Philips India - Labor Problems at Salt Lake

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"They (unions) should realize that they are just one of the stakeholders in the company and have to accept the tyranny of the market place."

-Manohar David, Director, PIL in 1996.

Selling Blues The 16th day of March 1999 brought with it a shock for the management of Philips India Limited (PIL). A judgement of the Kolkata1 High Court restrained the company from giving effect to the resolution it had passed in the extraordinary general meeting (EGM) held in December 1998. The resolution was to seek the shareholders’ permission to sell the color television (CTV) factory to Kitchen Appliances Limited, a subsidiary of Videocon. The judgement came after a long drawn, bitter battle between the company and its two unions Philips Employees Union (PEU) and the Pieco Workers' Union (PWU) over the factory’s sale. PEU president Kiron Mehta said, "The company's top management should now see reason. Ours is a good factory and the sale price agreed upon should be reasonable. Further how come some other company is willing to take over and hopes to run the company profitably when our own management has thrown its hands up after investing Rs 700 million on the plant." Philips sources on the other hand refused to accept defeat. The company immediately revealed its plans to take further legal action and complete the sale at any cost.

Souring Ties

PIL's operations dates back to 1930, when Philips Electricals Co. (India) Ltd., a subsidiary of Holland based Philips NV was established. The company's name was changed to Philips India Pvt. Ltd. in September 1956 and it was converted into a public limited company in October 1957. After being initially involved only in trading, PIL set up manufacturing facilities in several product lines. PIL commenced lamp manufacturing in 1938 in Kolkata and followed it up by establishing a radio manufacturing factory in 1948. An electronics components unit was set up in Loni, near Pune, in 1959. In 1963, the Kalwa factory in Maharashtra began to produce electronics measuring equipment. The company subsequently started manufacturing telecommunication equipment in Kolkata.

In the wake of the booming consumer goods market in 1992, PIL decided to modernize its Salt Lake factory located in Kolkata. Following this, the plant’s output was to increase from a mere 40000 to 0.278 million CTVs in three years. The company even expected to win the Philips Worldwide Award for quality and become the source of Philips Exports in Asia. PIL wanted to concentrate its audio and video manufacturing bases of products to different geographic regions. In line with this decision, the company relocated its audio product line to Pune. In spite of the move that resulted in the displacement of 600 workers, there were no signs of discord largely due to the unions’ involvement in the overall process.

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1] Kolkata is the name of erstwhile Calcutta.

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