Chapter V Prevailing Practices of Industrial Relations in...

The Industrial Relation Practices in Selected Industrial Units of Ahmedabad and Anand Districts

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Chapter V

Prevailing Practices of Industrial Relations in Selected Units

5.1 Introduction of Engineering Industry

5.2 Introduction and Profile of Engineering Units

under Study

5.3 Conceptual Background of Industrial

Relations Practices in Engineering Industry

5.4 Problems faced by Engineering Industry

5.5 Industrial Relations Strategies and Policies


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5.1 Introduction of Engineering Industry

The term ‘engineering industry’ is generally used to denote a wide variety of

industries which fundamentally are based on metals. Originally the engineering

industry was concerned with the making of engines and machines but to this has been

added a variety of other manufactures, and it now forms of vary complex branch of

industry. Today, engineering industries comprise a large heterogeneous, yet the same

inter-connected group of industries the machines tools, industrial machines, heavy

electrical equipments, aircraft, automobiles and ships.28

Engineering industries are primarily metal using industries taking the end

products of iron and steel and non-ferrous metal industries and subjecting them to

further processing. The processed parts are then assembled into final products, either

capital goods or consumer durables, which for the most part consist of engines and

machines or vehicles driven by engines.29 The engineering industries can broadly be

divided into two categories: heavy engineering industries and light engineering

industries. Industries like ship-building and bridge-building fall in the category of

heavy engineering, while the light engineering industries are concerned with the

manufacture of light things like bicycles and radios. 28 Khanka S. S. and Gupta V.K. Economic and Commercial Geography, Sultan Chand and Company Limited, New Delhi, 2001, p. 9.62 29 Wilfred Smith: An Economic Geography of Great Britain, Second Edition, p. 72


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As food clothes and shelter are the prime sources of human life, in same way

the raw material is essential need of any sort of industry. Infect without it difficult to

do the process of production. In the 21st century of technology, one can not function

without the production machines. Nevertheless in all the spheres of industry,

machines and its spare parts are the required priority. In general it can be said that

there is a collaboration of engineering industry to industries who manufacture the

engineering products. However, if it is not wrong to say that all other industries

progress depends upon the development of engineering industries. Therefore, the

engineering industry is termed as the “Engine of Growth” which occupies an

important place in the Indian economy. The engineering sector, popularly known as

the mother of all industries, is the largest industrial segment and is reckoned as the

growth engine of economic development. The Engineering industry broadly covers:

Basic metals, Fabricated Metal Products, Machinery and Equipments, Electrical

Machinery, Communication Equipments, Medical Instruments, Motor Vehicles,

Other Transport equipments, Furniture and Engineering projects.

The importance groups with in the industry include machinery and

Instruments, primary and semi finished iron and steel, non-ferrous metal, electronic

goods and project exports.

Engineering industry may be classified into two broad categories; (1) “Heavy

Engineering Industry” – Producing capital goods such as heavy industrial machinery

(required for example in textile, cement, sugar, pharma, printing and jute industries)

power generators, railway engines, machine tools, etc. and (2) “Light Engineering

Industry”- Comprising of durable consumer goods like sewing machines, electric

fans, typewriters, motor-cycles, razors and such other goods. Chart 5.1 reveals the

classification of different engineering products produced by engineering units.


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Chart: 5.1 Classifications of Engineering Products

(Source:ww.vibrantgujarat.com/sectorhigh/engineering/automobile-industry etrivedon26/12/2007)

The industry in general has made rapid progress since 1960s in both the public

and private sector.

Among developing countries, India offers the best combination of low costs,

availability and skills and capabilities of manpower for the engineering sector. The

Indian engineering industry is highly competitive with a number of players in each

segment.


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The Industry primarily deals with the design, manufacture and operation of

structures, machines or devices.

Among the third-world countries, India is a major exporter of heavy and light

engineering goods, producing a wide range of items. The industry has grown almost

entirely since 1950 and was both a consequence of the necessary requirements for the

industrial revolution.

The performance of the engineering sector is linked to the performance of the

end user industries for this sector. The user industries for engineering include power

utilities, industrial majors (refining, automotive and textiles), government (public

investment) and retail consumers (Pumps and motors). The engineering sector has

been growing, driven by growth in end user industries and the new projects being

taken up in the power, railways, infrastructure development, private sector

investment fields etc.

In terms of availability and skills, India produces over 500 Ph. D’s 2,00,000

engineers, 3,00,000 non engineering post-graduates and 21,00,000 other graduates

each year, thereby ensuring a steady supply of qualified manpower for the Industry.

In order to give leverage to India’s intrinsic technology and strengths and provide a

vast pool of highly qualified software professionals.

