Japanese carmaker Toyota has halted its production at two of its assembly plants in India in a move that will affect 6,400 employees. The carmaker’s decision came after employees began threats to management and “deliberately” resisted work on the assembly line after the company and its labor union failed to strike a deal.
Both the management and union have been trying to sign a new contract over the past 10 months to no avail, with local government even stepping in to mediate. The statement by Toyota regarding the lock-out says, “In the meantime, under the instigation of the union, certain sections of employees have resorted to deliberate stoppages of the production line, abuse and threatening of supervisors thereby continuously disrupting business for the past 25 days.” It added, “All these unlawful activities have been detailed in the lock-out notice. With this background, the company is left with no other option but to declare a lock-out of the premises to ensure the safety of its workers and management personnel.”
While Toyota hopes that production will began soon, it gave no timeline for the lock-out period. Japan has been trying to strengthen ties with India in hopes of countering China’s booming presence in the region. However, it remains a challenge to Japanese firms located there. A riot at Suzuki’s plant in 2012 left a manager dead and 100 other managers hurt. Japanese companies have already been advised of the unstable work climate in India. Yosuke Miura, analyst at Tokai Tokyo Securities said, “There is a tense caution among businesses expanding into the Indian market. All companies that invest in India take this kind of risk, to varying degrees.” Further noting, “It’s tough to know what will come out of this. But what is important for Toyota and others investing in India is to keep up communication with people working at their factories.”
On the other hand, Japanese pharmaceutical firm Daiichi Sankyo scrambled with Indian drugmaker Ranbaxy, which now owns majority of its shares since 2008. Issues of drug recall of some of Ranbaxy’s products are affecting Daiichi Sankyo. Japanese Prime Minister Shinzo Abe recently visited India to encourage closer commercial and strategic ties in an effort to shrug off Beijing’s hold on the area. Japan’s investments in India have reached around $15 billion in the past, including a $90 billion project of the Delhi-Mumbai Industrial Corridor.
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