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Siemens in India
Siemens set up a small workshop in under Mahalakshmi Bridge, Central Mumbai
in 1956 manufacturing Switchboards. Today it has grown over the last 56 years
into one of Indias largest multinational conglomerates. Siemens, which designs,
produces, sells, and services a wide range of electrical equipment, has its Indian
headquarters in Mumbai, the commercial capital of the country. The last decade
has seen unprecedented growth of the companys Indian operations due several
acquisitions and joint ventures, introduction of new services in electrical and
electronic fields and new manufacturing facilities. Siemens in India is active in
four sectors energy, industry, healthcare and infrastructure. As of 2012 it has
several sales offices and 20 manufacturing units.
Industrial Relations
Today, Siemens Workers Union (SWU) is the largest of all unions in Siemens in
India. From basic wages and working conditions in the 1960s to trade union
rivalry in the turbulent 1970s to downsizing in the 1990s and the current fight
against de-unionisation, the labour struggle in Siemens has gone through
different phases over the years.
1. Consolidation: Post Indian independence to Emergency (19562. Turbulence: Post Emergency (19773. Collaboration: Economic Liberalisation (1986 to
4. Defence: Deregulation (1986 onwards)
India industrialises
The early years of this phase, until 1966, saw rapid industrialisation in both
public and private sectors. Fuelled by dreams of building a free India, large scale
irrigation and infrastructure projects were undertaken under the Five Year Plans,
which focused on import substitution and technology transfer from developed
countries. Industries sprung up mainly in the capital goods and intermediary
goods sectors. Industrial growth rate of around 7.7 percent threw open
employment opportunities and there was large scale migration of people to
urban centres. Employment grew from 0.4 percent to 2 percent in this period.
Employment growth led to unionisation and the number of registered unions
went up from 4,623 to 11614 in the years between 1951 and 1961. There were
trade unions of different political hues ranging from the communist led All India
Trade Union Congress (AITUC) to the Congress government sponsored Indian
National Trade Union Congress (INTUC).
Typically the unions were led by external leaders who guided the largely
unskilled, first generation blue collared workers. The struggles revolved around
demands for basic wages and working conditions.
Regulatory environment
A background of the regulatory framework is critical to understanding industrial
relations in India. The Industrial Disputes Act (IDA) of 1947 was the single,
dominant legislation that governed industrial relations in India and continues to
do so even today.
The other legislation is Indian Trade Union Act 1926, according to which seven
workers could form and register a trade union. However, the Act did not define
any mechanism such as secret ballot for recognition of unions.
In 1959, manufacturing and assembling of medical equipment, like low voltage Xray machines, were added to the product range of Siemens at Worli. In 1960,
manufacturing of switchgear products began at Worli and in the same year
manufacturing of switchboards was extended to Calcutta Works.
Split at birth
In 1962, some engineers decided to form Siemens Employees Union (SEU) to
represent white-collar employees, namely clerical, administration and
supervisory staff since EGEU had neglected these employees. This was the
beginning of division of workers with EGEU representing blue-collar workers and
SEU representing white-collar workers. SEU signed a settlement on behalf of
white-collar employees in 1962 for their wages and service conditions.
First strike
The company and the workforce continued on its growth path. However, the
workers were dissatisfied with EGEU and they formed an internal union, Siemens
Workers Union (SWU) with Mr. A. D. Shastry as their leader. Mr. Shastry was not a
worker but a lawyer by profession with a background of left-wing politics. Soon
SWU launched its first industrial action in the form of a strike for better wages
and bonus. However, the strike failed because some black-legs, supported by the
management, broke the strike after 45 days. Thereafter the company refused to
negotiate with Mr. Shastry labelling him an extremist. To break the impasse,
SWU made Mr. B. S. Dhume President of the union so that he could negotiate
with management. Mr. Dhume was the leader of the largest left-wing union,
AITUC. A mechanical engineer, Mr. Dhume, with his vast experience, steered the
union from an antagonistic course into a collaborative mode. SWU signed a
settlement in December 1967, which improved the working and service
conditions considerably. The wages were increased by nearly 25 percent and
working hours were reduced by 8 percent.