The engineering industry is conscious of the tasks ahead and has geared itself

to meet the production targets that are commensurate with the demand pattern as well

as with the export potential in the coming years, and play its part in the overall

development of the country. With dynamic approach, innovative economic policies

and proper Government support, the industry is well set to enter the 21st Century with

more prospects.


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5.1.1 The Engineering Industry and India

Engineering industry is one of the major and oldest industries of the Indian

economy. It is one of the capital intensive, indigenous and vital industries, which

assumes an important role in economic growth and development of our country.

Since its inception engineering industry has provided employment to thousands of

people across the country. In short the engineering sector is the largest segment of the

overall Indian industrial sector. It employs over 4 million skilled and semi-skilled

workers (direct and indirect).The engineering industry accounts for 12 per cent of

India’s GDP. Engineering goods enjoy 30.5 per cent weight in the Index of Industrial

Production (IIP); 29.9 per cent share of total investment; and 62.8 per cent share in

foreign collaborations. Engineering exports accounts for over 20% of India’s total

exports. It is the largest foreign exchange earner for the country. In short engineering

industry in India has remained as source of employment to many people. Graph 5.1

and graph 5.2 reveal the contribution of engineering sector in the development of

Indian economy. Demand and supply of skilled man power, their wage and salary

structures, trade unions, collective bargaining power, industrial discipline,

government policies and the role of management in engineering industries have been

changing from time to time. So that this study is concentrated on industrial relation

practices practiced by engineering (industrial) units, particularly in Ahmedabad and

Anand Districts.


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Graph 5.1

(Sources: ‘Background note of engineering and auto sector,” Gujarat state website, www.ic.gujarat.gov.in.accessedjanuary2009; “Export performance,” engineering export promotion council (EEPC) website, www.eepcindia .org.accessed6january2008)

The data presented in Graph 5.1 indicates the year wise output (in rupees

billion) in Indian engineering industry. In financial year 2004 the output was Rs.

4,647 billion; in 2005 it reached to Rs. 6,592 billion while in 2006 it was Rs. 7,287

billion. It means it shows an increasing trend in output by value.

7287

4647

6592

0

2000

4000

6000

8000

FY 04 FY 05 FY 06

INDIAN ENGINEERING OUTPUT BY VALUE (INR BILLION)


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Graph 5.2


Graph 5.2 reveals the segment – wise output by value in rupees billion during

the year 2006. Compared to other segment output of basic metals was found higher

and output of medical instruments was found lower during 2006.

Segment-wise output by value(FY06,INR billion)

448501

1207

103341678

946

509

2553

0

500

1000

1500

2000

2500

3000

Basic

metals

Fabric

ated

met

al pr

oduc

ts

Mchine

ry an

d equ

ipmen

t

Electric

al m

achin

ery

Commun

icatio

n equ

ipmen

t

Medica

l instr

umen

ts

Motor

s veh

icles

Other

tran

spor

t equ

ipmen

t

furnit

ure


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5.1.2 Trends in Engineering Exports

The Engineering Export Promotion Council (EEPC) was set up in 1955 under

the sponsorship of Ministry of Commerce, Govt. of India, for export promotion of

engineering goods, projects and services from India.

Initially started with a few hundreds of engineering units as a small outfit, with

a passage of time it has grown to be the largest Export Promotion Council having

membership of nearly 12,000 from amongst large Corporate Houses, Star Trading

Houses, Small & Medium Scale Units (SME), Trading Houses, etc.

Out of the total membership of the Council, 60% constitutes the SMEs. At

present India is exporting there engineering products in the following countries as

shown in Table 5.1. Graph 5.3, 5.4 and 5.5 show the direction of engineering exports.

Table 5.1: Top 10 destinations of Indian engineering exports

Importing Country

Importing Country Cumulative Exports 2007-08

% change over 2006-07

USA 4269.81 12.49 UAE 2669.13 39.42

Singapore 1460.18 31.48 UK 1340.72 18.14

Germany 1279.24 43.74 Italy 1255.16 2.56

Saudi Arabia 1236.62 13.64 China 962.72 -25.69

Belgium 917.63 0.1 Malaysia 747.64 106.74

(Source: DGCIS)


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Graph 5.3

(Sources: ‘Background note of engineering and auto sector,” Gujarat state website, www.ic.gujarat.gov.in.accessedjanuary2009; “Export performance,” engineering export promotion council (EEPC) website, www.eepcindia .org.accessed6january2008) The data presented in graph 5.3 indicates the Indian engineering exports (in US

Dollars billion) since 2003 to 2008. In 2003 engineering exports was 7.8 billion US

Dollars, in 2004 engineering exports was 11.5 billion US Dollars, in 2005

engineering exports was 16.4 billion US Dollars, in 2006 engineering exports was

20.3 billion US Dollars, in 2007 engineering exports was 27.1 billion US Dollars and

during the year 2008 its reached to 33.2 billion US Dollars. To conclude, that Indian

engineering exports is growing year by year.

