The restructuring of industries and the fatal sickness of an industrial town

– S.Kumaraswamy

RESTRUCTURING OF industry is a global phenomenon. It is taking place in India, too. It is a haunting question before the TU movement. It is quite obvious that the TU movement has not restructured itself to the necessary levels to face this challenge. If you want to restructure your TU movement you must have a comprehensive idea about the changes that have taken place in industry. Let us begin with a micro-level study of Ambattur Industrial Estate (AIE). The AIE came into existence in the year 1963 when the Congress government was in power in Tamil Nadu.

Those were the days when Chennai was having an industrial boom. In Manali, Thiruvottiyur and Ennore, refineries, chemical plants, and fertilizer units were coming up. Simpson and Leyland were growing fast. Ambattur was predominantly inhabited by some 5 to 10 dalit villages, some Vanniyar and Mudaliar settlements and few other upper caste households.

In Ambattur township there are three areas, Ambattur Old Town, Padi and Orathoor. With the development of the TVS group of industries, Padi developed into a workers’ area. Then, there was the TI group and Dunlop factory which were in existence at the time when the AIE was promoted. Within 10 kms. from Ambattur there were defence factories like Heavy Vehicles Factory and Ordinance Clothing Factory in those days. Likewise, the Tube Products of India was also located within 5 kms. from Ambattur.

TVS, TI group, Dunlop, and Brittania were only employing a few thousand workers. Ambattur was an underdeveloped suburban area in which these industries were a distinguishing feature. But, with the development of the AIE, the very face of Ambattur changed.

A buyers’ guide, 1998, released by the Ambattur Industrial Estate Manufacturers’ Association (AIEMA), gives the following details about the AIE:

* established in 1963

* one of the largest in Asia covering approximately 6 area.

* 2000 units, mostly small and medium industries.

* area 1500 acres.

* combined turnover: Rs. 2000 crores.

* employment – 2 lakhs including 60000 women.

* located at a distance of 20 kms. from the airport and 15 kms. from the city.

* connected by suburban train services and state-run buses.

The nature of the industrial activities in AIE is: automatic components, fabrication units, foundries and forge shops, engineering products, garments, leather goods, rubber components, electrical equipments, tool rooms, machine tools, light and heavy machine shops, service industries, heat treatment, and metal finishing etc.

Most of these units were engineering units and auto components manufacturers. Around this estate, in areas like Padi, Mogappair, Korattur and Ambattur there were numerous tiny industries employing less than 5. Most of the industrial units in AIE were manufacturing products for TVS, TI group, Ashok Leyland and Simpson. Only around 100 of these units employed more than 100 workers. Over the years only some 750 of these units registered themselves with the employers’ association.

The TI and TVS groups, Britannia, and Dunlop had a flourishing time up to the 1990s. Their capacities expanded. Some of them put up several ancillaries. Their workforce grew in number. Their wages improved. The whole town was expanding at a fast rate. There are some 21,50,000 voters in Ambattur township. Banks, telecom, roads and facilities improved. Urban middle class moved into the area around the township and built their houses. Very soon land prices soared. It was a booming town till the 1980s.

The fast downward trend started in the 1990s. Industries were collapsing just like that. Even the big players like TVS, Britannia, and TI took a beating. They all cut down their workforce. The case of TI group is interesting and instructive. The TI group closed down almost all its ancillaries in the 1990s. TI Wright Saddles (with 20 workers), TI Cold Forgings (60), TI Cycle Chain Division (70), TI Hubs and Pedals (150), TI Acme Chain (40), were all closed down. Britannia’s workforce of 250 came down by 50%. TVS sent out one-third of its workforce and started launching new companies in the nearby Kanchipuram district. Dunlop was fast driving towards its disaster. All major medium industries faced serious problems and closure. Kunal Engineering with 280 workers and Chemec with 1650 have closed down. Southern Switchgear, Best and Crompton, India Meters, Sivananda Steels, Omega Cables, Madras Radiators and Pressings are all facing difficulties. Repeated rounds of VRS have not cured these industries from sickness. TVS, TI, and Britannia have survived. But a disaster has struck the AIE and the mushrooming tiny sector.

The AIEMA is saying that out of 1848 units only four are functional. The rest have either perished or are breathing their last. The big and medium industries have organized unions. Brittania has only insider union and it has gone for outside leadership only once. But it has given up the experiment. TVS and TI Cycles have employer-friendly INTUC union. All other big and medium industries have independent unions wherein elections are held once in a year and any outsider can contest for the post of president.

