Foxconn India’s Plant Shutdown: Workers – Unions – Management Deadlock
“We are not able to give jobs to all the workers, since we don’t have orders... Since the management has declared a holiday for the factory, workers are asked not to come to the factory.”
- Foxconn Management’s Notice on Suspension of Production
“The Labour Department also asked them not to deny work to the employees, since it is against the law.”
- A Soundararajan, Honorary President, Foxconn India Employees Union
A Week after December 11th 2014
Locked factory gates, police forces and company security personnel deployed, protests, hunger strikes, union leaders’ speeches, workers trying to barge into the factory premises, arrests, groups of workers with a look of despair on their faces (Exhibit I) – this was the volatile and eruptive situation at the factory gates of Foxconn India in Sriperumbudur, Tamil Nadu, as the company announced its lockout from December 24th 2014.
The sudden closure of the Foxconn India’s plant created quite a stir in the region, involving the workers, trade unions, company management and the Tamil Nadu Government’s Labour Department. While the management insisted on keeping the facility closed citing the reasons of no production orders (from Nokia) and unnecessary costs, the trade unions quoted several reasons, including the illegality of the closure, for keeping the factory functional. Who was right/wrong in this scenario and to what extent? What are the relevant legal provisions (as enshrined in relevant Acts) applicable to either party in this particular case? Was there an amicable solution that could be applicable to this scenario under the purview of law and acceptable by both the parties?.........................
Foxconn
In 1974, Terry Gou established Hon Hai Precision Industry Company Ltd. (traded as Foxconn Technology Group (FTG)) in Tucheng, New Taipei, Taiwan. It was a vertically integrated manufacturing services provider and catered to the B2B market world-wide. With intent to supply electronic products at lowest-cost, it had partnered with global consumer electronics companies for joint-design, joint-development of products, manufacturing, assembly and after-sales services..........
Foxconn in India
Foxconn’s plant in India was incorporated in 2007. The Indian facility of Foxconn was engaged in the manufacture, processing and sale of connectors, cable, enclosures, wired/wireless communication products, optics products, power supply modules, printed circuit boards, telecom components and assemblies. Foxconn International Holdings India Private Limited (Foxconn), earlier known as Foxconn India Private Limited, operated as a subsidiary of FIH Mobile Limited (Exhibit III)..........
Nokia’s Closure – Foxconn India’s Loss of Business
On November 1st 2014, Nokia India Private Limited5 (Nokia) had shutdown its mobile manufacturing factory in the TSEZ at Sriperumbudur, Tamil Nadu. This came as a blow to all the big and small companies located in and around the TSEZ. Many of them were the VIs, component manufacturers and supporting businesses like logistic and packaging providers, etc...........
Foxconn’s Forced Closure?
By the end of the year, on December 11th 2014, Foxconn too followed suit and announced its plans to suspend its production. Foxconn, which had invested over $100 million6 in its Sriperumbudur plant, had decided to suspend its operations from December 24th 2014. “We can confirm that our India operation, FIH India Private Ltd., will be suspending all operations at our manufacturing facility in Chennai effective December 24,” said a company spokesperson...............
The Deadlock
After the talks failed to make any headway, and since the management was against allowing workers into the plant, on December 22nd 2014, Soundararajan along with the workers assembled in front of the Nokia SEZ and forcibly tried to open the chained gate. Nearly 250 workers along with the union leaders were arrested and released later that evening (Exhibit V)............
The Impact of Closure
An entire generation of workers had left their family vocations (farming, masonry, hair-cutting, carpentry, electrical, plumbing, etc.) to join firms like Nokia and Foxconn for a regular salary. Most of the employees had just completed their 10th or 12th standards before getting recruited in these factories. The closures resulted in loss of jobs and livelihood. For some of them, these closures meant loss of face.............
The Last Nail
The end of Foxconn in India might not have come as a surprise to many, as its fortunes were directly linked to Nokia’s business fortunes. Experts opined that, “With Nokia India’s shutdown, Foxconn did not have much of a choice.”..................
Assignment Questions
I. What were the contributing factors that led to the unilateral shutdown of Foxconn India’s manufacturing plant at Sriperumbudur? How did the shutdown disturb the manufacturing ecosystem in the TSEZ and the employment scenario in the region?
II. Was Foxconn right in announcing the closure from its business perspective as well as in the light of the provisions of the relevant and appropriate law? Or as the trade unions termed, was it illegal?
III. ........................
Exhibits
Exhibit I: Closure and Protests at Foxconn India
Exhibit II: Foxconn’s Global Presence
Exhibit III: Foxconn’s Holding Company
Exhibit IV: CITU Leader A. Soundararajan Addresses Agitating Foxconn Employees
Exhibit V: Face-off Union Leaders, Police and Foxconn Security Personnel and Arrested Foxconn Employees