Indian engineering exports (USD Billion)

33.227.1

20.316.4

11.57.8

05

10 15 20 25 30 35

FY03 FY04 FY05 FY06 FY07 FY08


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Graph 5.4


The graph 5.4 shows the composition of Indian engineering exports during the

year 2007. It indicates that out of total exports composition, 36% exports belonging

to primary iron and steel items, 30% exports belonging to capital goods, 21% exports

belonging to consumer durables, 11% exports belonging to non – ferrous metal and

products, 2% exports belonging to management and technical services. It means in

composition of exports the share of primary iron and steel items was found more.

Indian engineering exports: composition(FY07,in %)

21%

2%

30%

36%

11%

Consumer durables

Management and technical services

Capital goods

Primary iron and steelitems

Non-ferrous metal andproducts


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Graph 5.5


Graph 5.5 shows major export destination of Indian engineering sector during

2008. It is clear from the graph that during financial year 2008, Indian engineering

sector was export 27% in European countries, 25% in Asia (excluding Middle East),

18% in Middle East, 17% in American countries, 12% in African countries and only

1% in Oceania. It shows that majority of the export destinations belonging to

developed countries.

Major export destination (FY08, in %)

18%

1%

27%

12%

17%

25% Middle East

Oceania

Europe

Africa

America

Asia (excluding Middle East


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5.1.3 Engineering exports and employment

The trends in engineering exports and the employment generated due to

engineering exports, both direct and indirect, that can be estimated since 2001-02 are

as follows:

Table 5.2: Trends in Engineering exports, employment and total

Employment due to Exports. En)

Year Engineering Exports (in Rs. Crore)

Employment due to Engineering Exports only (in numbers)

Total Employment due to exports (in numbers)

Engineering Exports employment as a percent of total employment due to exports (in %)

2001-02 32082 618896 10747917 5.71% 2000-03 41287 719910 13095510 5.49% 2003-04 61380 993689 13391400 7.42% 2004-05 79749 1187558 15972094 7.43% 2005-06 90108 1244561 16280062 7.64% 2006-07 122660 1550723 18921530 8.19% (Source: EEPC estimates.)

5.1.4 Diversification of Indian Engineering Products

During the nascent stage, Indian engineering exports were mainly confined to

Asia and to a small extent to Africa. Over the years, the scenario has completely

changed and as of date, about 43% of total engineering exports are made to

developed countries as shown in table:-

Table 5.3: Exports of engineering products to developed countries

Region 11956-57 2006-07 Europe 00% 26%

America 0% 17%

(Source: EEPC estimates.)


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5.1.5 Future outlook

The engineering sector’s future outlook is promising. Drivers like

infrastructure development, industrial growth and favourable policy regulations will

ensure growth in manufacturing.

Emerging trends such as outsourcing of engineering services can provide new

opportunities for quantum growth Opportunities for Engineering Industry in the

Defence and Civil Nuclear Energy Sector. The Council has proposed a Technology

Up gradation Fund (TUF) Scheme for enhancing the technological capability of

Indian engineering sector.

The Council also appointed IIFT to carry out a detail study on China for the

benefit of Indian engineering exporters.

To conclude India’s engineering industry’s progress is critical for the growth

of the manufacturing sector, employment generation and indirectly tackling problems

of poverty and inequality. Engineering sector too is a major employment generating

sector and needs to be supported both by central and state authorities.


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5.1.6 Engineering Industry and Gujarat

Gujarat is one of the highly industrialized states in the country. It has many

pharmaceuticals, textile automobile, chemical, cement and engineering industries.

Among them engineering industry occupies a key role in the growth of the state.

Whatever industries had been established in Gujarat, among of it engineering

industry has prime importance even in the progress of Gujarat, it has foremost

position. Comparatively to other industries the contribution of it is 9.5% which is

described in a chart below. Engineering Sector is one of the Strong manufacturing

sectors in Gujarat, which contributes 16% of net value added amongst all industries

in Gujarat. It is also contributes to over 9% of India’s total engineering output. There

are 300 units in large sector and over 75000 units in small and medium enterprises

(SME).

There is a major production base for sponge iron, steel pipes and tubes, copper

cathode, Electrical, switchgear, transformers and transmission line towers, heavy

fabrication, ship building and auto components in Gujarat. Largest producer of

sponge iron and SAW & ERW pipes, important manufacturer of power generation

plants, switchgears, transformers and transmission line towers are exist in Gujarat

under the auspious of engineering industry. Graph 5.6, 5.7 and 5.8 represent the

overall contribution of engineering sector in the development of Gujarat.


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Graph 5.6


Graph 5.7



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Graph 5.8


As far as Gujarat is concerned there are many engineering industrial units

located at different places. In Gujarat mainly engineering units are established in the

area as shown in table 5.4:

Technical manpower available for employment in the engineering

space(in no.)

