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Published: Tuesday, 12/2/2008

INDIA: DRIVEN TO COMPETE

Growth in autos sparks challenges in India

Some villagers upset; others welcome jobs

BY STEVE EDER
BLADE STAFF WRITER
Prasanta Dutta, right, and his mother, Mayarahi Dutta, said he was not compensated for the land taken to construct a Tata Motors plant. Local pressure forced Tata to abandon the plant. Prasanta Dutta, right, and his mother, Mayarahi Dutta, said he was not compensated for the land taken to construct a Tata Motors plant. Local pressure forced Tata to abandon the plant.
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Last of three part series

SINGUR, INDIA -- For generations, Prasanta Dutta and his family, like thousands of other villagers, have depended on the vast flatlands of rural West Bengal for food and income.

Covered with the golden-brown dust that blankets everything, the villages near Singur are packed with peasants and farmers who grow enough vegetables to feed local villages and large swaths of India. But more than two years ago, those villagers braced for a change in how they've lived for hundreds of years.

Tata Motors, the automotive wing of one of India's iconic business houses, The Tata Group, announced plans to build the world's first $2,500 passenger car - later named the Tata Nano - in Singur. The Tata Group committed more than $250 million in investments in West Bengal and the state's communist government promised to buy 997 acres from farmers to make room for the plant.

It was West Bengal's golden opportunity to emerge from decades of neglect from developers and businesses and begin charting a new path to join in India's economic prosperity. But amid the planning, the roll-out of the Nano, and the worldwide media frenzy that ensued, political infighting took hold as some farmers felt their land had been taken without fair compensation.

READ MORE: Driven To Compete: India's auto industry

"We have been suffering for more than two years," said Mr. Dutta, standing with his wife and son inside his village storefront on a September evening. "Either Tata gives us more money or they have to go back."

As the October start-up of the plant neared, protests intensified and violence set in. Politicians leveled allegations of farmers being betrayed and agricultural roots abandoned for industrialization in West Bengal.

Staring down a troubled future in West Bengal, Tata Motors opted out, abandoning its nearly completed plant in Singur and instead making a 1,100-acre site near Ahmedabad in western India the home of the Nano.

Tata Motors' tortured tenure in West Bengal is emblematic of the many challenges India faces in the years ahead, The Blade found, as the country works toward its stated mission of emerging as a worldwide force in the automotive industry.

In September, The Blade spent three weeks in India reporting from the country's five biggest cities - Mumbai, Kolkata, Delhi, Bangalore, and Chennai - meeting with auto executives, politicians, workers, villagers, and parts suppliers.

Infrastructure shortcomings, language barriers, and cultural divides within India - a country of 1.1 billion people - pose challenges for automakers looking to cash in on India's growing middle class and increasing number of drivers.

Security stands guard outside the Tata Nano production plant in Singur, India. Violent protests caused Tata Motors to abandon its nearly completed plant in Singur, depriving the rural farming communities of West Bengal of thousands of new jobs. Security stands guard outside the Tata Nano production plant in Singur, India. Violent protests caused Tata Motors to abandon its nearly completed plant in Singur, depriving the rural farming communities of West Bengal of thousands of new jobs.
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But those challenges have not stopped global automakers like General Motors, Ford, Hyundai, and Nissan from entering and expanding their presence in India, nor have they sidetracked the global aspirations of homegrown manufacturers like Tata Motors and Mahindra Motors.

India's master plan for automotive growth by 2016, as announced by the country's Department of Heavy Industries, is an ambitious one: "To emerge as the destination of choice in the world for design and manufacture of automobiles and auto components" with output reaching $145 billion a year, accounting for more than 10 percent of India's gross domestic product, and providing additional employment to 25 million people by 2016.

The emergence of India's automotive industry has caused strife in parts of the country where villagers feel betrayed by the encroachment of industry. But elsewhere, and throughout much of India, the growth of the auto industry is welcomed because of the new jobs it brings and the opportunities it presents to improve the standard of living in a country where 27 percent of people live below the poverty line of 10 cents per day, per person.

Staying in India

Abhinandan Choudhury, a 23-year-old mechanical engineer, is among those who have benefited.

Mr. Choudhury, a graduate of India's National Institute of Technology, one of the country's elite engineering schools, earned a golden opportunity to work with a team of engineers from Bajaj Auto on the company's "people's car" design, a joint venture between Bajaj Auto, Nissan, and Renault.

In a project unveiled in January, Bajaj - long one of India's leaders in producing three-wheel auto rickshaws - and its counterparts hope to build a car that can compete with Tata's Nano.

Abhinandan Choudhury, left, and Shweta Tomar are young
engineers working for Bajaj Auto, an Indian automaker known for making bikes and three-wheel vehicles. Mr. Choudhury, 23, is developing a small car design expected to compete with the Tata Nano. Ms. Tomar works in Bajaj’s electronics division. Abhinandan Choudhury, left, and Shweta Tomar are young engineers working for Bajaj Auto, an Indian automaker known for making bikes and three-wheel vehicles. Mr. Choudhury, 23, is developing a small car design expected to compete with the Tata Nano. Ms. Tomar works in Bajaj’s electronics division.
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The alliance hopes to begin selling its yet-to-be-named competitor for $3,000 to $3,500 by 2011.

In order to reach that goal, Bajaj has hired people like Mr. Choudhury to be the brains behind the future product. It's a challenge that Bajaj's engineers are embracing.

Mr. Choudhury said he never dreamed that a project of this nature would present itself so soon.

