September 27, 2018 / 2:15 PM / in 3 months

Motorcycle companies in India's 'Detroit' hit by strike over wages

NEW DELHI (Reuters) - Hundreds of workers at motorbike companies including Yamaha Corp (7951.T) and Eicher Motors (EICH.NS) are on strike in the southern Indian city of Chennai, demanding better wages and a right to form unions to defend their interests.

Employees said the companies had employed a large number of contract workers to get around rigid Indian labor laws that make it difficult to hire and fire full-time staff and have refused to bring them on company payrolls even after years of contract work.

The unrest is the latest to hit the state of Tamil Nadu, dubbed the Detroit of South Asia because big automakers such as BMW (BMWG.DE), Daimler (DAIGn.DE), Hyundai (011760.KS), Ford (F.N), Nissan (7201.T) and Renault (RENA.PA) have factories in the state.

“Our main demands concern low wages, contract employees not being made permanent and workers being denied basic respect,” said S Kannan, Kanchipuram district president at the Centre of Indian Trade Unions, one of the leaders involved in organizing the strike at Yamaha.

Kannan said that talks to resolve the strike had made no progress.

A spokesman at Yamaha, which sells in India as well as overseas, said that production is running below capacity.

Yamaha has a 4 percent share of India’s two-wheeler market. It sold about 793,000 motorcycles in the past financial year and exported about 252,000.

Wages are low in India, making it an attractive manufacturing and export hub for companies, but workers feeling the effects of rising inflation have been agitating in recent years for higher pay.

“The issue is not widespread. It is in pockets, but it is a cause of concern, especially since it is an industrial belt,” said an executive at a global automaker.

In May protests turned violent at metals conglomerate Vedanta’s copper smelter about 400 miles from Chennai over alleged environmental violations that the company said underlined the risks global businesses face in India.

The government has tried to overhaul labor laws, hoping to create millions of new jobs and boost economic growth by making it easier to hire and fire, but has faced resistance.

Workers at Eicher Motors, which owns the Royal Enfield motorcycle company, are protesting one such scheme, the National Employability Enhancement Mission (NEEM), said R Sampath, vice-president of the Royal Enfield Employees Union.

“The scheme stops contract workers from becoming permanent employees, allows management to keep wages low and fire people with one-month’s notice,” said Sampath, adding that contract workers do not receive other employee benefits.

Royal Enfield, which has about a 4 percent share of the two-wheeler market and sold more than 800,000 motorcycles in India over the past financial year, is “hopeful of arriving at a mutually beneficial solution”, it said in a statement. 

“We have forums that address matters related to the wellbeing of workmen and are working to understand the issue that compelled a few workmen to refrain from reporting for work today,” the company said.

Eicher Motors competes with U.S. motorcycle manufacturer Harley-Davidson Inc (HOG.N) in India.

Reporting by Sudarshan Varadhan and Aditi Shah in New Delhi; Editing by Sanjeev Miglani and David Goodman

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