20,540

5709

3453

0

5000

10000

15000

20000

25000

Degree Diploma Vocationaltraining courses

Technical manpower available for Employment in the engineering

Space (in no.)

20,540

5709

3453

0

5000

10000

15000

20000

25000

Degree Diploma VocationalTraining courses


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Table: 5.4 Location wise Engineering Industries in Gujarat Oloation of cluster engineering industry

ENGINEERING INDUSTRY LOCATION OF CLUSTER Castings and forgings Ahmedabad,Bhavnagar,Rajkot,Anand,Baroda Electric motors Baroda,Anand Ship breaking Alang Brass parts Jamnagar Fabricated Metal Products Ahmedabad,Bhavnagar,Rajkot,

Baroda,Surat,Ankleshwar,Himatnagar,Vapi Steel and aluminum furniture Ahmedabad,Rajkot,Himatnagar Steel re-rolled products Bhavnagar,Ahmedabad Automobile parts Ahmedabad,Rajkot,Baroda Agricultural equipments Rajkot,Morbi Diesel engines and parts Rajkot, Food processing machinery Ahmedabad,Rajkot,Valsad Textile machinery parts Ahmedabad,Surat,Surendranagar Chemical machinery parts Ahmedabad,Baroda Power driven pumps Ahmedabad,Visnagar,Rajkot Air and Gas compressors and Industrial valves

Ahmedabad

Ball and Roller Bearings Rajkot.Ahmedabad,Jamnagar Lathes and Machine tools Rajkot,Ahmedabad,Jamnagar,Bhavnagar

(Source: www.ic.gujarat.gov.in.accessed january2009)

New Developments in Gujarat (Source:

Large projects in automobile sector commissioned or in Development which

include automobile car project of GM, heavy commercial vehicle of AMW, TATA

NANO, Metro rail car project of Bombardier, electric two wheeler projects of

Electrotherm and Oreva have opened up opportunities for Development of auto

components.

Electrical equipment industry continues to witness impressive developments.

ABB, AREVA India, Integra, Thermax, Kalpatru, Jyoti, Videocon, etc are on


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expansion mode. Steel production and steel pipes industries has been witnessing

continuous investments.

5.1.7 Engineering Industry and Anand District

In Anand District the Engineering Industries is situated at new V.V Nagar

known as V.U. Nagar GIDC, where around 80% industrial estates are closely

connected with the production of engineering products, among them Elecon stands

first for the gearbox production. In short the contribution of engineering industry is

incredible in the development of Anand district. In the district the engineering units

are associate with the production of engineering products like Bearings and its

components, Boilers and its components, Anodising plant, casting and forging,

Chemical process equipments, Coupling, Crushers, Dairy equipments, Dies and

moulds, Distilled water plant, Domestic Appliances like flourmill, Gear and Gear

boxes, Gaskets and packing, Pumps and its parts, Transformers and their parts, Solar

equipments, Water heaters, Pollution control equipments, Powder Coating industry

and material handling equipments etc.

5.1.8 Engineering Industry and Ahmedabad District

If we talk about industrial estates in Ahmedabad district then we can find at

various places just as Naroda, Odhav, Vatva, Changodar (Sanand), Ranpur etc.

among them 50% of industries is concern with engineering products directly or

indirectly. The development of Ranpur City is totally based on two bearing

production companies: they are (1) RMP bearings (2) Texspin bearings. Because the

85% of the employees of the surrounding area of Ranpur are directly or indirectly

concerned with these two companies. Most of the estates of Naroda GIDC are

connected with engineering production. In short the contribution of engineering

industry is incredible in the development of Ahmedabad district too.


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5.2 Introduction and Profile of Engineering Units under Study

1. Anupam Industries Limited:

Year of Establishment : 1973

Types of Company : Public Limited (Not registered at stock exchange)

Registered Office : 138, Phase – I, GIDC Estate, V.U.Nagar – 388121,

Dist: Anand

Products : E.O.T. Crane, Gantry Cranes, Grabbing Cranes.

Standard(s) : ISO 9001

Number of Employees : Total 500 which includes 350 permanent and 150

Contractual

2. EIMCO Elecon (India) Limited:


Types of Company : Public Limited (Registered at stock exchange)

Registered Office : Aannd Sojitra Road, V.V.Nagar – 388120, Dist: Anand

Products : Mining Equipments, Hydraulic Equipments, Air Motors,

Blast Hole Drills

Standard(s) : ISO 9001: 2000, B: S:


contractual


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3. Elecon Engineering Company:



Registered Office : Anand Sojitra Road, V.V.Nagar – 388120, Dist: Anand

Products : Industrial Gears, Material Handling Equipments

Standard(s) : ISO 9001-2008

Number of Employees :Total 1450 which includes 850 permanent and 600

Contractual.

