out, 800 new workers were hired.
(GugaonWorkersNews no.14 and no.19)

Lock-out and police attack on workers at car parts manufacturer Musashi – April 2009
In a dispute about union recognition several leaders were suspended. About 250 workers showed their solidarity and were locked-out in response. During a protest-march the police attacked and arrested many workers.
(GugaonWorkersNews no.18)

Strike / Lock-out at Rico and Sunbeam car parts manufacturer – September 2009
In dispute for higher wages and union recognition about 4,000 workers of two car parts manufacturers went on strike / got locked-out. One worker got killed during a clash, AITUC called for a one-day-general strike.
(GurgaonWorkersNews no.21)

What crisis?

a) In what kind of situation of the Indian automobile industry did Gurgaon strike take place?

The strike in Gurgaon automobile industry happened at a time of proclaimed “recovery” of the Indian car industry. End of October 2009 the two main automobile companies in Gurgaon – and India – announced record figures.

Maruti Suzuki India reported a nearly two-fold jump in its net profit for the period July to September 2009 – compared to the previous year. The company’s domestic sales grew by 21.9 per cent at 209,083 units. Management said exports during July to September 2009 jumped by 109 per cent at 37,105 units as against 17,745 units in the year-ago period. Maruti Suzuki announced significant investment in Gurgaon plant in order to increase capacities by 90,000 cars. In the two plants in Gurgaon and nearby Manesar production capacities are about 1 million cars per year.

Hero Honda which runs two plants in Gurgaon area and is world’s biggest two-wheeler manufacturer is on a similar high. End of October 2009 the company announced that it would smash its annual sales target as it reported a 95 per cent jump in the second quarter profits. Hero Honda management was confident of exceeding its sales target of four million units for the year.

Examples of an exceptional regional boom contrasting the global crisis or just a mild recovery after a record slump?

b) No decoupling: Indian car industry shared the global slump in October 2008 and benefited from the state sponsored scrappage incentive in the EU and deficit spending and low interest rates in India

The Indian car industry experienced a similarly deep slump in the end of 2008. All major car companies sacked their temporary staff, temporarily closed assembly departments or cut working-times – for summary see GurgaonWorkersNews no.16.

During the fiscal year 2008 to 2009 (April 2008 to April 2009), the sales of domestic passenger cars increased by ‘only’ 1.31 per cent to reach 1,219,473 units. In the absence of stimulus packages, the sales of passenger vehicles would have declined 3 per cent or have shown no growth whereas the commercial vehicles sales would have declined 30-40 per cent.

The mild recovery since March 2009 was partly based on lower prices for steel – due to the severe over-production of Chinese and Indian steel manufacturers. The industry also benefited from lower taxes – part of the deficit spending of the Indian state, which tumbles further into debts. Car sales for June 2009 (107,000 units) have increased by 7.8 per cent in the Indian market. The main contributing factor is the reduced interest rates for the auto loans. In July 2009 115,000 units were sold, the mild upward trend continued till September 2009.

More than from internal demand the Indian car industry recovered due to the state sponsored “recovery” of the EU car market – through scrappage incentives and other stimulus programs. Car exports from India – mainly to the EU – jumped by 35.73 per cent from April till September 2009, in concrete numbers 210,088 units as against 154,783 units in the year-ago period. In October 2009 newspapers announced a drop in export growth due to end of government programs in the EU. Total exports grew ‘only’ by 21.6 per cent in September compared to over 30 per cent in the last few months.

The total sales figures of commercial cars like trucks and buses are still down. State infused liquidity might encourage private consumers to take on a credit, but the general industry seems still reluctant to beg on future profits by investing.

c) India’s car industry shares global fate of over-capacities – the internal market is limited

India’s car industry is running into over-capacities – the productive capacities of the two Maruti Suzuki plants alone are at 800,000 to 1 million cars per year. Currently are about a dozen more assembly plants in India – modern assembly plants run profitable at about 300,000 cars, meaning that the total productive capacity in India is somewhere beyond 3 million cars per year. Currently the internal market is about 1.3 million cars – propped up by cheap credits and dependent on US outsourced IT and banking jobs – export figures are at about 350,000 units. Industrial workers in India are nowhere near an income allowing them to buy cars and the waged middle class mainly depends on crisis ridden real estate or IT sectors. The Tata Nano – hailed as India’s Volkswagen and cheapest car in the world – turns out to be produced into a social vacuum. Since production start in July 2009 the monthly production is only 2,500 units. About 150,000 Rs is still way to expensive even for well paid industrial workers – and exactly these better off permanent industrial workers have been under attack since the mid-1980s – see for example GurgaonWorkersNews no.8 on struggle at Maruti Suzuki.

d) In the current phase state credits keep the business running, mergers and struggle over markets are increasing – but they only exacerbate the problems in the future

