ArrowArtboardCreated with Sketch.Title ChevronTitle ChevronEye IconIcon FacebookIcon LinkedinIcon Mail ContactPath LayerIcon MailPositive ArrowIcon PrintSite TitleTitle ChevronIcon Twitter

Strike at Honda's Indian motorbike arm compounds broader woes

Labor relations face test as vehicle-sector recovery proves elusive

Scooters at a Honda factory in India. The conflict between the company and its workers stems from slumping sales in the country.   © Reuters

NEW DELHI -- Honda Motor's two-wheeler business in India is confronted with new challenges as the market sputters and workers continue a weeks-old strike.

A local subsidiary has been forced to halt production at its northernmost factory after staffers revolted against a decision not to extend the employment of some 200 contract workers.

The Manesar plant in the state of Haryana, currently with 1,900 permanent employees and 2,500 contractors, is one of four operated by Honda Motorcycle & Scooter India. Workers have been on strike there since Nov. 5.

HMSI, second only to Hero MotoCorp in the Indian market, has suddenly lost a portion of its annual production capacity of 6.4 million units as a result.

Union President Suresh Gaur said the strike will continue until "our demands are met, which include job security for contract workers or at least fair compensation to the retrenched ones so that they could do something else and support their families."

The friction between management and labor stems from a sales slump in India, the world's largest two-wheeler market, which has been hit hard by the ongoing economic downturn. HMSI's sales in April-October decreased 16.3% to about 3.17 million units from the same period last year.

The two-wheeler industry as a whole saw sales shrink 15.9% to 11.45 million units from a year earlier. Car and truck manufacturers also faced a drop in sales.

Overall, the Indian vehicle sector has lost hundreds of thousands of jobs in recent months as showrooms close and passenger vehicle production tumbles amid its worst slump in nearly two decades. Analysts place most of the blame on a credit crunch triggered by a crisis in the nonbank financial sector, as well as tougher environmental regulations and higher insurance and registration costs.

HMSI President and CEO Minoru Kato recently told the Nikkei Asian Review that current economic parameters do not appear promising for a turnaround anytime soon and similar conditions can be expected in the fiscal year starting April 2020.

Honda Motorcycle & Scooter India President and CEO Minoru Kato, center, says India's current economic parameters do not look encouraging for the motor vehicle sector. (Photo courtesy of the company)

"Our festival season retail sales [in October, when India celebrated the Diwali festival] were very much positive ... but still the Indian economic situation" does not look encouraging, he said.

"It's difficult to see positive signs," Kato said. "Also, the motorcycle industry itself has been facing consecutive slowdown" for months, and "it's very difficult to expect recovery" soon, he added.

The Haryana government has met in the state capital of Chandigarh with representatives from both sides of the dispute.

"Both workers and management were directed to reach a solution amicably" to the impasse at the Manesar plant, Gaur said.

But the bleak market outlook has prolonged the conflict. Workers at a Bangalore-area HMSI plant in the south halted operations for two hours on Monday in sympathy with the Manesar workers, Gaur said.

The action has drawn support beyond the company's walls, such as from General Secretary Kuldeep Janghu of the union at market-leading automaker Maruti Suzuki India's Gurgaon plant, also in Haryana.

"For so many years, HMSI had been generating good profit," Janghu told the Nikkei Asian Review. "Now that the market is down this year and it is forced to remove some manpower, it must compensate them, as these people had been working with the company for several years and helped it grow."

Laid-off workers should receive at least 100,000 rupees ($1,390) for each year of service, Janghu said.

The weak sales have also cast a shadow over HMSI's investment plans.

HMSI said in October 2018 that it would spend 6.3 billion rupees to build a new production line at its factory in the western state of Gujarat, adding 600,000 scooters to annual capacity there to raise the plant's total to 1.8 million.

HMSI's overall two-wheeler production capacity would thus rise to 7 million a year by 2020, the company said when announcing the plans. But it has since walked back that time frame.

"The construction is ongoing in the new line in [HMSI's] fourth factory in Gujarat, but the actual production start time is under consideration and depends on the market situation," Kato said.

While Maruti Suzuki views the sales decline as having bottomed out, Chairman R.C. Bhargava said in a late-October interview that it would be "very difficult" to predict a revival in the next few months.

"I think we need to watch [for] maybe three months to see how the market is ... before we can make a somewhat more certain prediction about whether we are coming around," Bhargava said.

Sponsored Content

About Sponsored Content This content was commissioned by Nikkei's Global Business Bureau.

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this monthThis is your last free article this month

Stay ahead with our exclusives on Asia;
the most dynamic market in the world.

Stay ahead with our exclusives on Asia

Get trusted insights from experts within Asia itself.

Get trusted insights from experts
within Asia itself.

Get Unlimited access

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this month

This is your last free article this month

Stay ahead with our exclusives on Asia; the most
dynamic market in the world

Get trusted insights from experts
within Asia itself.

Try 3 months for $9

Offer ends July 31st

Your trial period has expired

You need a subscription to...

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers and subscribe

Your full access to the Nikkei Asian Review has expired

You need a subscription to:

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers
NAR on print phone, device, and tablet media