4. GMM Pfaudler Limited:



Registered Office : Aannd Sojitra Road, Karamsad, V.U.Nagar – 388121,

Dist: Anand

Products : Reactors, Filters, Dryers, Evaporators, Pipes and Fittings,

Agitator, Agitated Nutsche Filters, Wiped Film

Evaporators, Fabricated Equipment, Thermal Control

Unit, Pharma Glass PPG,

Standard(s) : ISO 9001 ASME


contractual


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5. IDMC Limited:


Types of Company : Public Limited (Not registered at stock exchange)

Registered Office : 124 -128, GIDC Estate, V.U.Nagar – 388121, Dist: Anand

Products : Dairy Equipments, Bulk Milk Cooling Tanks, S.S Fitting,

Pumps, Pharmaceutical Machinery, Brewery Equipments,

Beverage Equipments, Blown Film

Standard(s) : ISO 9001: 2000,


contractual

6. Milcent Appliances Private Limited:


Types of Company : Private Limited (Not Registered at stock exchange)

Registered Office : 20, Phase – I, GIDC Estate, V.U.Nagar – 388121,

Dist: Anand

Products : Domestic Flourmill

Standard(s) : -------


contractual


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7. Oswal Machinery Limited:


Types of Company : Public Limited (Not Registered at stock exchange)

Registered Office : 143 - B, Phase – I, GIDC Estate, V.U.Nagar – 388121,

Dist: Anand

Products : Material Handling Equipments, Load Lifting

Standard(s) : ------

Number of Employees : Total 115 which includes 65 permanent and 50 contractual

8. Vulcan Industrial Engineering Company Limited:



Registered Office : A – 2/ 44, GIDC Estate, V.U.Nagar – 388121, Dist:

Anand

Products : Drilling Accessories, Spares of Heavy Earth Moving

Machinery, Gear Boxes,

Standard(s) : ISO 9001: 2000


contractual


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9. Swiss Glascoat Equipments Limited:



Registered Office : V.U.Nagar – 388121, Dist: Anand

Products : Reactors, storage tank, distillations columns, agitators,

pipes and pipe fittings etc.



contractual

10. Power Build Limited:



Registered Office : P.O. Box No. 28, Anand Sojitra Road,

V.V.Nagar – 388120, Dist: Anand

Products : Belt weigher, weighfeeder, automatic weighing,

Bagging machines, wagon and truck loaders, overband

Self cleaning type electro magnetic separators and

Metal detectors.



contractual.


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11. Texspin Bearings Limited:



Registered Office : Station Road, Ranpur – 363610 Dist. Ahmedabad

Products : Bearings and its components which includes Engine

products, Suspension component,

Transmission component, steering component

Two and three wheelers component, Textile

component,

Standard(s) : ISO 9001:2000


contractual

12. RMP Bearings Limited:



Registered Office : Station Road, Ranpur – 363610 Dist. Ahmedabad

Products : Bearings and Related Components



contractual


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13. Harsha Engineers Limited:



Registered Office : P.O Changodar, Sarkhej Bavla Road,

Dist. Ahmedabad - 382213

Products : Precision Bearing Cages, Bearing Seals and other

Stamped components, Steel Spherical Roller Bearing

Cages, Brass Machined Cage, Polyamide Cage and

Taper Roller Bearing.



contractual

14. Precision Bearings Private Limited:


Types of Company : Private Limited

Registered Office : 26 A/B, Changodar Industrial Estate, Changodar,

Tal. Sanand, Dist. Ahmedabad – 382213

Products : Spherical Roller Bearings, Spherical Roller Thrus Bearings,

Taper Roller Bearings, Ball bearings, Double Row Self

Aligning Ball Bearings, Angular Contact Ball Bearings and

Special Bearings as per Samples & Drawings. Outer Rings,

Inner Rings, Balls and components like Rollers material


Number of Employees : Precision bearings has a workforce of more than 540

employees and strong technical base of 90 engineers.


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15. JHT Power Engineering Private Limited:



Registered Office : Steel Town, Plot C – 7/8/9, Opp. Nova Petrochemical

Limited, At. Moraiya, Tal. Sanand, Dist. Ahmedabad

Products : Manufactures and Galvanizers of Electric Hypertension

Tower, Sub Station Structures



contractual

16. Lubi Group of Industries:



Registered Office : Near Kalyan Mills, Naroda Road, Ahmedabad - 380025

Products : Pumps and Motors which includes Aqua pack pressure

System, Ac induction motor, End suction pumps Shallow

well jet pumps, De-watering pumps Monoblock pumps

Residential / agricultural / industrial pumps, Submersible

monoset pumps Submersible pumps and motors

Standard(s) : ISO 9001

Number of Employees : Total 1800 committed employees working under the

banner of Lubi Group of industries.