Unable to solve the actual problem of the industry – the profitability crisis and the crisis of a mode of production – increasing company merger invert the neo-liberal myth of ‘outsourcing’ and profit-centres. In the course of the crisis the big car manufacturers had to bail out the spun-off and formally independent suppliers (e.g. GM had to bail out subsidiary Delphi). Some Indian companies are taking part in those international fusions of capital. Delhi-based car parts manufacturer Amtek was seen as a potential buyer of machinery and plants of bankrupt EU branch of Ford’s main supplier Visteon – on Amtek’s violent repression in Gurgaon factories see GurgaonWorkersNews no.3. Gurgaon based Motherson Sumi bought several bankrupt parts manufacturer in Europe in 2009 – on working conditions at Motherson see GurgaonWorkersNews no.6. In 2008 Tata took a loan of over 3 billion USD for taking over Jaguar and Land Rover. These mergers are only formal reflections of two general tendencies: ‘global cars’ (produced in few plants and exported to countries all over the planet) and a extension of the global supply chain and spread out division of labour (e.g. US factories actually depending on parts produced in the global south).

e) With increasing transport costs the ‘global car’ was put on hold – now it is seen as one way out of the crisis

Particularly the Renault Logan was presented as a truly global car. Manufactured in few factories, amongst others in Romania and India to be delivered to countries around the globe. The Logan production in India is stuck in a jam. India sales crashed by 71 per cent in September 2009 to just over 500 vehicles, while its April to September 2009 numbers are down to less than a third of last year. Renault managers say that “it is more expensive than we hoped it would be in India. The market here is extremely sensitive to the price. Another reason is, we don’t have enough localisation in India”, meaning that too many parts are imported from ‘expensive’ abroad. The concept of an ‘export car’ is still on, e.g. Nissan and GM want to start production of a ‘cheap global car’ in 2010. Indian labour costs are said to be about 10 per cent of that in the U.S. and Europe and raw material costs in the nation are lower by 11 per cent. “The Chennai plant will start exports in the second half of 2010. We will export 110,000 units in 2011 to more than 100 countries especially, Europe (30 countries) and will increase to 180,000 units in the future,” a Nissan manager said in October 2009. India exports more cars than world’s biggest car manufacturer China and exports are growing faster than domestic sales, e.g. Hyundai plans to export 300,000 cars from India in 2009, more than its sales in the Indian local market. But where to, given the general slump in car sales? Newspapers hail the 10 per cent share of Indian manufactured cars in emerging markets like South Africa – but that is 10 per cent of ‘only’ 500,000 annually sold cars. Another trend in order to enter markets is to source cheap car parts from China or other Asian countries. India’s automobile manufacturers increasingly intertwine their production with Chinese car makers, particularly for automobiles produced for exports to Africa and within Asia.

f) We can see an extensions of the global supply chain of car parts emerging out of the last years’ profit squeeze – connecting Indian workers more or less directly to workers in China, South Korea and the EU and the US

During the last years export of car parts from India grew faster than the export of complete cars – parts are exported mainly to the US, EU and Japan. In September 2009 Fiat announced to source 1 billion USD of parts from India in 2010, out of which 300 million USD for export to the EU plants. In September 2009, as well, Hyundai India started exporting crank shafts and connecting rods to Hyundai factories in South Korea. Component exports from India, that touched 3.6 billion USD in 2007-08, are estimated to be near flat in 2008-09. The car parts manufacturer in India are directly linked to the international markets. Amtek Auto – mainly based in Gurgaon – gets as much as 50 per cent of its sales from abroad. In September 2009 an Amtek manager said: “Overseas sales for us was down as much as 30-40 per cent last fiscal year following the slowdown in Europe. While we had done around $650 million in 2007-08, the number came down to around $450 million last fiscal,”. The same is true for Rico Auto Industries that makes components for engines: “Our exports dipped by around 7 per cent last fiscal as US and Europe shrank,” he said. Rico supplies to companies like Ford, GM, Caterpillar, BMW and Cummins.

g) Global division of labour and ‘global cars’ make sense only if low wage regions are kept low waged and if these low wages are imported back into the centres. Workers have to turn this trend around by making use of their global cooperation. The Rico dispute in Gurgaon stopped a Ford plant in Canada, at the same time Ford workers voted against a wage cut deal.

The Rico dispute has shown the global dimension of car production today. It has shown Ford workers in the US and Canada not only that the production in their plants depend on ‘cheap labour’ from the south, but that this ‘cheap labour’ is not up for the race-to-the-bottom: an industrial dispute, amongst others concerning the demand for higher wages, interrupted the global supply chain. At this point of time Ford workers in the US were supposed to vote in favour of wage cuts in order to save their jobs. End of October 2009 Ford workers in Missouri have overwhelmingly rejected a new contract with Ford. Ford and the United Auto Workers union agreed to the changes to help lower Ford’s labour costs, but UAW members must ratify the changes. Kansas City UAW local president Jeff Wright says workers were angry about a cap on entry-level wages, changes in work rules and a no-strike provision. This is not yet an ‘active communication’ between workers around the globe, but a mutual influence and a sabotage of the current re-structuring process of the global car industry. Only by making conscious use of this cooperation the global working class can find a way out of the automobile madness of destructive production.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: