A Live Project Report on Labour Unrest in Honda

Submitted in partial fulfillment of the requirements for the award of the degree of

MASTER OF BUSINESS ADMINISTRATION Session- 2011-13

MAHARAJA AGRESEN INSTITUTE OF TECHNOLOGY
(ISO 9001:2008 Certified and AICTE NBA Accredited) PSP Area, Plot No. 1, Sector-22, Rohini,Delhi-10086Ph.: 011- 27582283 Website: http://www.mait.ac.in

Submitted ToDr. Sangeeta Malik

Submitted ByRahul Singh Koshiha Lal Aakash Saxena Ankit Kumar

CERTIFICATE
This is to certify that the live project report titled “Labour Unrest in Honda” is an academic work done by “Rahul Singh, Koshiha Lal, Aakash Saxena, Ankit Kumar” submitted in the partial fulfillment of the requirement for the award of the degree of MasterOf Business Administration from Maharaja Agrasen Institute of Technology, Delhi, under my guidance & direction. To the best of my knowledge and belief the data & information presented by him/her in the project has not been submitted earlier.

Dr. Sangeeta Malik Project Guide

ACKNOWLEDGMENT Research is a venture that requires cooperation of many people we feel pleasure in taking this opportunity to express our sincere regards to our mentor. We are also thankful to all teachers and nonteaching staff of the institute for their kind help. Kakkar.without her guidance.K. Dr. Sangeeta Malik. We wish to place on record our gratitude to Dr. valuable suggestions. N. Rahul Singh Koshiha Lal Aakash Saxena Ankit Kumar . Director Maharaja Agrasen Institute of Management. New Delhi for his continuous encouragement and advice which were of immense help. constructive criticisms and encouragement throughout the course of the project the present shape of the work would not have been possible.

For companies. . 2005. Apparently there was a show of strength between the management and the workers. The management held the workers responsible for indiscipline and for slowing down production.This led to police intervention and a violent tussle ensued between the police and the workers in which workers protesting peacefully were also beaten up. While the management alleged that the workers were resorting to 'go-slow' tactics and were threatening not to return to work until their colleagues had been reinstated. the workers of the plant were demanding reinstatement of the suspended employees when some workers allegedly attacked policemen on the plant premises. On July 25. The police were reported to have overreacted and it was alleged that they had been overzealous in protecting the interests of the HMSI management. the workers tried to form a trade union and this resulted in a confrontation with the management. even without any direct request from the company's management (Refer to Exhibit I for some images of violence during the HMSI protest). The management and the workers traded allegations and counter allegations on what the root cause of the dispute was.EXECUTIVE SUMMARY The Gurgaon plant of HMSI had peaceful labor relations for the first few years after it was set up in October 1999. With their demands being rejected by the management. the incident brought to the fore the need to maintain sound industrial relations to ensure productive and profitable operations. In December 2004. while the workers insisted that there had been no indiscipline on their part and that the management was bringing up this issue only to prevent the formation of a trade union at HMSI. They blamed each other for the situation that ultimately took an ugly turn on July 25. which covered the basic wage structure and detailed parameters specifying the work conditions for workers. the workers alleged that the management was using pressure tactics such as victimization of active union members and a 'lock-out' to break the back of the union. The management entered into labor contracts with individual laborers. Fifty workers of the production team were suspended and four others dismissed in May 2005. the workers at HMSI's Gurgaon plant started demanding that the management increase their wages commensurate with the company's growth in the market. 2005.

. o Background Study. o Research Methodology. o Bibliography.issues. o Result. o PROBLEM – what really happened. o CAUSES for the unrest. CHAPTER 3. CHAPTER 2. o Conclusion. o Introduction.TABLE OF CONTENTS  Company’s Profile. CHAPTER 4. CHAPTER 1. . o Analysis.

The initial installed capacity was 100. The Tokyo-headquartered HMCL was one of the leading manufacturers of automobiles and power products and the largest manufacturer of two-wheelers in the world. Private Limited (HMSI) is the wholly owned Indian subsidiary of Honda Motor Company.COMPANY PROFILE Honda Motorcycle and Scooter India. It aimed to produce technologically superior. backed up with after-sales service of Honda’s global standard. Honda Eterno was launched thereafter to add to the portfolio of HMSI's scooters. yet at a reasonable price for complete customer satisfaction.000 scooters per year. 700 persons were working as trainees and 300 were apprentices under the Apprentices Act. The HMSI factory was spread over 52 acres. Founded in 1999. after Hero Honda. The Honda Shine has since been released.00. Besides. HMSI was dedicated to supplying products of the highest quality. Instead of being just vehicles of transportation. it was the fourth Honda automotive venture in India. HMSI operated on principles. Almost every worker or trainee held a certificate from some or the other ITI (industrial training institute) in India. of these 2000 were in the worker category–– 1300 were confirmed workers. 1960. whereas only about . as the Honda Dio. HMSI was established on 20th October 1999. Limited. and change in the way you live. Japan.000 scooters by the end of 2005. Honda was the largest manufacturer of two-wheelers at the global level. Maintaining a global viewpoint. which was scheduled to reach 6. HMSI was a whollyowned subsidiary of Honda Motor Company Limited (HMCL). its products were intended to become vehicles of change: change in the way you work. Its aim was to achieve this dream through production of world-class scooters and motorcycles manufactured at its state-of-the-art plant. All trainees normally got absorbed in the regular workforce after the training. Japan. which were followed worldwide by all Honda companies. the way you travel. HMCL was known to have excelled in the adoption of the postFordist production system (also called Toyota Production System). and 700 were contract workers. About 1000 employees belonged to the supervisory and managerial staff. efficient and reasonably priced two-wheelers. The Honda Unicorn was the first motorcycle released by HMSI. a 100 cc scooter. A slightly modified trendier version of the Activa was soon launched. with Honda-tested technology. The company had about 3000 employees in all. with more than 120 manufacturing facilities in 30 countries worldwide. Kinetic Honda Motor Ltd and Honda Siel Cars India. The entry of Honda into the Indian market as HMSI began with the launch of the Honda Activa.

in October 2005. The company believed that it was the contribution from each individual in the company that was responsible for company’s success. table tennis. one company cap and one pair of shoes were provided to each employee every year. During the time when workers waged recent agitation. carom board. The company had a sports club for employees’ use at Sukhrali village in Gurgaon. and trust. workers were divided into five categories. 2. HMSI had the reputation of being a comparatively good paymaster. For the purpose of increment.000 towards house rent allowance. Going by the region-cum-industry considerations. transport facilities to and from workers’ residences were provided at subsidized rates.15 per cent of the apprentices were able to get a job with the company after the apprenticeship was over. salaries for workers ranged from Rs.150 for its unskilled worker to Rs. Two sets of uniforms. Things were going smooth for nearly two years after production started. Some of the key initiatives in this regard were as follows: Besides canteen. equality. The company announced all PA results and salary-hikes immediately on the end of the financial year. 8. and which would take the company into the future. but for a series of unpleasant events. Respect for the individual stemmed from initiative. Workers had been organizing matches with employees of other companies in different games including football. HMSI had a performance appraisal (PA) system for all its employees including those in the worker category. increments ranged from Rs. badminton. . EMPLOYEE WELFARE HMSI had taken several initiatives in the area of employee welfare. volleyball.200 for skilled worker. tug of war and high/long jump. on the basis of which PA was done on a rating scale. 11. It involved interviewing of the person concerned by the section head and the shift incharge. which included Rs. which ranged from subsidized canteen facilities to attractive hospitalization reimbursement for all employees. Thus. The latter considered itself as a unique organization as it claimed to have adopted some distinctive employment and production practices. 400 to 1400 per month depending upon the PA grade of an employee. which had facilities for indoor games. chess. HMCL. 3000 per month. the company had increased the wages of each worker by Rs. HUMAN RESOURCE POLICIES The Human resource policies of HMSI were in alignment with the philosophy of its parent company. all employees including the managers wore similar uniforms.