If we go by the latest statistics many thousands of tiny sector units are not unionized. Out of 1848 units less than 200 have trade unions. The overwhelming majority of this workforce is non-permanent and their average wages hover around Rs.1800 per month. The least-skilled backbreaking jobs and the jobs on contract are performed by workforce coming out of Ambattur from rural areas. For all practical purposes, the doors of permanent industrial employment are closed for the local youth.

Big units like Dunlop and medium units like Kunal, Sivananda Steels, Chemec etc. are not sure of their future. By and large the majority of the non-functional units are defaulters on ESI, PF, cooperative society and bank loans. Workers have not received their wages for months together for work already performed. Settlements are not honored. Full and final settlements are evading majority of the workers.

Let us take the concrete case of our AICCTU union. In the last 5 years more than 50 units where our union had a presence have been closed. Some 2500 of our workers have settled their accounts. We are experiencing at least one closure a month on an average. Three years back, we had our union in 56 units. Now we have our union only in 24 units in the AIE. Many of these workers from closed units who have not been paid their wages or their settlements, and who have lost their jobs, are becoming security guards, petty shopkeepers, petty traders, construction workers and even wineshop attendants. Every household has at least one person who has lost his employment due to closure or suspension of work, VRS or non-payment of wages for months, even years, together.

This industrial town is facing a slow death. There has been no new investment, no new industries. But another interesting development has taken place. The employment of women has grown by leaps and bounds, especially in garment units. Ambattur Clothing is one such company employing women in large numbers (7000). These industries do not require much fixed capital. Women in Ambattur Clothing are provided with transport facilities. Bonus, PF, ESI, earned leave and maternity benefits and minimum wages are complied with. This company is treading its own path. The wage levels, including OT, at times cross Rs.2500. There is no trade union here. Rest of the garment export industries employ several thousands of women workers. Tata group’s Coramandel Garments has downed its shutters last year resulting in a loss employment for 1000 workers. This women workforce is mobile. Majority of them do not remain or are not allowed to remain in the same factory for long years. The overwhelming majority of them are not paid proper wages and are not given welfare benefits. There is practically no union in this segment of industry. Any attempt at unionization is crushed. In Ambattur, in a process, these women workers in regular employment have now slowly taken over as the main bread winners from the earlier position of merely adding something to the family kitty. Because other industries are dying, the employment of women and their issues acquire a new social, cultural and economic significance.

The major challenges posed by the ongoing process are as follows:

* The problem of sickness and closure: it is a very complex problem. Though it is often called suspension of work, lock out, or lay-off, it lasts for years. For all practical purposes it becomes a closure. Wages are not paid. Settlements are not made. Statutory payments to the authorities, workers and other creditors are not made. In a majority of the cases the dues are not paid. The factory is not reopened. The state of limbo persists for long. The very morale of the working class is dented. The workers get into a mood of frustration, despondency and desperate anger.

* Relatively reasonable settlements in prevailing circumstances are no more possible. Actually we had a two-pronged approach. As soon as there is a closure, we were able to get an injunction from the civil court to restrain them from taking away the machineries. Workers from other unions in other small units were mobilised in solidarity. This paid dividends. We were able to hike up the settlements. Gratuity and 15 days salary per year of service was the legal settlement. In addition to this we were able to get from 1 ½ to 3 months’ salary per year of service as additional compensation. Now the managements do not go beyond legal settlements. Courts do not give injunctions. So the issue does not get resolved for a long time. Because of the delay the workers are compelled to settle for a lesser amount.

* Permanent employment runs into a few thousands only. This number is steadily getting reduced. This inevitably leads to a very narrow scope for TU activities. The entire Ambattur TU movement is now confined to a minority of the workforce. The other big section which exceeds the existing permanent workforce is the workforce of the closed and sick units. The overwhelming majority of this section is badly in search of some gainful employment. The unions of these workers are not guided to have a live and continuous functioning.

* the existing TU movement does not reach out to workers who are not their members.

To sum up, the scope of TU activities is very narrow and the entire work is among a very small section of the workforce. Thus the vitality of the workers’ movement is weakened. The governments at the Center and the State instead of addressing these problems only aggravate the issue. The political parties are insensitive to this issue.

In the concluding part of this article we shall deal with the reactions of the employers, other TUs, general public and the workforce. We shall also deal with our failures and our proposals for TU restructuring.

AICCTU’s Struggles in Sick Industries

The Never-Say-Die spirit of Kunal workers

KUNAL ENGINEERING Limited of Ambattur, Chennai is a textile spindles manufacturing unit. The chairman of this company, Mr. Deepak Banker was earlier the chairman of the FICCI. This ISO-certified company had a good international and domestic market. This company became sick and was closed on 26 March, 2000. After the closure the workmen elected Com. S.Kumaraswamy of AICCTU as the president. There are some 288 workmen here, including women. The union raised an industrial dispute and got an award that the closure was illegal and that the workmen were entitled to wages, other benefits and continuity of service.

