As Chinese auto major SAIC Motor Corporation announced its plans of making an entry into India with United Kingdom’s Morris Garages (MG) brand on Wednesday, the buzz around its acquisition of the Halol plant from General Motors(GM) has gained traction.
The site, which was shut down in April this year, is in the midst of a labour transfer process that will see workers being shifted to GM’s Talegaon plant in Maharashtra. The Talegaon unit is expected to be completed by July-end.
An amicable settlement of labour issues at the zero-manpower plant is critical for the Halol deal to come off.
SAIC, which is entering India through its subsidiary called MG Motor India, had signed a term sheet to evaluate the Halol plant. However, labour-related issues, lingering two years after GM announced the shut down of the facility, dampened SAIC’s spirits.
Consequently, in April, the company said that the Halol plant deal is subject to GM's submission of all government approvals, settlement of labour issues and all other pending issues by GM.
GM India had shut down its two-decade-old plant at Halol, located around 40 kms away from Gujarat’s Vadodara city, on April 28 this year.
With an installed capacity of making 110,000 cars per annum, it is Gujarat's oldest automobile facility.
GM had decided to consolidate its manufacturing operations in India at Maharashtra's Talegaon to improve the firm’s bottom line. Its accumulated losses in the country was estimated to stand at Rs 8,000 crore, and its domestic market share in the passenger car segment has dipped below 1 per cent.
In 2016, agreements of contractual workers at the Halol plant were not renewed and permanent workers were offered a separation package in the form of a voluntary retirement scheme (VRS) that included 100 days of salary for each year of service per worker. Of the 625 permanent workers at the site, a large section refused to accept the VRS, saying it was not beneficial. They were also against shifting to Talegaon.
Sources, however, said workers were slowly warming up to the idea of shifting to Maharashtra.
M H Patel, assistant labour commissioner, Godhra, informed that GM has already given transfer orders to all workers, who have refused to accept the compensation offered by the company. "The transfers are taking place in batches and a few batches have left for Talegaon already. This process is expected to be completed by end of July," he said.
The development was confirmed by a worker as well.
The site, which has had a chequered past with labour issues, has seen worker protests develop late in May, this year. Around 200 workers had gathered before the factory gates on the International Labour Day, with banners and placards to protest the transfer orders given to them to shift base to Talegaon.
Initially, the unwilling workers had approached the state government demanding that whoever acquires the asset should also absorb the existing manpower. Sources claim that nothing much can be done for workers in this case as the US-headquartered carmaker has already met all the statutory requirements of shutting down the plant.
SAIC, however, has said: "The company is in the process of finalising its manufacturing facility and is firming up its product strategy for the Indian market, details of which will be announced at a later stage." P Balendran, executive director of MG Motor India said "We continue to look for various options to finalise our manufacturing facility in India. Having said this, the state of Gujarat continues to remain our preferred option. We will announce the location of our manufacturing facility once finalised.."
Sources in the state government indicated that a team from MG Motor visited Gujarat recently and they were also considering setting up a greenfield plant in the region, in case the Halol deal does not come off.