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 India’s 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 company’s 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 (1956-
  2. Turbulence: Post Emergency (1977-
  3. Collaboration: Economic Liberalisation (1986 to
  4. Defence: Deregulation (1986 onwards)

Consolidation: Post Indian Independence to Emergency (1956-1976)

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.

This legislation, though powerful, had no provisions to identify representative unions and it did not make it mandatory for managements to collaborate with unions. The word “collective bargaining” had no place in the Act.

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.

Siemens starts manufacturing

Siemens set foot in India way back in 1867, when the company was contracted to build an 11,000 kilometre telegraph system between London and Calcutta in India. The company was founded in India more that half a century later in 1922.

It was only in 1956 that Siemens started manufacturing activity in India. A workshop was setup up under the Mahalaxmi Bridge, in Central Mumbai, basically to assemble switchboards. Given the Indian government’s focus on import substitution and technology transfer, it was decide to manufacture products locally and a company known as Siemens Engineering and Manufacturing Company of India Ltd. was established in 1957.

In 1959, manufacturing and assembling of medical equipment, like low voltage X-ray 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.

The first union

In 1960, employees in Siemens had organised themselves under the Engineering and General Employees Union (EGEU). This union was lead by R.J.Mehta, President and J.H.Pinto, General Secretary, along with Narayan Shetye, Honorary Secretary. This union signed the first settlement with the company in December 1961 with regards to working and service conditions. This settlement was signed on behalf all workmen and service workmen, but did not include white-collar employees.

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.

Towards a skilled workforce

Manufacturing of switchboards, switchgears and medical products was on full swing in Worli. The workforce at Siemens, like elsewhere in India, was largely untrained and the company, being a technology leader, felt the need of a skilled workforce. In 1964, a technical Training Centre was open by the company to skill workers. This centre was modelled on lines of the one in Germany. The training followed German techniques but the courses were conducted in accordance with the Apprentice Act, 1961. Many apprentices trained in different technical trades were absorbed in the company’s factories. Initially, the number of apprentices was few but by late sixties the numbers had increased.

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 government’s 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 transfer manufacturing activity of switchgear products from Worli to Andheri, a north-west suburb of Mumbai.

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.

SWU consolidate too

During the early years in this phase, SWU was the sole representative union for the category of workers in Bombay. However, in Calcutta, the employees were represented by two unions, one belonging to the left-wing and other led by the Congress party. AISEU represented white-collar employees across India.  Since SWU enjoyed maximum membership, the management discussed and settled all major issues of employees in general and workers in particular with SWU first, and thereafter with  other unions. Thus SWU was the torchbearer of the working people in Siemens.

Skilled vs. unskilled

In the late 1960s and early 1970s, a large number of trained workers from government Industrial Training Institutes (ITI) and apprentices trained from Siemens Training Centre were also recruited. These trained workers were multi-skilled and their productivity was much higher than the existing workmen. This became a bone of contention between the existing workmen and the new recruits. There were altercations between the two groups over jobs, promotions, etc. However, the existing SWU leadership sided with the older workmen and did not address the grievances of this new workforce. The young trained workmen, with their better understanding of the company and technology, also posed a serious threat to the existing union leadership.

Bonus based on ability to pay

In the 1960s, bonus payment was an important issue as it was related to festivals – Diwali in Bombay and Puja celebrations in Calcutta. In 1972 the SWU leadership was on the verge signing a bonus payment settlement which was not related to profits. A group of young workers from Bombay demanded higher bonus payment based on “ability to pay” because the company was making huge profits. For the first time, the demand was justified by quoting figures from the company’s Annual Report. These workmen also produced figures from balance sheets of preceding years which indicated that the workers were legally entitled to higher bonuses in the preceding years. SWU leadership was under tremendous pressure to address this development and it eventually signed a settlement for bonus payment, which was more than double that in the preceding year.