In the meanwhile, the creditors, bankers and financial institutions filed winding up of proceedings and the High Court ordered liquidation. The union’s plea to get impleaded was disallowed, but it was held that the union would be heard as interveners and that it was open to us to come forward with a revival scheme. Because of union’s Jan.2 siege of the Labour Department, the Labor Minister asked the Department officials to convene talks for revival. For the first time, talks for revival were held in TN by the Labour Department in the case of a company under liquidation. Since the chairman of the company and bankers did not show any interest in the revival, the union moved the High Court seeking direction to all the parties to attend and co-operate in the revival talks. Though the writ petition on behalf of the workers was dismissed, the High Court observed: “However considering the grievance of the petitioner union this Court hopes that the concerned parties will co-operate with the officer concerned for an amicable settlement”. Using this observation the union has written to all the concerned parties, and during the last round of talks the chairman of the company and other major creditors attended. The chairman of the company has said that it was not possible for him to come forward with a revival proposal. Truth is stranger than fiction. Now the union has been asked to come forward with a revival proposal.

Textool – A fight to the finish

COIMBATORE (KOVAI) is not only a victim of Hindutva but also of serious industrial sickness. The TU movement in the textile industry is in a serious crisis. 80% of the textile workforce is non-permanent, sweatshop labor. There is frustration among broad working class of Kovai. In this background we had to wage a relentless struggle in Textool in Kovai. Once there were 6500 workers employed here and the textile machinery unit has been in existence for 50 years. The owners have started 4 new units from out of the profits of this company. AICCTU is one among 10 unions here. By 2000 there were only 1355 workers. The management sought permission from the State Govt. to lay-off all the workers. The union led the battle against this. Because of the resistance, the Govt. refused permission for lay-off on 18.9.2000. The management sent out 180 workers under a so-called voluntary separation scheme. Then they sought permission to retrench 385 out of 1075 workers. Again due to workers’ resistance permission was refused on 30.3.2001. From June 2001, the management stopped paying wages. On July 2001, the management signed a settlement under Section 12(3) of the ID Act 1947 to provide them with work by rotation and keep the workers on special leave with wages. But this settlement was honoured in its breach. Again the management started forcing out workers by VSS. They started paying wages only to those who were ready to leave. They announced several ‘last’ dates for VSS. Thus only 482 workers remained in service on 28.12.2001.

On 28.12.2001, the government received the management’s application seeking permission to close down from 31.3.2002 under Section 25-0 of the ID Act 1947.

LPF (DMK’s union), MLF, ATP, NLO, and two other unions openly supported the management’s application for closure. CITU abstained like the BSP and TMC did in the voting on POTO in the joint session of the parliament. AICCTU, AITUC and WPC opposed the closure. They pointed out that if the govt. does not pass orders on the application seeking permission for closure within 2 months i.e., by 28.2.2002, under Sec 25-0(3) of the ID Act it would be deemed that permission is granted by the govt.

In the meantime, AICCTU organised a programme to court arrest. The Labor Secretary was summoned by the then Labor Minister Anwar Raja, of DMK, and the file was handed over to the Minister. The Minister of Labour slept over it and did not pass orders up to 28.2.2002. The management sent individual letters after 28.02.2002 that the company’s closure has been allowed by the government and hence the services of all the workers will come to an end from 31.03.2002. Now it was the turn of WPC to remain absent. AICCTU and AITUC moved the High Court and sought an injunction against the controversial closure which is a deemed closure as the government abdicated its powers to pass an order within 2 months to favor the management and to refer the issue of justifiability of closure before a court of law. After a bitter legal battle, we have succeeded in getting an injunction against the closure, and now the government has been ordered to refer the issue of closure for adjudication and the labor Court has been directed to pass an award within 2 months, with a rider that closure will come to effect after 2 months of reference if no award is passed within this period. Now the whole legal relief is applicable only to the members of AICCTU and AITUC and all other TUs stand exposed as collaborators of the management. AICCTU will fight the battle to the finish.

Compensation to the workers of sick and closed industries –
Yet another success

AICCTU IS the only union in Tamil Nadu that keeps the issue of compensation to the workers of closed industries alive. Due to AICCTU’s struggles workers of the closed units got a monthly relief of Rs.250. On Jan.2, AICCTU organised a struggle throughout TN on three demands of these workers:

1. Enhance the monthly relief to Rs.1000/- and remove all conditions;

2. Formulate a policy, create a fund, and form a department for rehabilitation; and

3. Waive interest of the loans of the workers’ co-operative society as was done in the case of farmers.

Now the State Govt. has issued a G.O. forming Advisory Councils in all the districts other than Theni. These Advisory Councils will be headed by the Collector, and MLAs, MPs and TU representatives will be members. AICCTU is in the Advisory Councils of Tiruvallore and Kanchipuram districts. The next sitting of the Tiruvallore Council will be held on 26.04.2002. On that day the workers of the sick and closed units under AICCTU leadership will lay siege on the council on the three demands, demanding that the government find solution to the issue of closed and sick units.

