General Motors, the first automaker to set up a plant in Gujarat 21 years ago, shut operations at its Halol factory on Friday even as a stalemate continued over the future of 500 employees, who feel they have been “left in the lurch”.
The workers have been on a strike—”without affecting production”—for 35 days demanding that they be retained by Chinese automaker SAIC which will take over the plant.
“The consolidation of manufacturing at our Talegaon facility (near Pune) is an important milestone for GM India,” Kaher Kazem, GM India president and MD, said in a statement.
“That said, we are mindful of the impact on our employees at Halol. We have committed to support them through this necessary transition with generous separation payments or the option of continuity of employment at Talegaon,” he said.
The Indian subsidiary of the Detroit-headquartered automobile giant had in July 2015 announced the closure of the Halol facility by mid-2016, seeking to consolidate India manufacturing operations at its Talegaon plant near Pune in Maharashtra. However, it was decided to continue production till March 2017 to ensure an orderly transition for suppliers and other stakeholders.
SAIC, formerly Shanghai Automotive Industry Corporation, is likely to take over some of the assets of the plant, but the agreement did not mention the plant’s employees.
Workers’ union leader Ranchit Soni had earlier told HT that the “the new employer should not just take over assets, but employees also”.
“GM’s offers, including transfer to Pune plant or voluntary separation scheme (VSS), have not been acceptable to us. While at this stage of life, where the average age of a worker here is around 35 years, a relocation is not possible, the sum offered in VSS is also not satisfactory,” he had said.
After a few of the employees accepted relocation to Pune and many accepted the VSS -- worked out with a formula of 100 days of salary per year of service, uncapped -- around 500 workers were left without a job.
“We have been protesting, but silently by observing a fast. And, we have not let the issue affect the production in any manner,” the union leader said.
However, GM India’s Kazem said, “Since we first announced in 2015 that we would cease manufacturing at Halol, we have worked with all stakeholders to ensure a smooth transition.”
Kazem said a range of additional support measures had been put in place for both the employees who opted for the “significantly enhanced separation payments” and those who will be transferred, including tax and financial advice and pre-transfer visits to Talegaon.
GM India started making Opel cars at the Halol plant in 1996, and Chevrolets from 2003. The facility with an annual production capacity of 110,000 volumes was underutilised over the last few years due to its falling sales and failure to revive with no good product mix.
After GM CEO Mary Barra’s visit to India in 2015, General Motors last year pulled back its $1 billion investment in India and decided to consolidate its production at the Talegaon plant. The company said it will continue making cars at its Talegaon factory near Pune which has an annual capacity of 170,000 units.
The Chevrolet India-parent last month also signed a three-year wage agreement with 2,500 workers of the Talegaon plant. Under the wage pact for the period April 1, 2017 to March 31, 2020, the average salaries of the employees will go up by Rs 22,000 at the end of the period.
The closure of GM Halol plant comes against the backdrop of most automakers like Maruti Suzuki, Hero MotorCorp, Honda and Ford opening operations in Gujarat.