wage would continue to be major consideration in labour unrest. Considering the nearing period of labour unrest with the recent cases of Honda and Maruti.which are often guided by external parties such as trade unions andpolitical parties. It has been concluded that so long as income remained the all important means for satisfying human wants and needs. It is a matter of controversy whether the predominant factors underlying labour unrest are economic or non-economic. It elaborates the incidents that led to the strike at the company that in turn resulted in HMSI workers being severely beaten upby the police. the company also received a lot of negative publicity as newspapers and TV channels gavewide coverage to the violence of the action. it is the time to do root cause analysis and find out what are the possible reasons which lead to labour unrest so as to address these issues and untide the tide of labour unrest. BACKGROUND STUDY:  Labour Unrest: A labour unrest is a social phenomenon of enormous complexity and it is very difficult to give any complete explanation of this phenomenon. Labor strife and the management's inability to deal with iteffectively had resulted in huge losses for the company due to the fall inthe production level at the plant. In addition to this. .CHAPTER 1 INTRODUCTION The case study focuses on the Human Resource problems faced byHonda Motor Cycle & Scooters India (HMSI). The case discusses thevarious reasons which led to the dispute between the management andemployees of HMSI. The case highlights the growing number of instances of clashesbetween the employees and the management of companies in India.

 HMCL: Soichiro Honda. They alleged that HMSI's management had violated certain lawsrelating to the welfare of workers. Thereafter. At the end of June 2005 the management replied by officially sacking 1. 1999. Honda's first product. They blamed eachother for the situation that ultimately took an ugly turn on July 25. The official justification for the dismissals was "undisciplined behaviour in the factory”. who was said to be engaged in organising a union within the plant. HMCL made an initial investment of Rs. In December2004.. an A-type 50cc bicycle engine. HMCL was incorporated with a capital of ¥ 1 million. in 1946. a mechanical engineer. was produced in 1949. The management held the workers responsible for indiscipline andfor slowing down production. established the 'Honda Technical Research Institute' in Hamamatsu. The management and the workers traded allegations and counterallegations on what the root cause of the dispute was. .HMSI HMSI was established on August 20.. the D-type two-stroke 98cc. and a plant was set up at Manesar to manufacture two-wheelers for the Indian market. The management entered into labour contracts with individual labourers. Japan. His idea was to develop and later produce small two-cycle motorbike engines. In 1948. The whole situation came to boiling point when the management sacked another 57 workers and nearly all the workers in the factory reacted by going on strike in June 2005. was produced in 1947. Another four workers were sacked after they expressed their solidarity with their workmate. the company started to design and produce lightweight motorcycles. Honda's first motorcycle. 3 billion to establish the plant which had an annual production capacity of 200. The conflict began in December 2004 after a manager allegedly hit a worker. 2005. the workers at HMSI's Gurgaon plant started demanding that the management increase their wages commensurate with the company'sgrowth in the market.000.000 workers and locking out the strikers. which covered the basic wage structure and detailed parameters specifying the work conditions for workers. while the workers insisted that there hadbeen no indiscipline on their part and that the management was bringingup this issue only to prevent the formation of a trade union at HMSI. Some analysts charged that the incident was fallout of the long term oppression and malpractices at the Gurgaon factory by the HMSI management.  Labour Unrest at HMSI: The Gurgaon plant of Honda Motorcycle & Scooter India (Private)Limited (HMSI) had peaceful labour relations for the first few years afterit was set up in October 1999.

