The closure of General Motors India’s Halol factory last Friday (28 April) has left workers devastated amidst a bleak outlook for re-employment elsewhere, local media reports said.
“We have nowhere to go now. We have slipped into a crisis at the peak of our career,” Rajendra Gosai, a production worker, told The Hindu Business Line after the automaker shuttered the plant on Friday.
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GM India had earlier announced its plans to consolidate production at its Talegaon plant in the state of Maharashtra and shut operations at Halol which has built a variety of vehicles in its 21 years.
“I started my career with GM and achieved good financial growth. Now, with the plant closing down, we have nowhere to go because other companies are not willing to match our salaries, and most of us have experience in only one field of automobile. There is no other way but to look for some self-employment,” a laid-off 35-year old told the paper.
The Hindu Business Line said GM India’s falling market share and weakening financial position due to mounting accumulated losses – reportedly INR8,000 crore (INR80bn or US$1.2bn) – prompted the consolidation.
GM India president and managing director Kaher Kazem told the paper a range of additional support measures have been put in place for employees who opted for ‘significantly enhanced’ separation payments as well for those who opted for transfer, including tax and financial advice and pre-transfer visits to Talegaon.
The Hindu Business Line noted the Halol factory had seen considerable worker unrest. In October 2010, workers went out on a four day strike demanding higher wages, followed by an indefinite strike, in less than six months, with the Indian National Trade Union, claiming there were health hazard issues. The strike lasted for about six weeks. Again in 2014, contract [temporary] workers resorted to a strike over wages and other related issues.
General Motors had signalled the end of Halol production as far back as July 2015, softening the blow to workers there with the promise to spend $1bn at Talegaon, opened in 2008, with a capacity boost to 220,000 vehicles by 2025 and establishment as a global export hub with at least 30% of output planned for sale outside India. Closure of Halol was scheduled “by” the second half of 2016.
“Consolidating our manufacturing in a single location in India will support the long-term sustainability of our business in a challenging emerging market,” GM India president and managing director Arvind Saxena said at the time. “This is not a decision that we are making lightly…”
In January 2016, Chinese vehicle producer SAIC – whose factories supply KD kits for small vehicles assembled in India and other emerging markets – was reported to be considering a move to purchase the Halol plant to start manufacturing in India. SAIC, which partners GM in China and holds a single-digit percentage share in the US company’s India operations, was said to be conducting due-diligence of Halol. Reports said, if the deal was to go ahead, SAIC would be the first major Chinese automotive OEM to set up manufacturing operations in India, a market seen by many analysts as having very good (but long term) growth potential.
The Economic Times reported SAIC was expected to begin its India operations by contract manufacturing the GM India models made at Halol – at the time the Cruze sedan and Tavera and Enjoy MPVs. The Times of India had reported negotiations were at an advanced stage.
In the event, the company announced almost a year later the Halol closure would be postponed until March 2017 while GM continued “to review future options for the site”. The automaker also said it would produce the upgraded Tavera at Halol.
Last January, matters took a turn for the worse as GM was reported to have halted spending on new models for India while it reviewed its future product line. The automaker, despite those 2015 plans to spend US$1bn to improve manufacturing operations and launch 10 locally produced models, had not set a schedule for lifting the freeze on new products, local media reported.
“…given the shift in customer preferences in India, we are conducting a full review of our future product portfolio and have put on hold future investment in our all new vehicle family for the market until we firm up our product portfolio plan,” a General Motors spokesperson told Press Trust of India.
The Hindu Business Line noted Halol was started as a joint venture with Hindustan Motors to produce Opel passenger cars and started manufacturing Chevrolet from 2003 when the Opel brand was phased out. Halol had an annual production capacity of 110,000 vehicles, while Talegaon can build 130,000.
GM had suspended Cruze (sedan) production some time ago, and ended Tavera (utility vehicle) production on Friday. Spread across 172 acres, the plant still has a huge inventory of sedans and utility vehicles piled up in its backyard, the paper said.
“The plant will remain closed. Only the administrative functions will remain open from Monday. There will be no workers entering through these gates from tomorrow,” a gatekeeper on duty at the plant at the weekend said.
See also: GM small car rationalisation plan targets emerging markets
GM India signs three year wage deal for Talegaon plant
