China's SAIC to take control of GM's Halol unit on May 1

On May 1, US-based car maker General Motors’ Indian subsidiary would sell its Halol (Gujarat) unit’s assets to China’s Shanghai Automotive Industry Corp (SAIC) for an undisclosed sum but sans the 625 workers there. 

Multiple sources confirmed that GM India and SAIC had entered into such an understanding. The Chinese buyer is not ready to absorb the current set of workers. GM India formally announced this week that it would cease production from April 28. It is a part of its plan to consolidate manufacturing at its Talegaon (Maharashtra) factory. 

A GM India spokesperson in an email said, “We continue to work towards the sale of the plant. We are working with our employees on transition arrangements, and continue to work with the government to secure the necessary approvals. We are working towards an asset-only sale.”

In an earlier statement, Kaher Kazem, president and managing director of GM India, had said the company would support its employees at Halol through the transition. “We have in place the options of a significantly enhanced separation package or continuity of employment at our Talegaon plant,” he’d said on Tuesday. 

GM has already transferred around 300 workers to Talegaon. For the remaining ones, it is offering a choice between a voluntary retirement scheme (VRS) and accepting a transfer to Talegaon. Senior officials in the state labour department say that apart from the legal requirement of severance pay, which includes around a month’s salary for each year of service, the company’s VRS scheme for permanent employees has 100 days of salary for each year of service. “This works out to Rs 12-13 lakh per worker. However, as the average age here is 35-36 years and they have many years of service left, they are not keen to accept the VRS,” explained an official. 

The average salary of the permanent workers is Rs 28,000-30,000 a month at Halol. If they accept a transfer to Talegaon, they would get a salary rise of Rs 12,000 a month, say sources. “This apart, there is an ongoing wage negotiation at Talegaon, which could eventually enhance their monthly salaries to around Rs 50,000,” said a labour department official. 

Worker sources, say the VRS offer is beneficial for managerial cadre employees, not workers. “SAIC would be making cars here; then, why not retain the old workforce. They would need more than 625 people to run the plant,” complained a senior worker at Halol, who did not wish to be named. All contractual workers are anyway gone by now.” 

He added that despite several requests for a meeting with the SAIC management, they hadn’t responded. The workers want to take the issue up with the state government and have made several attempts to meet the chief minister in Gandhinagar, with no success. “We want to question the government — how can they give a nod to a deal where the acquirer is not absorbing the work force?” said a staffer. 

Sources in the state bureaucracy who are monitoring the developments said no acquirer is bound by law to absorb the current set of employees. “It is a matter of choice. They (SAID) might (then) just ask the workers to leave, offering a basic severance package,” said one. 

The official added that GM had set a deadline of March 14 for workers at site to accept the VRS or not. The company might issue transfer orders in lots of 50-60 workers after the deadline. Being an election year in the state, worker lobbies are trying to put pressure on the state government. Interestingly, the plant made 130 cars (Tavera and Cruze) on Wednesday.