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17. Apex Engineers Private Limited:



Registered Office : Plot No. 1716, GIDC Phase – III, Vatva,

Ahmedabad - 382445

Products : Plastic Extrusion Machineries

Standard(s) : -


contractual

18. Windsor Machines Limited:



Registered Office : 5403, Phase – IV, GIDC, Vatva, Ahmedabad - 382445

Products : Hydraulic and Toggle type Injection Moulding

Machines, Blow Moulding Machines of up to 30

litres capacity and Extrusion Lines.



contractual


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19. Transformers and Rectifiers (India) Limited:



Registered Office : P.O Changodar, Sarkhej Bavla Road,

Dist. Ahmedabad - 382213

Products : one of India’s leading transformer manufacturing

Companies who manufacturing Power Transformer,

Distribution Transformer, Distribution Transformer,

Rectifier Transformer, Furnace Transformer,

Specialaity Transformer. etc.



contractual

20. Dresser – Rand India Private Limited: Year of Establishment : 2000 Types of Company : Private Limited Registered Office : 187 GIDC Estate, Naroda,

Ahmedabad - 382330 Products : As a leading provider of rotating equipment solutions,

dresser-rand designs, manufactures, sells, and services a wide range of technologically, advanced centrifugal and reciprocating compressors, steam and gas turbines, expanders, rotating separators, portable ventilators, and

control systems. Standard(s) : ------ Number of Employees : Total 200 which includes 147 mangers and executives and 53 shop floor employees (workers).


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21. Bosch Rexorth (India) Limited:



Multinational Corporation (MNC)

Registered Office : Near Vatva Railway Station, Vatva, Ahmedabad - 382445

Products : Hydraulic valves, pumps, blocks, cylinders and power

Units, machine tool, press, plastic processing equipment,

steel mill, civil engineering, materials handling,

earthmoving and other mobile applications, printing and

packaging equipment, textile machinery, etc.


Number of Employees : Total 545 which includes 400 executives and 145

shop floor employees (workers)


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5.3 Conceptual Background of Industrial Relations Practices

in Engineering Industry The development of engineering industries depends on a number of factors like

(i) the existence of a well-developed metallurgical industry to supply necessary raw-

materials: (ii) a well-developed system of transport: (iii) highly skilled labour

technicians and engineers: (iv) facilities for industrial research; (v) a large supply of

capital. Of these entire factors, skill and technology are the most important and thus

countries lacking in industrial research and technical training are unable to develop

their engineering industries. In fact, the development of engineering industry is an

index of the industrial prosperity and technological advancement of a company.

The engineering sector is the largest segment of the overall Indian industry,

where over four million skilled and semi skilled workers are working (directly or

indirectly) so an emphasis is to be given on industrial relations in engineering sector

because, development of sector mainly depends on industrial relation practices, If

industrial relations are satisfied they will reduce the labour turnover rate, absenteeism

and will retain skilled workforce for a long time. At present engineering sector is

facing the problem of attrition. So, to reduce the attrition rate focus is to given on

sound IR Policies.

To develop conducive IR, emphasis is to be given on following issues, because

they are directly associated with Industrial Relations:-

• Trade Unions

• Workers participation in management

• Role of Government

• Industrial Discipline

• Collective bargaining, etc.


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In engineering industry only large industries have formal collective bargaining

procedures to redress grievances and industrial unrest. There is no formal grievance

redressal procedure in small scale units. Most of them are solving their grievances at

their own level with mutual understanding. In all the selected industrial units it is

found that, management (employer) is stronger in bargaining power. So in selected

engineering units bargaining power of employees is poor. In short employers have

stronger collective bargaining power in selected engineering units.

Trade Unions:

One of the important parties of IR is trade unions. Success or failure of IR

Strategy is mainly depends on attitude of trade union. But there are no strong unions

in selected engineering units. Out of 21 selected units trade unions exist only in 8

units and they are marked with multiplicity, internal intra union rivalry, poor

financial position and non recognition. Poor trade unions cannot initiate rich

argument during negotiation. The following table provides real picture of existence of

trade unions in selected units and their affiliation to various political parties as well as

no. of membership


135

TABLE 5.5: Existence of Trade Unions in selected Engineering Units

Sr.

No

Name of

Company

Name of Trade

Union

Affiliation to

Political Party

Number of

Membership

1 Texspin Bhartiya Majdoor

Sangh

BJP 165

2 RMP Akhil Gujarat

General Majdoor

Sangh

- 350

3 Elecon Gujarat Majdur

Panchyat (GMP) - 225

4 Oswal CITU CPI (M) 70

5 IDMC INTUC Congress 200

6 Bosch INTUC Congress 145

7 Precision Bhartiya Majdoor

Sangh

BJP 400

8 GMM V.V Nagar

Majdoor Union - 233

Total 1788

(Source: on the base of data collected through field work)

So, in selected engineering units there is no trade union in small scale units. As

far as large units under study are concerned, employees of all units have their trade

unions. It has been found that in all selected engineering units, where trade unions

exist, contractual staff is not allowed to become a member of respective trade unions.