Examine top management's role in maintaining a peaceful workingenvironment. which created stress for the workers. May 26. CHAPTER 2 PROBLEM – WHAT REALLY HAPPENED AT HMSI:  To find out the causes of labor unrest in Honda manesar plant. in disturbing the working environment in a company.  To study the human resource policies and employee welfare in Honda.workers get unions registered.WHAT WERE THE CAUSES FOR THE UNREST: The major issues that we have chosen for careful consideration and analysis are to:     Understand the factors that lead to labor unrest at a factory and the impact of such incidents on the employees and the company. Analyze the role of external parties such as trade unions. 2005 . 2005 . 2005 . May 30. Time line of events January 17.AITUC leader gurdas dasgupta complains to Haryana chief Minister.A Honda official kicks a worker. Study HR policies adopted by organizations to prevent labor unrest at the workplace. During the months of May and June. The company followed post-Fordist production system. Company had been suffering a production decline resulting in a monetary loss of 1300 million. politicalparties etc.. company dismisses four unions Office . 2005.

Dass gupta meets the prime minister of India after writing to him. 2005.00 AM.11.M –workers assemble there. 2005.June.. Violation of Laws Some analysts charged that the incident was fallout of the long-term oppression and malpractices at the Gurgaon factory by the HMSI management.secretariat at gurgaon to Submit memorandum 2. over 500 policemen surround them and Beat up them    Understand the factors that lead to labor unrest at a factory and the impact of such incidents on the employees and the company.30 P..it is concluded that all the possible reasons can be classified into Five major heads. The management held the workers responsible for indiscipline and for slowing down production. The potential problems can then be researched to find the root cause and correct it. Deputy superintend of police were beaten-up 1. Examine top management’s role in maintaining peaceful working environment. 2005 unions asked why workers not allowed in despite giving Undertaking. July.They blamed each other for the situation that ultimately took an ugly turn on July 25.M . 6. 2005 .about 3000 marching workers clash with people. they alleged that HMSI’s management had violated certain laws relating to the welfare of workers It was reported that a worker had allegedly been kicked by a Japanese manager on the shop floor in December 2004. . Study HR policies adopted by organizations to prevent labor unrest at the workplace. July 21. 27. The five heads are as follows: Monetary Political Legal Job Specific Others The Blame Game The management and the workers traded allegations and counter allegations on what the root cause of the dispute was. July 25.unofficial lockout. ROOT CAUSE ANALYSIS From the study of some of the strikes and lockouts over last 10 years. while the workers insisted that there had been no indiscipline on their part and tha the management was bringing up this issue only to prevent the formation of a trade union at HMSI.. The services of four other workers who had come to his rescue were allegedly terminated. company willing to allow workers in if they want. 2005 .workers told by police to go to mini.30 P.

evaluation and synthesis of evidence in order to establish facts and draw conclusions about past events. Limitations  Money Constraint: HMSI was established on August 20. Since it is located in gurgaon. Even if they have been conducted in ways that make them difficult to compare. This method consists of:   Analysis of several analysis. and a plant was set up at Manesar to manufacture two-wheelers for the Indian market. Deals with the evidence of man’s past acts and thoughts.RESEARCH METHODOLOGY The data collected is secondary data and is collected and analysed using qualitative methods like:  Meta analysis.  Time Constraint: . 1999. A way of extracting meaningful information/data from lots of small studies. Attempts to test the truthfulness of the reports of observation made by others.  Historical method. visiting it required ample of time and money so this prevented the in-depth study of the case. This consists of:    Systematic & objective location.