Youth takes over

Bonus based on ability to pay marked the beginning of a new leadership in the company. The workers, who were frustrated with the old leaders, rallied around this young leadership. Their main grievance was the external political leadership. This young group demanded representation in the union’s committees through election by secret ballot. However, the bureaucratic leadership did not accede to this demand. So the group formed a parallel Siemens Employees Union (SEU) led by workers who were incidentally all trained in Siemens Training Centre. SEU claimed to have the support of a majority of workers and demanded that the management recognise it. However, the management stubbornly refused to accept this and stated that SEU should get recognition through the Industrial Court. This was ironic because the existing SWU was not recognised by the Court. It was clear that the management was prejudiced against SEU.

Turbulence: Post Emergency (1977-1985)

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.

In 1975, national emergency was declared by the Union Government led by Indian National Congress (INC), a centrist party. This introduced a new set of problems for labour. All trade union rights were curtailed. Leaders of opposition and militant trade union leaders were imprisoned. Trade union activity was banned. The right to strike was withdrawn and no bargaining on key issues was 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 state’s 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.

Post emergency militancy

National emergency was lifted in 1977 and general elections were declared. All leaders of the opposition including trade union leaders were set free. In the election, INC was routed by the newly formed Janta Party (JP), a conglomeration of a breakaway group from INC, right-wing leaders and socialists.

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.

Union rivalry in Siemens

Post emergency, workers in Siemens were agitated since the company had taken advantage of the national emergency and connived with the SWU leadership to impose an unfair settlement on them. This resulted in the formation of a new militant union named Association of Engineering Workers (AEW), led by Dr. Datta Samant. In spite of the overwhelming support of workers for this new union, the company stubbornly refused to recognise it.

AEW demanded that the question of recognition of union be settled by seeking the mandate of the workers through secret ballot. However, the company refused to settle the controversy. This resulted in hostility between two sets of workers owing allegiance to SWU and AEW. In February 1978, violence erupted between the two factions and the company declared a lock-out.  Following this, the AEW declared a strike. Encouraged by the company and protected by the authorities, the strike was broken after a month by a handful of workers belonging to SWU. The company rigidly maintained that they would not negotiate or recognise AEW even if 90% of the workers were on strike. The company urged the workers to return to work by giving an undertaking that they would never take part in any industrial action. The workers refused and the stalemate continued.

There was more violence against strike-breakers resulting in action by authorities against the striking workers. With the intervention of the Chief Minister of the State, the strike was called off after 10 months. More then 100 workers were dismissed for taking part in the strike and indulging in violence. AEW continued to enjoy the support of majority of the workers and pursued its efforts for attaining recognition. In the early 1980s, the AEW again launched an agitation for reinstating workers who were dismissed on false charges, but were acquitted by the courts.

To go where there are no unions

In 1977, manufacturing of electronic equipments began at Worli Works. Sensing the militant mood of labour in Bombay, the company decided to diversify manufacturing activity into new areas with the aim of cutting labour cost and avoiding unions. In 1979, a small workshop was established in Satpur, in Nashik district of Maharashtra, to manufacture switchboards and motor starters. Similarly, in 1980 the manufacture of low tension switchboards were transferred and expanded from Calcutta Workshop to Joka Works, outside Calcutta.

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.

Collaboration: Economic Liberalisation (1986 to 1995)

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.

Youth wins through secret ballot

There was a change of leadership within unions at Siemens too. The AEW withered away, but a large number of workers still refused to accept SWU as their representative body. In 1985 there were serious differences among the leaders of SWU. This led to its break up. Sensing an opportunity to take control of the leadership, all members of the erstwhile AEW joined SWU and once again demanded elections to the union’s committee through secret ballot.

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.

The Indian government embarked on liberalisation of laws and brought about structural reforms. Under pressure from developed countries, it opened its economy to global players. These developments gave a boost to the private corporate sector, which saw phenomenal growth. Multinational companies were the biggest gainers of liberalisation. Many restrictions were removed for these companies giving them a distinct advantage over Indian counterparts.

Unions were under pressure due to liberalisation as companies wanted more employment flexibility, which in practice meant contract employment. Voluntary retirement schemes were introduced across industries to replace older, organised workers with new contract labour at lower wages. All this weakened trade unions and their bargaining power.

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.

While liberalisation had an immediate impact on unions in hundreds of companies across India, it did not affect industrial relations between Siemens and SWU in the early 1990s.

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.