Out of the total membership (1788) in various trade unions 345 employees are

associated with Congress, 565 are associated with BJP, 70 are associated with

CPI(M) & 808 are not associated with any political parties. 19.30% are actively


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associated with Congress, 31.60% are with BJP, 3.91% are with CPI (M) and 45.19%

are not associated to any political parties. To conclude, position and status of trade

unions are not satisfied in selected engineering units.

In selected engineering units management has a negative attitude towards

unions. The management does not appreciate its workers joining unions. As stronger

unions are a must for collective bargaining process, this kind of attitude from

management hampers the process.

Workers participation in Management:

Workers participation in management has also failed in selected engineering

units. In selected units emphasis is given to participation at the higher levels. That

means active involvement is confined to a few, and the creative potential of rank and

file of workers is ignored.

In short, it may be said that conditions in selected engineering units of

Ahmedabad and Anand districts so far have not been conducive for participative

management.

Role of Government in maintaining IR:

Government has to play an important role in maintaining and developing

harmonious relations amongst employers and employees. During the study it is found

that in the entire selected engineering unit’s government has played crucial role,

because all selected engineering units are changing their IR and HRM Policies as per

the government directives from time to time. All the selected units are paying salary,

wages and bonus to their employees as per norms, prescribed by the central

government and the state government. Even during the fieldwork too most of the

employees of selected engineering units have confessed that government plays an

important role in maintaining industrial relations. Therefore, the role of government

is found positive in all selected engineering units.


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Industrial Discipline:

During the fieldwork it was found that level of discipline was satisfactory in all

the selected units. Out of 402 respondents from employees, 28 % have answered well

disciplined status in their units, 42 % have answered discipline status in their units,

25% have answered average discipline in their units and only 5 % employees have

answered undisciplined status in their units. It means, the level of discipline in

majority of the selected units is good, which is a positive sign for industrial relations.

It shows congenial relations between employees and employers in selected

engineering units.

From the responses received from the employees of the selected engineering

units, 54% say that the status of industrial relations is very good in their units, 38%

say that level of industrial relation is good in their respective units, 7% say that IR is

average in their respective units and only 1% say that IR is poor in their respective

units. It means overall industrial relations are satisfactory in the selected engineering

units.


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5.4 Problems Faced by Engineering Industry

Attrition :

Rate of attrition is much higher in Engineering Industry as compared to other

industries. Most of these Engineering Industrial units are facing the same problem

due to unavailability of skilled (manpower) work force. Skilled work force has

migrated to foreign countries for better prospects and structure of salary is not

competitive in Engineering Sector.

Interest Subsidy:

Compared to other sectors, government is not promoting Engineering Sector

for example government offers subsidy in interest to SSI, but which is not made

available for Engineering Sector. Thus Engineering sector is facing the problem of

interest subsidy.

Problems related to research:

Facility of qualitative research is not extended up to Engineering Sector.

Research available on engineering sector is not satisfactory. Thus, industries are not

getting latest information regarding their products and technology. So there is a need

to encourage research and technology development institutions for engineering

sectors.

Inadequacy of finance:

Lack of finance is one of the major obstacles in the development of

engineering units. The credit provided by various institutional agencies Such as State

Financial Corporations, Commercial Banks, Small Industries Development Bank of

India and other Financial Institutions etc. is inadequate to meet the needs of

engineering units. Again many a times, the credit extended to engineering units is not

timely. Such delayed availability is a major factor which causes bottlenecks

ultimately leading too much of the industrial sickness in that sector.


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Technological Problems:

In engineering industries the growth of small scale industries is hampered by

the obsolete technology. This leads to relatively higher production costs and inferior

product quality as compared to the products of large scale industries. Also, there is

dearth of trained and experienced supervisory personnel to advise them in this area.

Provision of modern technology is therefore an important element in context of

the SSI in order to stimulate increased productive efficiency and to encourage

introduction of new product lines.

Managerial Problems:

In engineering sector, particularly in small scale units, lack of managerial

expertise is another obstacle. In India as well as in Gujarat many small scale

engineering units are set up by young entrepreneurs who are not competent and have

no previous experience. Hence, they borrow money at high interest rates and fail to

be economical in reducing cost of production during the initial stage. Thus,

inexperienced management of small scale engineering units also leads to industrial

sickness in that sphere.

Shortage of raw materials and Inventory Management

In engineering sector problems related to shortage of raw material is faced by

those engineering units which depend on imported raw materials. Even they are not

getting adequate supply of raw materials at reasonable prices regularly.