With the first batch of skilled workmen joining the shop floors of factories in
1967, there were differential skill levels within the workforce. In the same year,
Mr. Dhume, given his engineering background, could successfully settle a
detailed classification of workmen with the management.
Meanwhile, many clerical and administration staff from across the country joined
SEU, giving it an all-India status. So the union decided to change its name to All
India Siemens Employees Union (AISEU).
Siemens consolidates
The governments planned development of infrastructure in the early 1960s
provided fertile ground for Siemens business. This was a period of consolidation
of Indian operations for the company too. In 1965, the company decided to
The company purchased huge tracts of land in the mid-1960s to build large
factories at Kalwe, Thane (now Navi Mumbai). In 1966, the company commenced
manufacturing of low voltage industrial motors at Kalwe Works. Since there was
sufficient space available for manufacturing of majority of its products,
switchgear manufacturing was expanded in Kalwe Works in 1973. Likewise, in
1974-75 switchboard manufacturing was transferred and expanded at Kalwe
Works. However, manufacturing of medical products continued at the Worli
Works. Since Siemens was manufacturing various products in the power
generation and distribution sectors, workmen related to commissioning and
erection of installation were placed in Andheri.
By the early 1970s, the first flush of post independence development began to
fade. The economy stagnated and this led to a drop in employment rates.
Workers across the country were restive as they were disillusioned with large,
nationwide and state controlled unions. There were efforts towards formation of
independent trade unions at the unit or regional level. However, a national
emergency put an end to any kind of union activity.
permitted. There was a wage freeze too. An interesting trend was that there were
more lockouts than strikes in this period. This was thanks to an amendment to
the ID Act by which factories with more than 300 workers could not be closed
down without the states permission.
SWU spared
Leaders of SWU supported the emergency therefore they were spared. All other
unions were banned or stopped functioning. Unions opposing the SWU met the
same fate. Meanwhile, the company, taking advantage of the situation, connived
with SWU to sign a settlement, which resulted in only 6 % wage increase for
workers and that too for 5 years.
Lifting of emergency released all the pent-up anger against the establishment.
This phase saw intense trade union rivalry as workers tried to break away from
the old unions and form small unit or local level unions. As a result, while the
number of unions increased to approximately 10,000 in 1979 from 2000 in 1950,
the average size of the unions did not increase. Trade union rivalry also resulted
in strikes and agitations in this period which saw the growth of militant trade
unionism under leaders such as Dr. Datta Samant, a medical practitioner by
profession. This was the period of the historic strike in the textile industry, one of
the longest struggles in India.
However, the management could not meet its objectives of cheap, unorganised
labour entirely. As a consequence of continued industrial actions by workers
belonging to AEW, the company was under pressure to give workers in the new
factory better service conditions. In 1981 the company signed a settlement with
SWU, which gave the workers huge benefits. This included 40% wage increase,
4% reduction in working hours, subsidised food and arrangement for
transportation to work. The company forced the AEW union members to accept
the settlement signed by SWU and got them to sign an undertaking thus
negating the claim of AEW for representing workers.
The move towards decentralization of unions in India worked well for some and
was a total disaster for others in particular the textile industry. The success or
failure of decentralised unions was a factor of the level of development of the
state or industry. Unions in profitable companies fared better, particularly in
multinational corporations.
In 1987, for the first time, SWU held elections through secret ballot in the factory
premises. This brought about significant change in the leadership of the union.
External leaders were replaced by workers working on the shop-floor and were
elected as central office bearers. This can be compared to elections for the Works
Council held in Germany.
Economic liberalisation
Winds of change started to sweep over India in 1991. There was a shift from
import centric to export oriented policies. Competition and deregulation were the
new mantras for industrial development.
Stability in SWU
Siemens, a global company was best placed to take the maximum advantage of
the new economic policies. In 1992 a second factory for switchgear products was
established in Waluj, in Aurangabad District of Maharashtra. In 1993 the
company established a factory at Salt Lake, Calcutta, to manufacture Digital
Switching Systems for telecommunications. In 1995, manufacturing activity of
medical equipment was started at a factory in Verna, Goa.