Management adopts de-unionisation strategy

Despite the relatively stable and collaborative industrial relations in his period, the company, after the experience of unionisation in other units, found a novel way to prohibit the formation of unions.  They designated all workers recruited for the Salt Lake factory at Calcutta and Verna, Goa as “Executives”. The company also impressed on these “Executives” that it would take care of all their needs. It issued veiled threats and warned that unionising would be detrimental to their careers.

Defence: Deregulation (1996 onwards)

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.

Management capitalises on losses

The supposed financial ill health of Siemens in India sent shock waves among all employees. The company took full advantage of the situation. It embarked on a total restructuring by reducing the workforce. The company launched a Voluntary Retirement Scheme (VRS) forcing many workers to opt for the golden handshake.

Reports of continuous losses affected the workers psychologically, and with constant propaganda about the uncertainty of the company’s future, more workers were driven to accept VRS. The company reduced its workforce by almost 50%, majority of which were in the workmen category.

Outsource, Outsource, Outsource

The company started to make structural changes in all offices and factories. Due to job losses, the unions had become weak and easily succumbed to these changes. The structural changes came in the form of outsourcing of manufacturing activities. Inside the offices, the unions were forced to accept contract workers in service areas of housekeeping and office maintenance.  This was done because the wage levels of contract workers or that of workers in small 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.

Bleaching the blue collar

On the staff front, the company introduced a new category of employees and labelled them “Executives”. White-collar workers were “promoted” to this “Executive” category. However, the executives continued to do the same work they did as workers. This created an illusion that there was no need of unions for bargaining for their rights. The company propagated that their Human Resource (HR) department would take all measures to settle all issues raised by individuals. This totally decimated the AISEU.

At present, AISEU has less than 11 members from the total strength of 22 white-collar 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.

Aggressive labour bashing

Thereafter, the company went into aggressive mode. In 1998, it closed down the Worli Unit, which was manufacturing medical products and shifted operations to Verna, Goa. There is no union in the Verna factory because all the workers are “Executives”. The company forced workers from Worli to get promoted to service technicians, after which they were relocated to offices of the company in different parts of India. Most of the workers were old and could not possibly shift and settle elsewhere. This resulted in more than 60% of workers opting to take VRS. Some workers of Worli were transferred to Kalwe and other offices of India. In 2000, the company closed the Joka factory, which was manufacturing low tension switchboards. All workers were forced to take VRS. This was in connivance with the local left union at Joka. The manufacture of LT switchboards were outsourced to small manufacturing units employing unorganised labour near Kalwe, Nashik and Aurangabad factories. Only the quality of these switchboards was tested in the factories of in the three locations.

Workers’ loss, company’s gain

While the management aggressively pushed the workers and the union on the defensive, it was equally aggressive on the business front. In 1995, Osram India Pvt. Ltd. became a group company of Siemens. It manufactures lighting equipments and systems at its manufacturing facility at Sonepat, Gurgoan district in Haryana. In 1998, the company setup a factory for manufacturing high voltage circuit breakers alongside the switchgear unit in Aurangabad.

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).

The Transportation division of Siemens has a near monopoly in products like signalling systems, point machines and AC coach invertors, which are supplied to Indian Railways. The Indian Railways have given large orders to the company. In 2006 the company commissioned a new unit for manufacturing of Traction Motors specially required for Indian Railways in Kalwe Works alongside with the Motors Unit. In 2007 a new transformer factory was commissioned, which will manufacture High Voltage Transformers in Kalwe Works.

In 2007 the company acquired a factory at Hyderabad, which was manufacturing isolators for vacuum circuit breakers. In 2007, Flender Ltd., a company manufacturing Gear Boxes for the sugar and cement industry was incorporated in the Siemens Group Of Companies. It has its manufacturing facility at Khargarpur, West Bengal. In 2007 the company acquired small manufacturing facilities in Pudicherry and Tamil Nadu. Fire Alarms for buildings and establishments are manufactured in Pudicherry, whereas in Tamil Nadu, special gear box for windmill generators are manufactured.

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.

Where we stand today

During the last 10 years, many of the rights and privileges enjoyed by the union’s 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.