The workers will. . that can be used to get a 3D view of the unrest. however. There are no proper articles available. The dismissed employees will also be giving a ‘separate assurance letter’ to the management.  Limited information: This project is based upon the secondary data. on the day the strike ended. The information available over the internet may not be correct or may be only of a particular perspective. The company also agreed to allow workers to retain the Labour Union. the in-depth study of Honda and the labor unrest required wide area coverage. formation of which was the bone of contention and a major issue which led to the confrontation with the management. COMPANY’S STRATEGY  WHAT WAS THE ACTION TAKEN BY HONDA: According to an agreement brokered by Haryana chief minister Bhupinder Singh Hooda. apart from the undertaking that all the agitators would sign before joining duty. Since the project had to be completed in 1 month. middle level management’s and the labor’s viewpoints. HMSI agreed to take in 4 dismissed and 50 suspended workers while workers agreed to resume duty from Monday and promised not to make any fresh demand for a one-year period. management’s perspective. The workers also claimed that the company has promised to employ a family member of one of the apprentices who was killed during the agitation early in July.HMSI’s location is the prime factor as far as the completion time of the project is considered. In the undertaking. time factor also acted as a major limitation. not get salary for the period they were on strike. the causes. that discuss the top level management’s. labor’s viewpoint etc. they would promise not to engage in any kind of indiscipline and also give an assurance that they would ensure normal production. Limited availability of the information required proved to be an effective constraint for the project. Also. which is very short span of time for all this.

In a statement issued that day. . the company said the management has in consideration of the state’s industry in general and the welfare of the HMSI workmen agreed to resolve the current situation with certain one-time measures that would help in normalising overall situation and promote goodwill and harmony not just at HMSI but at the entire region as well.

. also ruled out any negative effect on flow of FDI into the country. The management had obviously wanted . too emphasized the need for flexibility in labour laws. said. India Inc. M. Amrit Kiran Singh. He. Mr. K. Trade unions form an integralpart of industrial relations and aid in peaceful settlements betweenworkers and the management." the PHD Chamber of Commerce and Industry President. particularly in a liberalized economy. He said the investment climate gets disturbed as such incidents send negative signals to both domestic and international investors. Mr.K. however. Mr. Memani. advocated easing of labour norms and streamlining the legislative framework. though guarded in its response to any major impact the incident could have on the investment climate. The Assocham President. ruled out any adverse impact on overseas investment inflow. The Chairman of the American Chamber of Commerce in India.CHAPTER 3 RESULTS VIOLENT clashes between the workers of Honda Motorcycle and Scooter India and the local police in Gurgaon for the past two days has led to a larger fallout with the industry asking for more flexibility in labour laws and warning of a negative effect on FDI inflow into the country. ANALYSIS  WHAT COULD HAVE POSSIBLY GONE WRONG? The management of HMSI had long denied the workers the right toform trade unions which is against the law.N. "Such incidents underline the imperative need to bring about effective legislative changes in labour laws and streamline the Industrial Disputes Act. Sanghi.

There have been charges that the workers were notgiven proper wages as per the prescribed norms and their welfare was nottaken care of.  WHAT THE COMPANY DID? The management never once tried to find the root cause of theunrest. deny the workers their rights and wanted to employthem as cheap labour. So.tostay bureaucratic. They were only concerned aboutlaying off the employees. were completely in the interests of saving the management and involved in unnecessary violence against the employees. When the workers felt aggrieved with their wages and benefits. The matter of the Japanese who kicked a worker was neverinquired and the four employees who came to his rescue were alsoterminated without any reasons. They could have easily avoided this.The alleged .they should have formed trade unions and taken the matter to the properauthority and should not have waited for the problem to grow and explode. And if this had been done.The trade unions were apparently not united and unified in theirideologies and policies as they were influenced by different politicalparties. welfare benefits and other allowances to the employees inthe first place. And it obviously had the police in its pockets asthe police were overzealous. The trade union was formed only after the workers were pushed offthe edge and very grave grievances were done to them. getting them arrested and saving their facesfrom the media and the public. the management should have fixedproper wages. the protests or the uprising. The company staged a “lock-out” when it was pressurized insteadof dealing with the issue. Some of the workers had indulged in violence against the policeand the management which should have been avoided as trade unions aremeant for peaceful settlements.  WHAT COULD HAVE BEEN DONE TO AVOID? For starters. the management should always look for the interestand welfare of the employees. But we should also notice that the HMSI management had deniedthe workers’ their rights to form unions. all this uprising would have been avoided.The management had apparently been involved in manymalpractices related to the worker benefits. The management should haveknown that the word would eventually get out and create a huge hue and cry someday. The workersshould have formed a proper workers’ trade union well before the unrestbegan to fight for their wages and welfare issues. These issued were never dealt with.

