Friday, April 28, 2006

Union Strikes in India

In speaking with a local Brooklyn scooter reseller, think Vespa, this past week I discovered that India is starting to face some of the same challenges and growing pains that more established job markets face - union strikes. LML has a scooter and motorcycle plant in Kanpur, where Genuine'’s Stella scooter (see photo), among other scooters and motorcycles, are manufactured. LML declared the lockout in response to "external rowdy elements... disrupting the peaceful atmosphere and working of the factory."” LML management failed to pay employees full wages and has suspended production in response to financial losses and restructuring.

In speaking with the local Brooklyn reseller he is seriously concerned about how and what he is going to sell this summer. Asked to withhold his name he commented, "I have 12 Stella's left and I'm going to be extra particular about who I sell them to. I want a client that is going to be a long term customer for aftermarket parts and maintenance and not someone that is going to take the scooter out of state. He added, "without Stella's I have to find another scooter to sell."

Thousands of contract workers are demanding more reasonable benefits from the plant that produces 6,200 motorcycles a day. A highly-publicized strike at Honda Motorcycles and Scooters of India, several months ago, resulted in police beatings, and many strikes have followed, including the State Bank of India and a Bangalore Toyota plant. I'm sure China and other emerging markets aren't too far behind.

What does this mean for global sourcing in the near future? Do the benefits still outweight the risk? These are the questions procurement managers are going to have to start considering as they look at emerging countries.

1 comment:

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