Toyota suspends production in India as efforts to agree labour deal fail

Up to 6,400 employees locked out as efforts to agree labour deal fail, amid claims of threats against management and deliberate stoppages

PUBLISHED : Monday, 17 March, 2014, 10:25pm
UPDATED : Tuesday, 18 March, 2014, 6:17pm


Toyota said yesterday it had suspended production at its two Indian car assembly plants in response to threats against management and "deliberate" assembly-line stoppages, as efforts to hammer out a labour deal failed.

The fresh strife comes as a blow to Japanese efforts to boost ties with India to counter-balance China's growing influence in the region.

The world's biggest carmaker said the move would see the lock-out of about 6,400 employees at the factories in southern India.

Company and union officials have been trying to sign a new contract for the past 10 months, with the local government helping to mediate negotiations.

"In the meantime, under the instigation of the union, certain sections of the employees have resorted to deliberate stoppages of the production line, abuse and threatening of supervisors thereby continuously disrupting business for the past 25 days," Toyota said in a statement yesterday.

"All these unlawful activities have been detailed in the lock-out notice. With this background, the company is left with no other option but to declare a lock-out of the premises to ensure the safety of its workers and management personnel," it said.

A Tokyo-based spokesman said Toyota hoped to restart production quickly. But he could not give a timeline for any re-opening of the plants, which make a range of models including the flagship Camry sedan, the Corolla and the Prius hybrid.

The two factories, near Bangalore, produce about 310,000 units annually, Toyota said.

The experience of Japanese firms in India has not always been rosy. In 2012, a riot at Maruti Suzuki's Manesar plant near New Delhi saw workers chase supervisors with iron rods, killing a personnel manager and injuring close to 100 other managers.

The riot, which workers' representatives at the time said was caused by unhappiness over wages and working conditions, saw India's leading carmaker lock out workers for a month and cost Maruti some US$250 million in lost production.

The Toyota spokesman said there had not been any reports of physical abuse of managers or workers at its now-shuttered plants.

Separately, Japanese pharmaceutical giant Daiichi Sankyo has struggled with its majority ownership of Indian drugmaker Ranbaxy since buying it in 2008.

Last week, Ranbaxy shares tumbled following news of a second recall of its cholesterol-busting generic drug. The company is already reeling from a string of US Food and Drug Administration (FDA) import bans involving manufacturing safety worries.

The FDA has banned Ranbaxy from sending drugs and ingredients to the United States, its biggest market, from four of its plants for failing to meet "good manufacturing practices".

Earlier this year, Japanese Prime Minister Shinzo Abe went to New Delhi to push for closer commercial and strategic ties with India, as Tokyo seeks to offset Beijing's regional might.

Tokyo is a major investor in India, pumping in about US$15 billion in the past dozen years and involved in building the Delhi-Mumbai Industrial Corridor, a US$90 billion project linking India's capital with its financial hub.

Since coming to power in late 2012, Abe has trotted the globe, partly in his self-appointed role as salesman for Japan Inc, but also to seek offset the growing influence globally of China.