then theindustrial relations in HMSI may improve gradually over the years in the following ways:      The workers may work in the interest of the management. Encourage the workers to form trade unions for peaceful talks andsettlements of disputes. Also. four other workers who had come to the assaulted workers rescuehad been terminated without any reason or notice.attack of the worker by the Japanese manager is agrave and sensitive issue of human rights violation. Avoid involving the police into the industrial disputes unless and until absolutely essential. This is a highly sensitive issue and vehemently condemnable onethat if taken to a court of justice could result in the complete closure ofthe company. They should not have involved in violence against the police even if they had been victimized. HMSI follows the suggestion that we have given above. Attrition and turnover may reduce a great deal. No manager can physically assault a worker at any point of time. layoffs and unrest. Punish employees who defame the management with their unethical behaviour. The management had been extremely negligent about this issue. The workers loyally may improve. Prevent malpractices in worker benefits and worker welfare. Try to have settlements with the workers rather than indulging inlayoffs and lock outs.  SUGGESTIONS TO HMSI TO PREVENT SUCH INCIDENTS IN FUTURE:          Ensure that the workers are satisfied with their wages.The management should have allowed the workers to form unions which would have resulted in peaceful talks and settlements and avoided all the dirty lock outs. benefits andwelfare provided to them. . Take stringent action against worker abuse. The workers should have taken the assault of the employee to acourt of justice. Respect all the workers equally and treat them as human beings. And moreover a foreignnational attacking an Indian could have become a global human rightsissue. The workers would have a peaceful and likeable work environment. The workers would not involve in violent protests. uprising or strikes. But since the workers did not have a proper union. they didnot know what to do and had staged protests.  HOW THE INDUSTRIAL RELATIONS WILL IMPROVE IN THE FUTURE IN HMSI: IF. Avoid violence and abuse against the workers.

rewards. A lot of recognition and award would pour in for efficient andeffective labour relations and employee management. titles and awards would galore.     Productivity would improve which in turn would improve the profitability of the company. The company would be considered a great place to work and would be considered as one of the best employers in the country. Certifications. The company would feature in the good books of the public and the media.  . The trade unions would help in peaceful resolution of grievances and disputes.

Thecase also illustrates the importance of trade unions and how mandatory They are in the industries. The HMSI incident is a good lesson that needs to be learnt by all organizations on how to deal with industrial disputes. Lock outs and layoffsare never the best options to deal with industrial relations issues or Resolution of industrial disputes. sensitive worker issues and labour legislation related matters. The media and thepublic would always be watching. The workers should never indulge in violent practices. .CHAPTER 4 CONCLUSION The Labour unrest in HMSI is a typical example how a small issuein the factory can turn out to be the reason a huge industrial dispute thatcould result in defaming the management in the worst possible way. Also. A foreign national assaulting an Indian could have easily become aglobal issue which luckily did not become grave. The companies should always take a holistic approach when dealing with sensitive issues that involve Humanitarian and human rights issues and issues related to wages andwelfare of the employees that are under the purview of labour legislations in the Indian constitution. human rights violation is a serious issue which needs awareness and proper grievance handling machinery to deal with.

economist. Pearson Education.& Gowan M. Links http://www. Human Resource Management.org/wiki/Honda http://www. (2009).com/ http://en. Cengage Learning Lepak.com/node/18621140 . Human Resource Management. Human Resource Management.BIBLIOGRAPHY Books Dessler et al (2008). Pearson Education Snell et al (2010).wikipedia. D.honda2wheelersindia.

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