"To be in a project competing with Tata Nano, it's a great opportunity for me. After the project is complete in 2011, my market value will be gigantic," Mr. Choudhury said during an interview in the lobby of the GTE Hostel in Pune in September.

Mr. Choudhury and other engineers reside in the GTE Hostel in Pune, near Bajaj Auto's campus. Many of their expenses are covered and food comes at a low cost, allowing the young engineers and trainees to keep more of what they earn - $13,000 a year for Mr. Choudhury.

In the past, engineers like Mr. Choudhury often needed to leave India and head to the United States or Europe to find quality engineering jobs in the automobile industry. But with the growth of India's auto industry, and the new focus on research and development, talented young engineers are finding more and more opportunities to stay in India and do the work they've been trained to do.

"Staying in India, being in the automobile design field, it is an exception," Mr. Choudhury said. "Working in a project like this, which is viewed with wide eyes, is a great opportunity."

Student supporters of the Trinamul Congress Party demonstrate near the Tata Nano project site in Singur. Farmers launched a nearly two-year campaign to protest the government’s seizure of their land, sparking the violence that caused Tata Motors to vacate the plant. Student supporters of the Trinamul Congress Party demonstrate near the Tata Nano project site in Singur. Farmers launched a nearly two-year campaign to protest the government’s seizure of their land, sparking the violence that caused Tata Motors to vacate the plant.
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Employees for life

The opportunities created by the auto industry in India are spreading not just to highly trained engineers, but to the country's vast population of potential factory workers. Many Indians are finding jobs working in auto plants, building factories, servicing cars, or selling cars.

As a group, Indian autoworkers are considered loyal and capable. They tend to show up for work on time and complain little about their jobs or working conditions, while working for wages far below what the same jobs would pay in the United States or Europe. Salaries for a union auto assembly worker in the United States average about $26 per hour, while Indian workers are paid anywhere from $1.65 to $7.20 per hour.

Ram Hudlikar, a spokesman for Tata's plant in Pune, said 95 percent of Tata's workers are lifetime employees, meaning they come to the company around age 20 and retire at 60 without leaving the company.

"Loyalty is not demanded," Mr. Hudlikar said. "It happens naturally."

Indian autoworkers, who are mostly represented by trade unions, usually arrive with no experience

There's serious competition for the jobs. When BMW announced its plans to launch its operations in India, more than 25,000 applications poured in for 150 jobs.

As in the United States, autoworkers in India are solidly middle class. They have families, sometimes with several children, and they own homes. Many come from farming backgrounds and are devoutly religious, and many pay for private education for their children, sometimes aided by scholarships from their employers.

Employers largely pay for major health-care expenses for workers and their families, and offer employees some type of stock in their companies. Few own cars, but many have motorcycles, the vehicle of choice in India.

Many of the automakers provide two meals to their employees each shift. Employers say their intention is to build community in the workplace, but it's also to ensure that rupee-pinching employees focus on their jobs and not on an empty stomach.

Hyundai has a farm on the premises of its plant near Chennai where animals are raised that are used in the cantina. Because of widespread water and food contamination, Hyundai wants to be certain the food for its workers is safe.

"We provide them with everything - food, transportation," H.S. Lheem, the managing director of Hyundai India, said. "Everybody we provide the two meals per day because they need good food."

Working conditions

Ford India, which also provides two meals per day to its employees and offers transportation, wants its workers to feel like they are part of the Ford family once inside the factory.

"You are leaving the chaos and coming into a very controlled environment," Michael Boneham, president of Ford India, said.

Autoworkers on production lines for major manufacturers like Ford, BMW, Hyundai, or Maruti Suzuki - which granted The Blade tours of their facilities - work in new facilities that are clean and well lit, albeit without air conditioning. The working conditions, at least at the major manufacturers and especially the newer ones, mirror those in the West, and the inexpensive labor didn't cause overcrowding inside the plant, where automation is prevalent and safety standards are plastered on the walls.

In comparison to the automaker facilities, the plants of some parts suppliers weren't as clean and were overcrowded.

On a mid-September day, the parking lot of Krishna Maruti - the Gurgaon-based seat-maker that will soon take over the contract to make Jeep seats - was flooded because of heavy rains. At Premium Steerings, a steering wheel maker in Gurgaon, sparks flew on the crowded manufacturing floor and workers scrubbed rust from steering wheels.

Car sales up

In Indian showrooms, the rust has disappeared, the air conditioning is on, and the cars are every bit as shiny as anything seen in U.S. dealerships. There are sales promotions and salespeople are peppered with questions from perspective buyers.

Of course, tea and coffee are offered to the prospective car buyers before they take a seat at the negotiating table.

On a Sunday in early September, a Millennium Mobility's Maruti Suzuki's dealership in Pune was busy with potential car buyers and families interested in test-driving its fleet.

Amol Soma, the assistant manager of sales, said three years ago his dealership sold about 100 to 150 vehicles per year, but now is selling 300 to 350. He said cars have made the shift from a status symbol for the Indian elite to a necessity.

"[The Indian driver] wants his own wheels to move around the city," Mr. Soma said, adding that customers more than ever are interested in safety features and in-car options.

In India, an average starter-car will cost about $4,500. Others can be far more expensive, depending on brand and features.

For Vm Baswante, 58, a soon-to-be retired engineer, buying a second car is essential to building a postretirement business he's starting with his two sons, Pritesh, 20, and Ashish, 21. Five members of the Baswante family came to the Maruti showroom to inform themselves about their upcoming car purchase.

"I want to develop my business so I'm searching for a car," Mr. Baswante said.

Contact Steve Eder at: seder@theblade.com or 419-304-1680.



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