This ultimately results in high inventory at an organization. For example, a

bearing which is imported has a high cost and takes a lead time of approximately 9

months to 1 year with an advance payment.


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Problems related to Letter of Credit

Banks were hesitant to issuing letter of credit due to credit non availability in

various countries.

Problems related to liquidity (both domestic and external) to Exporters

Most exporters have complained that they face serious problems with respect

to credit requirements. The main complaints are: Banks are hesitant to sanction limits

and have increased interest rates;

Banks have suddenly refused to discount our Non LC-Inland bills at a time

when festive season is on stating that they have exceeded their credit limits, event

though this was not done earlier.

Banks are unwilling to roll over this buyer’s credit in foreign currency for

import of machines.

Banks are not releasing pre shipment credit easily and there is problem in

discounting foreign letter of credit documents even restricted ones

Issues related to existing export order and new orders:

Exporters have expressed concern over both export orders and new orders.

One member has reported that their American buyer has stated that goods in

US and EU are now cheaper than that of India.

The frequency of orders has come down.


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5.5 Industrial Relations Strategies and Policies

Word ‘strategy’ is derived from the Latin Word ‘strategia’ which means an art

and science of directing the military force. It is a game plan which directs what to do

and how to do to achieve the objective. Here, IR strategy is to be formulated to

maintain congenial relations. In an industrial unit, managers generally do not feel the

need to act before the problems arise. But stiff competition due to changing economic

environment, low productivity and increasing production cost, management must

plan proactive strategy to deal with industrial relations. The corporate objectives can

be achieved by getting the maximum co-operation from workers and reducing

industrial unrest.

Therefore, it is necessary to have a clear cut strategy and policies for industrial

relations. Two sets of factors, internal as well as external, influence IR strategy. The

internal factors are:

• The attitudes of management to employees and unions

• The attitudes of employees to management

• The attitudes of employees to unions

• The inevitability and the difference of opinion between management and

unions.

• The present and the future strength of the unions.

• The extent to which management can or wants to exercise absolute authority to

enforce decision affecting the interests of employees..

• The extent to which there are dominating unions or the existence of multiple

unions leading to inter union rivalry.

• The extent to which effective and agree procedures for discussing and

resolving grievances or handling disputes.


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• The effectiveness of managers and supervisors in dealing with industrial

relations problems and disputes.

• The prosperity of the company, the degree to which it is expanding, stagnating

or running down and the extent to which technological changes are likely to

affect employment conditions and opportunities.

• The external factors affecting IR strategy are:

• The militancy of the unions - nationally or locally

• The effectiveness of the union and its officials and the extent to which the

officials can and do control the activities of superiors within the company.

• The authority and effectiveness of the employers association.

• The extent to which bargaining is carried out at national or local or plant level.

• The effectiveness of any national or local procedure, agreements that may

exist.

• The employment and pay situation nationally and locally.

• The legal framework within which industrial relations exist.

To create conducive and industrial relations, it requires clear cut and sound IR

policies as well as strategies. During the field work, interaction with employers and

personal contacts with employees, it is found that the selected engineering units of

Ahmedabad and Anand districts have implemented the following strategies and

policies to develop the harmonious industrial relations in their respective units.

• To reduce the disputes related to salary and wages majority of the selected

units have implemented the terms and conditions as per the agreement made

with the employees and trade union leaders. Most of the employers sign the

agreements as per the Act and make settlements with employees accordingly.


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• To reduce the grievances related to Bonus, majority of the selected units offers

fair Bonus to their employees, not only that they also make changes in their

Bonus rate and wage structure at regular intervals.

• To minimize the number of accidents at factory plant, management of the

selected units have provided safety equipments like helmets, gloves and

spectacles to their employees

• To improve the skills of workers (shop floor employees), majority of the

selected units have provided regular training to their workers at factory

location as well as they also sends their employees to take part in seminars and

conferences for their skill development.

• In companies like RMP, TEXSPIN and MILCENT special award is announced

for the most punctual employee. Such kind of motivational award reduces the

rate of absenteeism.

• To improve communication skills amongst employees, companies like

ELECON, PBL, EIMCO (Elecon) and HARSHA ENGGINEERING regularly

organizes workshop on communication skills. Such types of workshops

minimize the communication gap, ultimately proper communication leads to

congenial industrial relations.

• Companies like HARSHA ENGINEERING, ELECON, DRESSER RAND TR

(India) and BOSCH REXORTH (India) have setup proper mechanism to

identify the grievances at different levels, which leads to good industrial

relations.

To conclude different IR policies and strategies have been implemented

by the selected engineering units of Anand and Ahmedabad districts for

maintaining, as well as to developing conducive industrial relations in their

respective units.

Chapter V Prevailing Practices of Industrial Relations in...

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