CASE STUDY -2 08-04-20

Title : IR PROBLEMS IN TOYATA

Brief introduction of case :

Toyota profile
 Toyota Kirloskar Motor private limited was a joint venture,
established in 1997, between Toyota Motor Corporation (Toyota),
Japan's largest car company and the second-largest car manufacturer
in the world, and the Kirloskar Group of India.
 Toyota holds an 89% equity stake and while the Kirloskar Group
holds the remaining 11%. Toyota has invested nearly US$ 336
million (INR 15 billion) in the plant with capacity of producing
60,000 units per year.
 Toyota holds an 89% equity stake and while the Kirloskar Group
holds the remaining 11%. Toyota has invested nearly US$ 336
million (INR 15 billion) in the plant with capacity of producing
60,000 units per year.
 From the time it started production operations in 2000, TKM had had
a history of disturbed relations between the management and the
workers.
 Prior to the strike and lockout in January 2006, the plant had
experienced three other strikes: two in 2001, and a strike and a
lockout in 2002 that lasted for almost two months.
 The first strike at TKM began in April 2001, and it went on for about
two days. The second one was in June the same year. In 2002, the
company decided to call the workers in two shifts to meet the
increased demand for the company's cars.
  The first shift at TKM started at 8 AM and ended at 4 PM. The
workers in this shift were asked to work overtime for four hours
between 4 PM and 8 PM...

Major and minor facts of case: -

 On January 08, 2006, Toyota Kirloskar Motor Private Limited

(TKM) announced an indefinite lockout of its vehicle manufacturing
plant at Bidadi located near Bangalore, Karnataka.
 The decision was taken following a strike, which had entered its
third day, by the Toyota Kirloskar Motor Employees Union
(Employee Union), the only company recognized union.
 The lockout notice stated that the strike was illegal as the Employee
Union did not give the mandatory 14 day notice period as per
Industrial Disputes Act, 1947. It also stated that the workers were
indulging in violence and destruction.
 On January 06, 2006, the Employee Union went on strike with the
demand to reinstate three dismissed employees, ten suspended
employees, and improve the workconditions.
 These employees had been dismissed and suspended by the
company, on disciplinary rounds, for attacking a supervisor and
misconduct.
 TKM made several serious allegations against the Employee Union.
The company said that the striking workers were threatening to
blowup LPG gas cylinders in the company premises, obstructing the
outward movement of manufactured vehicles, illegally stopping
production, and manhandling other workers, who were not part of
the Employee Union, to strike.
  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'.
 TKM continued with partial production of vehicles with the help of
non-unionized
Workers and the management staff, who were specially trained for
these kinds of emergencies.

 The company’s output had fallen from 92 vehicles per day to

30vehicles with an estimated production loss of around INR 700
million.
 The issue took a new turn when representatives from the
management at TKM refused to attend a meeting before the Labor
Commissioner on January 09, 2006 for resolving the dispute with
union.
 There is a clash between the management and trade unions it would
result in the lock out by the labour in the toyota.
 The Employee Union got support from various trade unions and
demanded the intervention of the state government to help resolve
the dispute in their favour.

SUGGESTIONS AND RECOMMENDATIONS:

 Industry analysts opined that the strike at TKM raised doubts about
the success of the Japanese style of management in the Indian
context. They also recalled the July 25, 2005 incident at the
Gurgaon plant of Honda Motorcycle & Scooter India Private
 Limited (HMSI), a wholly-owned subsidiary of Honda Motor
Company Limited.

 When there are violent protests from workers , disrupting

production at the plant.
These incidents served to underline the fact that it was essential to
ensure sound industrial relations for the smooth continutiation of
operations and the safety of managmet , workers and the plant of
companies commenting on the growing incidents of discord
between the management and workers .

 China had less rigid labor laws when compared to India according
to the 'Doing Business' study conducted by the World Bank in
2005. India was rated among the countries with most rigid
employment regulations.

 Liberal labor laws are not about hire-and-fire at will but about more
room for contract labor with a tenure of, say, three years or so, and
more temporary workers. If there is a feeling that minimum wages
are low, the government must work toward increasing them.

 The HR policies and top management support should be such as

to minimise the chance of a grievence turning into dispute , there
by avoiding the influence of external parties in disurtburing the
peaceful working environment .
1. Who are the different stakeholders in IR and Write out in detail about
their duties they should have obliged to solve the issue?
1 .Employees.
2.managers
3. owners
4.Government
These are different stake holders in participating in industrial relations their
duties are
1.creating and sustaining employee motivation,

2.ensuring commitment from the employees

3.Achieving higher level of effiecncy.

4.negotiating terms and conditions of employment

5.sharing decision making with employees.

EMPLOYEES :

Among the participants to IR, employees are considered as the most affected

one by the IR system prevalent in an organisation. Employees with their various

characteristics such as their commitment to the work and the organisation, their

educational and social background, their attitudes towards the management and

so on affect and are affected by the system of IR.

Generally, employees perceive IR as a means to improve their conditions of

employment, voice against any grievances, exchange views and ideas with

management and participate in organisational decision making processes.

OWNER :

Employer is the second party to IR. In the corporate organisation, employer is

represented by the management. Hence, management becomes responsible to

various stakeholders in an organisation including employees.

GOVERNMENT :

The role of government in the matter of industrial relations has been changing

along with changes in industrial environment and management perspective. The

IR matters were left to be settled by the employees and employers. But, towards

the end of the 19 century, the attitude of the government in the changed

conditions of conflicts between employees and employers, changed to some

kind of intervention in the matter of IR.

2. If you were the IR head of TMC how you would have solved the case?

If Iam the head of the the TMC I’m going to observe following situations

 Understand the factors that lead to strikes and lockouts at a factory and
the impact of such happenings on the employees and the company
  Study HR policies adopted by organizations to prevent labor unrest at the
workplace
 Examine the role played by the top management in ensuring peaceful
working environment
 Analyse the role of external parties such as trade unions; political parties
etc in disturbing the working environment in a company.

Conclusion :

As we study the case study observe that the case highlights the
growing number of instances of clashes between the employees and the
management of companies in India, which is often guided by external parties
such as trade unions and political parties. No such external parties involvement
in the time of disputes between the employees and management .we should
give respect to the employees and their emotions. The trade unions are not
favouring the demand of industry to improve labour legislations .Hr policies
cover the areas of industrial relations like union recognition ,union
representation, collective bargaining, prevention and settlement of industrial
disputes , participative management etc

With regards

B K Mahalakshmi

(Lecturer in management)

ADC GPT , visakhapatnam