Case Study

Industrial Relations

Company
Arvind Aircraft Ltd. was established in June 1978 at Industrial zone of Kanpur. The basic
motive of opening this plant was to match the demand of ever growing aircraft industry.
The company has an enviable track record and reputation as a good paymaster
with liberal perquisites and benefits to its employees. The company, which has
enjoyed the benefit of stable and committed manpower for a long time

Products manufactured:
Aircraft
Fighter aircraft
Helicopter
Spares

The company started operations in Dec. 1978 and had been growing consistently since
then. It had state of the art facility of manufacturing, assembly, testing and overhauling of
different types of aircrafts and helicopters. It had design, process planning, scheduling,
and tool design departments, which were indirect departments* while direct
departments** are Sheet metal shop, machine shop, sub assembly, final assembly, testing
shop and flight hanger.

*Indirect department: Supporting departments not directly with shop floor.

**Direct department: Shop floor

Fact Sheet:
Nearly 4200 workers and 800 officers were working in the organization.
Two shifts were operated to achieve the target
The targets were set by the top management at the corporate office.
The corporate office of the company was at New Delhi
The plant was located at Kanpur.

This year top management at the corporate office gave the target of manufacturing 12
aircrafts and deliver to the customer by the end of the financial year. Manoj Kumar was
the GM of the company and there were four AGM’s who were heading the different
department such as Assembly, Manufacturing, Design and Projects and they were the part
of the management.

Employees Union & Officers Association:

There was an employee union and officers association which was the body for taking care
of the interest of workers and officers respectively.

Union members:
The employees union had a total of eight executive members. One secretary, one
president and the remaining six were head of different committees such as treasury
committee, welfare committee, cultural committee, co-operative society, sports
committee and employees club. Every worker of the organization was the member of the
employees union.
Union election:
All the eight executive members were elected in every two years and all the members had
the right to vote in the election. Rajesh Tiwari was the secretary and Atul kulkarni was
the president of the company’s employee union.
“Raj Tiwari was one of the oldest members of the union. Apart from it, he was related to
a local political party and even he once contested election for ward member in local
municipal corporation election. Even he was arrested once for his connection and
political activities”.
“Comparatively Atul Kulkarni was more submissive and sincere towards union working
affairs”.
 The active members of the officers association were elected by top management.
There was a harmonious relationship between workers and officers in the plant as well as
in the township. All the festivals and cultural activities were celebrated together and
organized by both the employees’ union and the officers’ association. This was the
culture which was a normal routine in the company premises.

Unfortunately this Diwali, an acrimonious relationship between both came out

when they celebrated Diwali separately. The officers celebrated Diwali at the officers
Club while workers celebrated their Diwali at Community Hall. There was a silence on
both parts. Neither was ready to understand the issue nor were they interested in
discussing the issue with each other. The most obvious reason for such an attitude of the
union was that production bonus on the eve of Diwali this year was not evenly distributed
to the workers as compared to the officers. There was a huge difference in the production
bonus this year if we compare with the last 5 years bonus of workers vis-à-vis officers.
The production bonus for the last 5 years for workers as well as officers has been shown
in Exhibit –1.

Company targets & working ambience

It was the month of November and the company was not able to hand over the 6th
aircraft to the customer while for the entire financial year the company has to supply 12
aircrafts to the customer as per the set target.

The management was very much worried about the current production and
pressure was also continuously coming up from the CMD of the company to speed up the
production process. The production process could not be speeded up due to low moral
among the workers as the workers received less production bonus on the eve of Diwali as
compared to the officers. In reality this resentment was growing among the union
members. Thus there was a strong resentment among the workers and they had slowed
the process of production in their respective shops.

GM was called to the corporate office by the CMD D.P. Das on immediate notice
for the current status of the production. When he came back from the corporate office he
immediately called a meeting of the management and discussed the problem with the
AGMs about the aggrieved situation. The AGM (Manufacturing) apprised the situation to
the GM and other AGMs and suggested that this issue could be resolved only by the
intervention of President and General Secretary of the Employees union. By
understanding the grave scenario at the company, he kept a meeting with the general
secretary and president of Employees union.

The meeting started in the morning 8 am and all the AGM’s were also present in
the meeting.

Conversation:
GM: You all know that we have to deliver the remaining 7 aircrafts till march

and we have given only 5 aircrafts in eight months till now.

