05-09-2009, 03:47 AM
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Hyundai Abandons India For Europe
Hyundai Motor India is planning to shift production of one of its premium models to Europe after a strike over unionisation at its south India plant that led to the mass arrest of 750 protesters.
The move by South Korea’s biggest carmaker is believed to be the first time such a step has been taken because of labour unrest since the country opened up to foreign investors in 1991.
The strike at the Sriperumbudur unit in Tamil Nadu state, which employs nearly 10,000 people, follows a rise in labour problems in India as campaigning for this month’s general elections intensifies and economic times get tougher.
“Because of these problems, we cannot keep up with targets and hence some production will shift to one of our facilities in Europe,” said Rajiv Mitra of Hyundai.
Mr Mitra said production of Hyundai’s i20 compact saloon was likely to be moved. A decision was expected this quarter.
The company originally planned to produce 120,000 i20s this year at its south Indian plant, of which 80,000 would have been exported, mostly to Europe.
The Hyundai strike comes as a big domestic auto manufacturer, Mahindra & Mahindra, said workers at one of its plants had downed tools. Employees at a facility run by health group Wockhardt Hospitals have also gone on strike.
Last September, a labour dispute that turned violent led to the murder of the chief executive of an Italian automotive parts company based on the outskirts of New Delhi.
Nevertheless, the company decided to keep its entire operation in India.
Tata Motors, the country’s largest automaker, was forced last year to relocate a plant for the world’s cheapest car, the Nano, after protests by farmers.
A prolonged in labour relations would be worrying for India’s hopes of becoming an industrial power.
Hyundai, whose plant is based about 40 kilometres from Chennai, said the protests started last month after workers demanded the company recognise a new union.
The dispute escalated on Wednesday morning after 750 workers were arrested for blocking traffic in Chennai ahead of a planned election rally for Sonia Gandhi, leader of India’s ruling Congress party. Police released them later that evening.
Edison Periera, a worker representative at Hyundai India, said employees had formed a union in July 2007 but the company’s management refused to recognise it.
“We will continue with our protest till the time management agrees to our demands,” said Mr Periera.
However, Hyundai India, which employs nearly 10,000 people at Sriperumbudur, said it already had an internal worker representative body.
“For 12 years we have not had any problems. But only now, since Sriperumbudur has become a parliamentary constituency, leftist-backed political parties want to get into the company’s affairs,” said Mr Mitra.
He said he expected the protest to die down after May 13 when Tamil Nadu goes to the polls in the general elections.