The Indian Rico strike and the aftermath: when capital wants to "de-risk"

The report of a Rico auto worker of a strike in 2009, alongside another similar struggle and general questions about workers' organisation in India.

Submitted by Steven. on February 9, 2010

Aftermath of the Rico strike

The following report of a Rico worker is part of a longer article published and distributed in Hindi in FMS no.227. Apart from the Rico dispute the article documents a workers’ struggle in Gorakhpur and asks general questions about how to organise.

Based on conversations with a permanent worker, Rico Auto Industries, 38 kilometer Delhi-Jaipur National Highway, Gurgaon:

“It’s a big factory. After casting in iron and aluminum through machining, various parts of vehicles are made. The company has factories in Ludhiana, Dharuheda, Manesar. Rico Auto, Continental Rico, Magna Rico, FCC Rico…In these factories, work of Hero Honda, Maruti-Suzuki, Honda, Ford, General Motors etc is done. Work has to be performed standing and after 8 1/2 hours duty, they force you to keep working. Even on weekly rest day, shift workers have compulsory duty. Payment of overtime is at single rate. They keep increasing the production target and for not completing the production target, they harass us. Wages are said to be 5,500 but really 4,200 are given. Basic wages are low and there are various allowances. Leave Travel Allowance (LAA) money is cut from the wages each month and given at the end of the year when LAA is supposed to be provided by the company. In the canteen, bad food for more money. No arrangement for transport. Despite many efforts, workers get tired of asking but many of the permanent workers also are not given ESI card. In this situation, permanent workers keep quitting jobs and new ones become permanent. ITI & MSC are taken as trainees. Permanent workers are 2,000 to 2,500. Through 2 contractors, as many as 2,500 workers have been hired. I don’t know about their condition…To overcome their difficulty, permanent workers put in 1,000 rupees each, that is 20 lakh rupees collected and joined the union. The big leader of the union converses with the Chief Minister-Prime Minister. In August, things started heating up. On September 21, when the company suspended 16 permanent workers, then no permanent worker entered the factory.
Workers hired through contractors also stayed out. Workers sat at the factory gates all day, even cooking their meals there. Leaders came to give speeches. Company hires new people. Production goes on. Goods enter and leave the factory. Sec. 144 forbids a gathering of 5 or more people at a place. Stay 50 meters away from the gate. Police took away the tents and mats. Arrests and bail. In support of unions in Sunbeam and Rico factories many unions together held a big meeting on September 25th. Normal production continues in other factories of the company. Due to prolonged time and the Diwali festival on the 17th, there were a smaller number of workers at the factory gate. The company organized an attack on October 18th in which a worker died and many were injured. Unions called strikes in 50 factories on October 20, 80-90 thousand workers did not work. Work came to a standstill for three days in the factory. One boss was beaten. Leaders did not allow the National Highway to be blocked. The company gave 5 to 10 lakh rupees to the family of the dead worker. No arrest in the murder case. Though the Labour Department-Chief Minister got negotiations started between the Management and union on Oct. 22nd. The Company restarted production in the factory through new hires on October 23rd. Negotiations are continuing. Leaders are keeping all things to themselves. This time they are not telling anything to the workers because… In 1998, when an attempt was made to form a union, the leader had sold out, we don’t know what is there in the demand notice, what the conditions are…Production is continuing in the factory. Pressure on the company is decreasing…Conversations-negotiations are on. Workers hired through contractors have dispersed. Where can we permanent workers go? Despair, full of rage, enraged. This week something is bound to…Union has started a relay-hunger strike from November 2nd”.

This is a worker’s voice when the dispute was still on. Shortly after union and management came to an agreement on 5th of November 2009. As per the agreement, out of the total 16 suspended workers, the management has agreed to revoke the suspension of eight, while one worker will be absorbed after one month. Seven workers will be investigated by State (Haryana) Labour Department. Management spokespeople said incentives and other issues like salary increase will be decided, after comparing with those of other leading companies located in and around the Gurgaon-Manesar area. At Sunbeam Auto – the other major disputed hot-spot dring autumn – losses of about Rs 65 crore for this financial year were attributed to the strike.

