Tuesday, November 03, 2009


I think that Labour unions are like cancer to the industries. Honda Motors and scooters India (HMSI) has been a 'victim' (notice the inverted commas - I'll come to this later) such labour unrest where the productivity of the factory has been severely hampered, which affects sales, which affects profits and which ultimately affects the salaries. And I think these unions are basically fighting for the increase in salaries. A simple relation that the unions have failed to understand. My complete sympathies for the management.

But this is just one side of the coin. What about the labour side? Frankly, I don't know the real issues that the labour unions of HMSI are facing. And actually this post is not about the labour issue of HMSI. It's about the company in which I am working. I won't disclose the name of my company but by the HMSI example one can fairly guess that I too am in a related industry (but I'm not working in another OEM).

My company made severe cost cuts in the name of recession in the beginning of this financial year. Stripping away the basic necessities such as Air conditioning in office space, stationary, allowance for mobile phones, transport in case someone had to make an official visit. Every new hiring now requires approval from the the M.D. Which has basically compelled the managers to force their employees to stay late night. Sometimes the employees are working for the entire night, then they go back home in the morning, freshen up and return to work (without overtime). Some of these cost cuts were not focused on actually cutting the expenses normally incurred by the company but were more or less cheap tricks to take out money from the employee's pocket. Apart from cost cuts, the company also introduced monetary penalties on its employees for delay in meeting a deadline.

Now somebody might say that it's justified keeping in mind that our focus should be on greater things, that we need to keep on going and survive this critical period and later things will return to normal. But wait till I tell more.

The marketing team of my company was in tremendous pressure from the management to get better prices from the OEMs. Since the volumes were 'supposedly' going down and the profits were decreasing. The marketing team worked hard and got better prices. Soon after that the raw material prices came tumbling down. As you might remember the crude oil prices that were over $150 per barrel same time last year are now around $50 per barrel. Almost the same thing has happened with all the other raw material prices globally. So now we have a situation where we are selling the goods at a higher price whereas our raw material costs are down by over 30%.

It's still justified, don't you think, considering that the volumes are down and the fixed costs are the same. Yes it is justified.

But, how about the fact that the volumes are much better. Maruti, Tata, Honda, Hero Honda, Bajaj, Yamaha and many other OEMs have in fact registered significant growth over the previous year in India in-spite of the on going recession.

There were some increments in the company recently at operator level and junior staff level. But they are like peanuts when you see the overall scenario. Management says that there will be no further increments. Reason - What if the recession comes back?

So basically at the end of this year all the hardwork, sweat, talent of passionate employees will get converted into serious money and will will go in one man's pocket. Coming back to the part where I had said that HMSI is a victim. Now if I consider a similar story in HMSI also, can I really say that HMSI is a victim?