Workers’ takeover of an industrial unit

UNIPRO IS an automobile-servicing factory in Chennai. The management closed down the industry. The owner of the premises in one unit evicted the workers. Now more than 150 workers are running another unit on their own in an organised manner and are sharing the proceeds.


THE PARTY and the TU had to deal with the issue of all-pervasive industrial sickness in Ambattur Town. We did not prepare ourselves adequately for the bad times. When the going was good, when so many units/unions were coming to us we were quite happy. Slowly but steadily our union activities got institutionalized. There were many settlements. We had the largest number of disputes before the concerned Conciliation Officer. But gradually we were getting isolated from the workers. Our activities were becoming more and more office-centered. We were making more efforts for mobilizing the workers in general democratic struggles, but we were hesitant and reluctant to wage struggles at the unit level. These led to bureaucratic distortions, which in turn, compounded our problems.

It is in such a background that we failed to see the unfolding scenario of all-pervading sickness and its impact. Our work had reached a saturation point and unless we radically changed our ideas, style of work and method of organization, we would be at the end of a blind alley. Party’s election work, and the Strengthen the Party campaign helped us to wake up to the reality of our narrowness of activities and to change the direction of our work.

Sometimes earlier the local Party had launched a campaign on Development and Progress of Ambattur and the welfare of its people. Many demands of this campaign were incorporated subsequently by all the major parties. But when we were demanding progress and development, the industrial town was dying. It is true that sickness and resultant unemployment are natural under capitalism and we cannot approach the issue of sickness from a social democratic point of view and advance the slogan of “Save Industry”. But still in the interest of the broad masses of the working people, we are duty bound to fight for progress and development. We cannot remain silent spectators and simply say that so long as capitalism is there, these problems will be there and that the only way out is socialism. This situation indeed calls for our serious efforts to propagate socialist ideas. At the same time we should seek for some reforms and fight for them in a revolutionary way. Easier said than done. Again, many an ideological pitfall await us. All the same we will have to seek the intervention of the govt. in the interests of the working people. We can demand the govt. to declare Ambattur as a backward area, so that it could attract new industries through concessions. We can further demand that the workers, who had already lost employment here and the local youth should get a priority in any future industrial employment in this area.

When we started narrating and articulating the tale of this town, we found that it touched a sympathetic chord in all sections of the people. This campaign on the issue of sickness of this industrial town is bound to attract newer sections, help us in reaching out to different areas and to enhance our profile. Of course, this will also serve as an anti-dote to narrow trade unionism.
On the question of sickness, in spite of our repeated efforts in taking initiative at the individual factories and at the general level, we find it hard to advance the issue as a movement. The question of a movement on sickness hinges heavily upon the question of cadres in these factories. In the initial stage, one gets a good number of cadres but as days become weeks, months and years, it is very difficult to find cadres for a general movement, leave alone struggles at the factory level. This is not to say that these workers are unfit for struggles. We will have to combine various methods and struggles to reach out to these workers and pay conscious attention to develop class vanguards from out of these workers. We feel that the question of sickness can be raised to the level of social issue, when we link it to the question of development and progress of the town and the welfare of its people.
When smaller units are closed just like that and workers are sent out with a pittance, our general workers’ union cannot keep quiet. Though it might not be possible for reopening these units or getting reinstatement, we must fight and get a reasonable compensation. Necessarily the workers should assert in a militant manner in good numbers to achieve this. The numbers and struggle forms should help us in dictating terms. For this, a new type of solidarity council of the workers will have to be built. Our youth and student organizations should be made to join the battle.

When the industrial town is getting sicker by the day, the interesting development is the employment of 70,000 women workers. Because of the general sickness, and because of the failure of earlier attempts to launch unions, these women employees are apprehensive to join any union as on date. Here we will have to create a space by which we will have to make them realize the necessity of struggle and organization. Towards this end we will have to reach out to these women workers in their residential areas. We will have to step up our propaganda and cultural efforts.

Our TU has dealt with the cause of many thousands of workers and they have a warm regard for our TU and Party. The general public feel that we alone champion the cause of the working class in an honest and serious way. Now it is time for us to reach out to the broad masses of this town and tell them, “We are here to champion the cause of progress and development of Ambattur and the welfare of its people.” This will definitely help us in getting out of our narrow confines and to find a political space for us.