Legal Aftermath

Only after the dispute it shows that the legal system worked as ususal – against the workers. We can see how Rico management ‘prepared’ the lock-out.
The company announced a lockout on the morning of 21st of September 2009.
Workers who arrived for the morning shift found the gates locked and around three dozen policemen and between 200 and 250 private security guards-some equipped with firearms, others with sticks-were inside the facility. According to a labour official, around 150 security guards were inside, mostly hired locally.
At 3pm, the company verbally communicated that 16 workers had been suspended for instigating workers to go slow, while the rest could rejoin work the next day. In the conciliation meetings that went on through the night, workers argued that they had met weekly production targets, so the suspensions could not be made on that ground. No show-cause notice was served on the suspended workers, which was illegal.
The company was prepared for the confrontation. Four days before declaring a lockout, it filed for an injunction in court not to allow workers to strike within 200m of the factory, which the court limited to 50m. This is the general practice of all managements in Haryana when they want to have a showdown with workers.
After the violence, the Rico management chose to file the first information report through one of their security guards; two workers were arrested for the murder while the private security guards disappeared. While all of Rico’s complaints to police have been registered as first information reports, those filed by the strikers have not been accepted by the police.


It is one thing to use the legal repressive apparatus against individual workers – a paper tiger in the end. The main problem is that capital cannot escape from a socially more and more spread out labour force. The Rico strike showed the supply chains are global. Automobile companies in the global north sourced 3.6 billion USD worth of parts from India between March 2007 and March 2008, compared with 330 million USD a decade ago. Now Rico and Honda management talk about ‘de-risking’ and ‘re-location’ – a myth of an escape from the living.
In the press in November 2009 Rico Auto management announced that it will set up two new plants outside Haryana. A Rico spokesperson said that the move was in line with a demand raised by key customers who were affected by the 45-day strike at its Gurgaon factory. “They want us to de-risk our operations to ensure uninterrupted supplies in case of any labour or industrial dispute in future”. Rico’s major production comes from Haryana while also has some new facilities created in Uttarakhand and at Sanand where Tata Motors’ Nano car project is coming up – just for demonstrating the global character: 15 percent of the value created of a Nano car is from German car parts manufacturers. In contrast to this a manager of a German company said at the recent Delhi Auto Expo that nowadays nearly 90 per cent of parts manufactured by German companies in India are sent to other national markets and production units outside of India.
In December 2009 Honda Motorcyle and Scooters announced that it could set up new plant outside Haryana. “We do not rule out the possibility of moving to the south or west, but ideally, we should stick to north India where we have a fully developed supplier base and logistic set-up. Industrial unrest is widespread in India and we can face similar problems anywhere in the country,” HMSI president & CEO Shinji Aoyama said. When asked what exactly are the factors which will determine a new location (if it moves out of Gurgaon), Aoyama said, “The key determining factor would be cordial industrial relations in the area. This is one of the important factors we will keep in mind while deciding location for a new factory”. In an interview, managing director and chief executive of Hero Honda Motors Ltd, Pawan Munjal answered the question: Labour issues have tripped up the auto industry in the last few months. Why is this happening repeatedly?

“In my view, it is purely a (labour) union-driven activity from the outside and they’re doing a huge disservice to this belt of Gurgaon, Manesar and Dharuhera. I only hope it doesn’t go the Faridabad way. I wish and I pray to the government of Haryana to take strict action otherwise it could become a huge problem”. (livemint, 7th of January 2010)

Never mind the Aftermath, here is the Prelude: Unofficial Action at Napino Auto and Electronics Ltd

Only days after the ’solution’ of the conflict at Rico a spontaneous strike action was reported from a different automobile supplier in Gurgaon/Manesar industrial area…

