Car production on Monday halted at Japanese auto major Toyota's twin plants near Bangalore, a day after the management declared a lockout over a failed wage deal with its employees' union.
"We have stopped production in both plants as a precautionary measure to ensure safety of machinery, employees and management personnel," Toyota Kirloskar Motor Ltd vice-chairman Shekar Viswanathan told reporters in Bangalore late on Monday.
The firm's Indian joint venture's plants are located at Bidadi, about 30 km from Bangalore. The plants have a capacity to roll out about 700 cars a day and 310,000 units annually.
"We have lost production of about 2,000 vehicles during the last 25 days due to go-slow tactics by a section of workers in both the factories," Viswanathan said, but did not quantify the loss in terms of revenue.
The union, however, termed the lockout illegal and said it was suddenly declared without the mandatory 14-day notice to employees and intimation to the state labour office.
"Lockout is illegal as management did not give the 14-day prior notice to us or informed the labour office in advance," TKM Employees' Union president Prasanna Kumar said earlier in the day.
In a statement from Tokyo, the automaker maintained that production in its Indian assembly plants were suspended due to threats against the management after efforts to reach a labour contract failed.
Meanwhile, talks among the management, union and the state labour department broke down late Monday as both management and union stuck to their position on the wage hike.
Both the parties have been negotiating wage hike and other demands, including work load and overtime allowances, over the last 10 months but have failed to reach an agreement.
"Though the management offered Rs 3,050 per employee for fiscal 2013-14 as against our demand for Rs 8,000 due to overall increase in cost of living and increased work load, we are open to negotiate for a mutual sum," Kumar said.
Toyota India revises wages every fiscal year beginning April unlike other firms that undertakes wage revision once in three years.
"We have revised our offer to Rs 3,050 from Rs 2,400 per month and are not in a position to give more as we are passing through a difficult period due to declining sales and severe impact from a steep depreciation in rupee against dollar on import of components for our range of models," Viswanathan said.
Of the 6,400 employees, 4,400 are permanent and 2,000 are on contract.
"One of the reasons for the lockout could be to reduce production and lower inventory, which has been piling up due to declining sale of vehicles rolled out of the plants," Kumar said.
The management gave Rs 4,000 increase per employee in the previous fiscal (2012-13).
The 16-year-old joint venture rolls out a range of models, including Innova multi-utility vehicle, Camry sedan, Prius hybrid, Corolla Altis, Etios, Prado and Land Cruiser, with some of them imported as completely built units.
This is the second time lockout was declared after 2006 over dismissal and suspension of some employees then.
Toyota holds 89% equity in the joint venture with the remaining 11 percent by the Pune-based Kirloskar group.