Gen Secy: What can we do in that. It’s management problem.
GM: I know the way the production is going on at the shop floor; we will not be able to
achieve the target for this financial year. So we will have to speed up our
production process.
President: (Interrupted): All workers are doing their job duties
AGM (Assy): But we are not getting the components for assembly because
manufacturing shops are not giving the parts on time as they used to give
earlier
AGM (Mfg): This is true what AGM (Assy) is saying. Every year production process
used to pick up the speed after Diwali but this year situation is totally
reverse.
Gen secy: You know the condition why all the workers have resentment. You
had promised to dole out the production bonus better than the last year. But
this year, forget about better, you have given even less amount
compared to the last year
President: You had also committed the promise that washing allowance, canteen
allowance, TD allowance and LTC allowance for workers would be increased
and would be at par with officers but nothing was done in these regard.
GM: Nothing is in my hand; everything is decided by the corporate office. You will
have to work hard from here otherwise management can take strong actions
against the workers who would be found not working their duty in duty hours

Consequences
As soon as GM came in threatening mode, both Gen secretary and President came
out angrily and went to the plant canteen and called their other six executive members of
the Employees union. It was the time of tea in the evening, thus many workers were
already having tea at that time. They started discussing with their members about the
meeting and told them the intention of GM towards the workers. As many workers were
also present there they also heard the developments. Since both Gen Secy and president
were employed in the sheet metal shop, they went there and started shouting “Stop
Work” and “Tool Down”. All the work in the sheet metal shop became standstill and
workers also joined with the president and Gen Secy in this bandwagon. In the mean
time, the news about the meeting and threatening by the GM broke out in each shop floor
like a fire in the jungle. Next day onwards all the shop floor stopped the work one by one
and the president of the Union declared the indefinite strike in the plant and said that until
all their demands are met the workers will not resume their work.

Two days passed and there was no response from the management side. Every
day workers used to come to the plant and they spent their duty hour by playing cards,
gossiping and protesting against management. One morning, the engineer, who was in-
charge of machine shop found that the lathe machine (cost around 25 lakhs) was in
destroyed condition. He immediately reported to the AGM (manufacturing) about the
incident and AGM (mfg) suspended the person who was working on the lathe machine
without incorporating domestic enquiry.

This move further worked as a catalyst in the agitation and workers made a
‘gherao’ of the GM. From this incident, the workers got more annoyed because the
suspended worker did not break the lathe machine. It was a mob of workers from the
machine shop, which actually broke the lathe machine. All the workers gathered at the
main gate and did not allow any officers to enter into the plant premises. This information
went to the corporate office and the development of the situation was asked from the GM
by the CMD. Having seen this grim situation, the CMD sent Director (HR) to the Plant
and told him to resolve the problem as soon as possible. Immediately GM decided to call
another meeting with the union representative in the presence of Director (HR) and asked
about their demands.

President of the employees union mooted all the demands which he has dealt in
the previous meeting with GM along with the restoration of that employee into the work.
Director (HR) made a promise that in the next pay the workers will get additional bonus
and other allowance would be revised soon. He also ordered to take back that employee
with immediate effect. But he also made a proposal that all the workers would have to
work in 3 shifts and overtime to meet the schedule on time. For that they would be paid
extra amount. President agreed to the demands of the Director (HR) and getting the
assurance by him, the strike has been called off and all the workers resumed the work
happily.
Case Analysis:

After analysis we found that there was a problem from the management side as well as
from the worker side. First, the management specially made many promises with the
employees union but did not fulfill those promises. This led to the creation of bitter
feeling among the workers against the management. The workers were motivated because
of the promises made. Now when the management did not fulfill those promises, it gave a
big jolt to the workers aspirations. Even in such moments management should come up
with some exceptional ideas to motivate the workers. In a manufacturing unit, the most
difficult part is to get the workers moving. Thus from the beginning the management
approach should be to contain the resentment among workers rather than to let it spread.

Second, without knowing the fact that which worker has spoiled the machine, the
management suspended the person who was working on the machine. The management
should have set up disciplinary enquiry before such a stern action and waited till the
results of the enquiry come.

Thirdly, GM should not have given a threatening warning to the employees without
considering the consequences of the warning.

From the union side, the union should put forward their points before going on
“working slow” mode. In the first meeting with the GM, the president and Gen Secy were
also in offensive mood. They did not consider the problems of the management but
discussed only about their demands.
 Before going on strike, they did not give 15 days notice period to the management
but next day after the meeting they went on strikes. This also aggravated the situation and
made the management to take hard steps against that employee.

Exhibit 1:
Workers’ Production Bonus

Sr. Scale Production Production Production Production Production

No. Bonus (Rs) Bonus (Rs) Bonus (Rs) Bonus (Rs) Bonus (Rs)
Year–2002-03 Year–2003-04 Year–2004-05 Year–2005-06 Year–2006-07

1 S-1 to S-3 7000 8000 8800 10000 8000

2 S-4 to S-6 9000 9700 10650 12200 10500

3 S-7 to S-9 12000 12950 13850 14900 13400

Officers’ Production Bonus

Sr. Scale Production Production Production Production Production

No. Bonus (Rs) Bonus (Rs) Bonus (Rs) Bonus (Rs) Bonus (Rs)
Year–2002-03 Year–2003-04 Year–2004-05 Year–2005-06 Year–2006-07

1 E-1 to E-3 15000 16500 18000 19600 22000

2 E-4 to E-6 17000 18400 20000 21700 24100

3 E-7 to E-9 18800 21000 22700 24600 27500