“Gurgaon, 19th of November 2009: It seemed like a trivial incident at the time-an overzealous shop-floor manager meting out punishment to a worker for a fault on the assembly line at Napino Auto and Electronics Ltd near Gurgaon.
The worker was asked to get on a table, hold his ears, squat, and then stand up again-a form of discipline across northern India and known as the “murga” (rooster) employed mostly on errant schoolchildren by teachers and by policemen on small-time criminals.
The incident, which came to be perceived as a public humiliation, ignited the discontent that had been simmering among the 900 or so workers at the company that makes electronic parts for auto makers such as Hero Honda Motors Ltd and Suzuki Motorcycle India Pvt. Ltd. The workers, surprised by their own show of solidarity since there was no union history at Napino, went on a snap strike demanding action on a list of demands, including the payment of long-pending dues.
They also pushed for full overtime pay, salaried leave and, most critically, equal wages for contract workers doing the same job as the regulars. They sought a wage hike and wanted those who had been on contract for a lengthy period to be made full-time employees and thus eligible for employee benefits. Of the workforce, 852 are contract workers, 48 are permanent. Napino has a partnership with Japanese company Shindengen Electric Mfg Co. Ltd.
The uprising at the Manesar plant, 16km from Gurgaon, stalled production for two days. As word spread to other Napino units in Gurgaon and Haridwar (in Uttarakhand), workers served similar notices on the management: The Gurgaon factory was shut for two days, while in Haridwar, output was hit for a week”.

Only a couple of weeks later, on 7th of December 2009, DNA business magazine reported “sporadic incidents of work disruption have again been reported from Munjal Group company, Omax Auto, over the last two days”. No wonder that the management think-tanks have to notice these developments. Some of them even recognising that the core problem is the ‘unruly nature’ of the unrepresented temp work force, which became the majority workforce of Shining India. They acknowledge the dual role of unions for the company management – on one hand an extra expense for representatives and certain distributive gains, but on the other hand a ‘negotiation partner’ valuable in times of general unrest. The probably best article published about Gurgaon industrial turmoil actually comes from a Wall Street Journal. From a social management point of view the article criticises the ‘uncooperative’ attitude of the managing class towards the representatives of workers, calling for better dialog. The following paragraphs are taken from the article, reflecting some of the union developments in Gurgaon.

“Workers of at least 35 companies in Gurgaon are now members of the Communist Party of India-affiliated All India Trade Union Congress, while the Hind Mazdoor Sabha has members in at least 38 companies.
While unions compete with each other for membership, they also realize the value of presenting a united front. About 35 of them came together in June this year to form a federation under the banner 4S, or Sanyukt Shramik Sangharsh Sangh (Joint Labour Struggle Union).
It’s not clear what 4S’ exact long-term strategy is, but its immediate goal, says secretary Harish Sharma, a Hero Honda union leader, is to build a platform for joint decisions on issues relating to suspension, termination and union registration. At least two contractors have been removed from companies for “misbehaving” with workers as a result of efforts by 4S, he said. The federation’s representatives also sit in on conciliation meetings to settle disputes.
Three weeks after filing for trade union registration, Ram Niwas Yadav, a worker at Hema Engineering Industries Ltd (Gurgaon), was waylaid by half-a-dozen men on the morning of 29 September. Yadav said he was beaten up by the men, who threatened to kill him if he did not resign from the company. As Yadav lay in hospital recovering from his injuries, the workers went on a one-day strike in protest.
In August, Hanif Mohammed, employed at Bajaj Motor Co. Ltd, was slapped several times by senior supervisors inside the factory before being forced to resign, prompting a production halt for a few hours. The incident took place a week after workers filed for union registration.
In the same month, workers at QH Talbros Ltd, which makes car steering systems, registered to form a trade union. The company’s first reaction was to transfer Mahesh Singh, a union leader, to Pune. After the factory was shut for two days owing to industrial action, it promised to reinstate him if he withdrew the papers for forming a trade union. The management eventually retracted the transfer order.
The Union government doesn’t seem to be fully abreast of the trouble brewing on this front, going by the figures. According to its records, four industrial strikes had taken place till September in Haryana, but an investigation by Mint found at least 15 labour upheavals in the Gurgaon-Manesar industrial belt alone, each stopping work for a few hours to 52 days (see graphic).
So what’s different about this wave of trade union activity? Timing. It comes as the world is emerging from a financial crisis that marks an inflection point in its industrial development. As the world’s fastest-growing economy after China-and one that sailed through the economic crisis relatively unscathed-India is poised to become one of the powerhouses that pulls everybody else out of the trough.
Take India’s automobile sector-it’s helping to define the future of the global car industry by churning out the low-priced models that are propelling growth as markets elsewhere lose steam. It’s also one of the key fronts on which workers are fighting companies, which explains why the stakes are so high”.

