For Bata, labor had always posed major problems. Strikes seemed to be a perennial problem. Bata’s chronically restive factory at Batanagar had always been plagued by labor strife. In 1992, the factory was closed for four and a half months. In 1995, Bata entered into a 3-year bipartite agreement with the workers, represented by the then 10,000 strong Bata Mazdoor Union (BMU), which also had the West Bengal government as a signatory. It was in 1998, that the company for the first time signed another long-term bipartite agreement with the unions without any disruption of work. Apprehensive about labor problems spilling over to other units, the company entered into similar long-term agreements with the unions at its manufacturing units at Bangalore and Faridabad. On July 21, 1998, Weston, the managing director, was severely assaulted by four workers at the company’s factory at Batanagar, while he was attending a business meet. The incident occurred after a member of BMU, Arup Dutta, met Weston to discuss the issue of the suspended employees. Dutta reportedly got into a verbal duel with Weston, upon which the other workers began to shout slogans. When Weston tried to leave the room the workers turned violent and assaulted him. This was the second attack on an officer after Weston took charge of the company, the first one being the assault on the chief welfare officer in 1996. Soon after the incident, the management dismissed the three employees who were involved in the violence. The employees involved accepted their dismissal letters but subsequently provoked other workers to go in for a strike to protest the management’s move. Workers at Batanagar went on a strike for two days following the incident. The issue was much wider than that of the dismissal of three employees on grounds of indiscipline. Stoppage of recruitment and continuous farming out of jobs had been causing widespread resentment among employees for a long time. In 1999, the Bata management in a bid to further cut costs announced the phasing out of several welfare measures at its Batanagar Unit. Among the proposals was near total withdrawal of management subsidies, canteen facilities, township maintenance, electricity and health care schemes for the employees’ families. Other measures were aimed at increasing productivity, reorganizing some departments and extending working days for some essential services. On March 8, 2000, a lockout was declared at Bata’s Peenya factory in Bangalore, following a strike by its employee union. The new leadership of the union had refused to abide by the wage agreement, which was to expire in August 2001. Following the failure of its negotiations with the union, the management decided to go for a lock out. Bata management was of the view that though it would have to bear the cost of maintaining an idle plant (Rs. 3 million), the effect of the closures on sales and production would be minimal as the footwear manufactured in the factory could be shifted to the company’s other factories and associate manufacturers. The factory had 300 workers on its rolls and manufactured canvas and PVC footwear. In July 2000, Bata lifted the lockout at the Peenya factory. However, some of the workers opposed the company’s move to get an undertaking from the factory employees to resume work. The employees demanded revocation of suspension against 20 of their fellow employees. They also demanded that conditions such as maintaining normal production schedule, conforming to standing orders and the settlement in force should not be insisted upon. In September 2000, Bata was again headed for a labour dispute when the BMU asked the West Bengal government to intervene in what it perceived to be a downsizing exercise being undertaken by the management. BMU justified this move by alleging that the management has increased outsourcing of products and also due to perceived declining importance of the Batanagar unit. The union said that Bata has started outsourcing the Power range of fully manufactured shoes from China, compared to the earlier outsourcing of only assembly and sewing line job. The company’s production of Hawai chappals at the Batanagar unit too had come down by 58% from the weekly capacity of 0.144 million pairs. These steps had resulted in lower income for the workers forcing them to approach the government for saving their interests.

1. Maintaining good industrial relations have always been a problem for Bata. Why? How do you think Bata can maintain sound industrial relation practices? 2. In 1999, the Bata management in a bid to further cut costs announced phasing out several welfare schemes at its Batanagar unit. Do you think it right to phase out welfare schemes to cut costs? Give reasons for your answer?