SWU now had a young, fresh leadership, many from the erstwhile AEU. Fully
conversant with the technicalities and working of manufacturing activity, the
internal leadership skilfully steered the union. The union brought back workers
from Nashik unit who were estranged during the internal struggle within the
union in 1985. The union convinced the company to settle problems of workers
with due consideration to the needs of the management. SWU, under the new
leadership, brought transparency and accountability in its working. Elections by
secret ballot were held regularly. There were several settlements signed between
the union and the management on a regular basis. In 1987 the manufacturing
activity of Industrial Electronic equipment was transferred and expanded to the
new Nashik factory in Ambad, Nashik. A settlement for relocated workers was
signed between the union and the management, which gave each transferred
worker a huge subsidy on housing loans thereby facilitating them to own a
house. There were settlements which enhanced the wage levels and bettered
the working conditions. These settlements also opened avenues for career
development and many workers were promoted to white-collar category.
Manufacture of fuses and starters were shifted from Kalwe Works to Aurangabad
where production of a new product of Miniature Circuit Breakers also
commenced. In spite of dissuasion by the management, the workers of
Aurangabad joined SWU. This resulted in a settlement for improving the service
conditions of the workers.
The period of steady growth and stability was short lived. In FY1997, the
company for the first time registered losses to the tune of Rs. 1,496 million which
was down from a profit of Rs. 603 million in FY1996. Incidentally the reasons for
these losses, it was later revealed, were critical errors in the accounting system
and not due to drastic fall in manufacturing or sales. This is was evident from
the sales turnover of Rs. 19,770 million FY1997 which was much higher than the
FY1996 sales turnover of Rs. 11658 million. The losses were carried forward in
the subsequent years too.
firms to which the work was outsourced was less than one-fourth of the wages of
workers directly employed by the company. The management encouraged
vendors and suppliers by giving them financial and technical support. This action
further forced SWU and other unions on the defensive. The managers of the
company openly created fear and insecurity among employees by make it clear
that all employees were dispensable.
At present, AISEU has less than 11 members from the total strength of 22 whitecollar workers. The company had more than 800 white-collar workers before
initiation of the VRS. The number of blue-collar workers came down from 3900 in
1996 to 1342 in 2011. SWU represents around 998 workers in units of Kalwe,
Nashik and Aurangabad. All other workers are represented by other unions which
have memberships ranging from 20 to around 200 people.
After 2000, the company started cutting costs largely through outsourcing of
parts including sub-assemblies. The company started downsizing by removing
machineries from switchgear, motor and switchboard units on a continuous
basis.
With the economy on the upswing, the company started diversifying into
different sectors. In 2005 the automotive components production of Siemens
VDO was integrated with Siemens Ltd. The Siemens VDO had manufacturing
facilities in Bangalore in Karnataka, Pune in Maharashtra and Gurgoan in
Haryana. In 2005, Siemens acquired Demag Delaval Industrial Turbomachinery
(DDIT).
In 2007, the Siemens VDO, which was integrated with Siemens, was disinvested
to Continental Group. The company embarked on acquisition of smaller
companies which manufactured parts required for their products. This gave the
company a distinct advantage over their competitors.
During the last 10 years, many of the rights and privileges enjoyed by the
unions committee members have been curtailed. The aggressive mood of the
management can be gauged by the fact that it has denied the union permission
to hold its bi-annual union elections within the company premises, which was
practice for the last 20 years.
The Company has now 20 manufacturing units but only half of them are
organised have unions. In the rest of the units, the Company has designated all
workers as Executives and barred them from forming or joining any union.
Their service conditions are totally de-regulated and unstructured with long
working hours, less holidays and salaries at whims and fancies of their superiors.
They have to work on any positions, least to say moving material and equipment,
shifting tables and cleaning floors etc.
Siemens Workers Union initiated and formed a all India federation Siemens
Employees Federation with unions from Kharagpur and Hyderabad works joining.
Unions from Vadodara have supported this Federation. However the Company
has refused to recognise this federation for obvious reasons.
Since year 2006 SWU has affiliated with IG Metall a union of metal workers in
Germany which includes Siemens and International Metal Workers Federation
(IMF). SWU has and is raising all issues internationally hoping to build pressure
on Siemens to accept Trade Union rights of all employees of Siemens.