Anger on the backdrop of a boom: short reports of workers employed by automobile suppliers in India

The Indian car industry currently experiences an upswing – due to orders from EU and to special credit schemes on the Indian market, which is likely run out in the near future. “Our sales grew 49 percent in September and 15 percent in October 2009. We would have done much better if it wasn’t for a serious parts supply constraint because of which we couldn’t ramp up quicker to meet the increase in demand,” said Karl Slym, president and managing director of General Motors India in December 2009.
The industry projects this boom into the future and adds new capacities. Despite all the talk of ‘de-risking’, the main assembly plants in Gurgaon are set up for further capacity extension. Not only passenger car maker Suzuki, but also its two-wheeler branch.
Suzuki Passenger Cars will also renovate the production facilities at its all three manufacturing units and add new capacity of at least 70,000 – 90,000 units by December 2009. A new production line is likely to be set up at the Manesar unit, which will have a capacity of 3 lakh units per year. The capacity addition is expected to be done in phases. The company has 600 acres of land in Manesar. “We can make two plants producing an additional 600,000 cars in Manesar itself,” Nakanishi said.
Suzuki Motorcycle India (SMIPL) plans to double production capacity of its two-wheeler plant in Gurgaon – news from December 2009. The company’s vice-president Atul Gupta said, “With robust demand in the past few months, we will increase our monthly production capacity to 25,000 two-wheelers by March 2010 from the current 12,000 units. “

Here are some voices from the bottom of the boom, voices of the future risk – published and distributed in Faridabad Majdoor Samachar in autumn 2009.

Gautam Packaging Worker
(354 Udyog Vihar Phase 4)
The factory runs on two shifts, we produce seat belts and power window parts for Maruti Suzuki. They pay skilled workers the minimum wage for unskilled workers.

Haryana Enterprises / Maruti Worker
(318 Udyog Vihar Phase 3)
The helpers get 3,000 Rs, neither ESI nor PF. The shifts are 12 hours each. Over-time rate is 10 Rs per hour. They produce parts for Maruti Suzuki here. People cut their hands on the power presses on a regular bases – they tell you to get private treatment and then sack you.
Logwell Forge / Maruti Worker
(116 Udyog Vihar Phase 1)
Us 48 workers work in this factory since fourteen years. In August 2009 all of a sudden the company changed our permanent contracts into temp work contracts – through a contractor. On top of that 26 of us were sacked. They did not even give the gratuity payment. Now us 22 workers left have to do the work of 48 workers. We manufacture parts for Maruti Suzuki. In total there are 400 workers hired through contractor in this factory. The 74 Rs of Dearness Allowance were not paid since July 2009. We work on two 12 hours shifts. Over-time is paid at single rate instead of double rate.

Neolite / Maruti Worker
(396 Udyog Vihar Phase 3)
We work from 9am till 9pm, manufacturing light-systems for Maruti Suzuki, Eicher and Tata vehicles. We used to be paid 16 Rs per hour, since July 2009 this has been reduced to 15.40 Rs. Over-time is also paid at this rate. We have to work on Sundays, too. If you take a day off, they kick you out. When they hire you, you have to work a day without being paid. If you are five minutes late they cut one hour of your wages. On one line 40 workers are employed, but there is only one fan. The heat causes a lot of distress. There is a cooler, but it does not work. If you tell them they say that the cooler stirs up dust which would damage the parts.