Lockout at Bosch to hit vehicle makers

Mumbai: A lockout at a factory of Bosch Ltd, India’s largest manufacturer of auto parts, may cripple the production of vehicles if the deadlock remains unresolved for a few more days, executives at some auto makers said.

Workers at Bosch’s Naganathapura unit near Bangalore have been on a go-slow protest since 12 February, demanding a wage hike of 25%. On 8 March, the local arm of German parts maker Bosch AG declared a lockout.

Workers at Bosch’s Adugodi plant, also in Bangalore—the company’s biggest—are staging a similar protest. That facility, too, faces a lockout.

The Naganathapura factory supplies critical electrical parts, such as alternators and starter motors, to vehicle manufacturers such as Mahindra and Mahindra Ltd (M&M), MarutiSuzuki India Ltd, Hyundai Motor India Ltd and Tata Motors Ltd.

“It’s a precarious situation for the entire automobile industry and we are very concerned about it,” said a senior executive at M&M, declining to be named as he is not the firm’s official spokesman.

Production at M&M, unaffected so far, would be tough to sustain if the problem at Bosch is not resolved soon, the executive said, adding that inventory sourced from the parts maker has reduced to 30%.

Car makers have asked TVS Group’s Lucas-TVS Ltd, which makes similar parts as Bosch, to scale up supplies to make up for any shortfall because of the protests at Bosch, he said.

Debasis Ray, a spokesperson for Tata Motors, said the firm’s production has remained unaffected so far. Rajiv Mitra, a spokesperson for Hyundai, said the company has enough inventory to see it through for some more days.

The Naganathapura and Adugodi units contributed to about half of Bosch’s Rs4,749.8 crore revenue in 2009. Sanjay Chakravorty, a spokesperson for Bosch, said the combined revenue loss at the two factories is Rs4 crore per day—Rs1 crore at Naganathapura and Rs3 crore at the larger plant.

Soumitra Bhattacharya, senior vice-president (finance and administration) at Bosch, said the firm would have to declare a lockout at its Adugodi unit as well if the workers do not end their protest.

“We don’t want a lockout, but we may be compelled to (declare one) if the union and associates do not go back to normal production,” he said.

S. Prasanna Kumar, president of the workers’ union at the Naganathapura plant, said the Bosch management had offered an average wage increase of Rs3,000 per worker, while the union wanted an interim hike of at least Rs4,500. The union is affiliated to the Centre of Indian Trade Unions.

This is the second time in 14 months that Bosch has faced a labour crisis. The firm had declared a lockout at its Jaipur factory in December 2008, following labour problems.

Delhi-based Praveen Sinha, an adviser to the German Foundation that represents German firms in India and has been in talks with the union at Bosch’s Naganathapura unit, said the crisis was because of the management’s unwillingness to conclude the wage negotiations, which have dragged on for 10-11 months now.

Poornima Mohandas in Bangalore and PTI contributed to this story.