September 26, 2024
📰 FEATURE STORY
Will the Samsung strike in Tamil Nadu dent the state and India’s image as a manufacturing hub?
Strikes by employees are quite common across the world. However, it’s not every day that one makes headlines. Workers at Samsung’s manufacturing plant in Sriperambudur near Chennai have been on strike for the past three weeks. They’re demanding better pay, working conditions, and union recognition.
The fact that this strike is happening in Tamil Nadu is notable. The state has projected itself as a haven for companies to set up shop. It’s part of the state government’s strategy to make it a manufacturing hub, much like what the Centre is working toward. Does this prolonged strike do anything to harm that endeavour? Will companies now think twice about investing?
Context
Tamil Nadu has worked towards becoming a manufacturing hub for several years. One Reserve Bank of India (RBI) study showed it had the highest number of factories in India. It’s famously known as the Detroit of India, thanks to several automobile companies who have set up their plants in the state.
The state government has worked toward securing investment deals with companies like Saint Gobain, Foxconn, and Godrej, to name a few. The latest in the line of companies is Apple, wanting to shift manufacturing away from China. Per Tamil Nadu Industries Minister TRB Rajaa, the state’s electronics exports in FY2023-24 were a record-breaking $9.56 billion.
Thanks to the Tamil Nadu Global Investors Meet (GIM) this year, the state has attracted some of the world’s top companies. It put on a show touting its business-friendly environment and schemes, skilled workforce, availability of land, etc.
In 2007, Samsung set up its manufacturing facility in Sriperambudur. It’s one of two of the company’s factories in India. The other one is in Uttar Pradesh. The Sriperambudur facility accounts for about 20-30% of the company’s annual $12 billion revenue in India. The plant has about 1,800 workers who make TVs, washing machines, refrigerators, etc.
On September 9, hundreds of workers went on strike led by the Samsung India Workers Union-Centre of Indian Trade Unions (SIWU-CITU), demanding higher wages and better working conditions. The SIWU was formed in July and remains unrecognised by the company. In fact, the SIWU’s formation coincided with the National Samsung Electronics Union’s protest in Seoul, South Korea, for better pay.
The CITU has over 6 million members and is affiliated with the World Federation of Trade Unions. They’ve previously focussed on automobile companies. Teaming up with CITU is seen by workers as a way to garner national support and have their voices better heard by Samsung. The company has its sights on electronics manufacturers like Sanmina and Apple supplier Flex.
The strike by Samsung workers is now one of the biggest unrests that have caused production disruptions at a foreign multinational company. The Centre has asked the Tamil Nadu government to resolve the issue quickly. The state and the Centre don’t want this to drag out further than it already has.
VIEW: Potential incoming damage
The labour strike has already made national and international news. The company and the government surely didn’t want it to become this big and be so prolonged. Yet, here we are. There’s a lot at stake for Tamil Nadu. Some estimates state that it contributes 34% to India’s electronics exports. A report by the Global Trade Research Initiative (GTRI) said this unrest has the potential to cast a shadow on the region’s manufacturing ecosystem. If the strike continues, GTRI predicts job losses, stalled development, and a significant decline in investor confidence.
The timing of the strike doesn’t do India any favours since it’s reviewing its free trade agreements (FTAs) with South Korea and ASEAN countries. If things escalate, the negotiations could be impacted. Tamil Nadu has dominated the manufacturing and electronics export landscape over the past several years. The longer the strike goes on, that’s now at risk. Companies like Foxconn, Flex, and Sanmina are surely keeping an eye on this matter.
The current strike evokes memories of Nokia’s downfall in the state a decade ago. It employed over 7,000 direct workers and 10,000 indirect workers. Its exports exceeded $2 billion between 2010 and 2013. However, tax disputes with the state government and mounting pressure from the union crippled the company’s operations. The plant closed in 2013. Apart from the resulting job losses, mobile manufacturing shifted to China. It was a blow to the state, and it could be deja vu.
COUNTERVIEW: Nothing more than a blip
The state government has assured workers that it prioritises employee welfare. Samsung clarified that it’s ready to address the demands of striking workers. The company has stated that it complies with all the laws and regulations of the state, and its wages are higher than what the government prescribes for the electronics industry. The company also signalled its intention to sign a long-term wage settlement with the workers.
If people thought that this strike would in any way hamper the state’s ability to attract investment, they might be wrong. As news of the strike began to make the rounds and take national notice, Chief Minister MK Stalin ended his two-week US tour and returned with investments worth over ₹7,600 crore from 18 companies. It included the likes of Apple and Google. One of the most notable bits of news here was Ford’s return to the state.
Overall, the investment deals are expected to generate nearly 12,000 jobs in regions like Trichy, Madurai, and Coimbatore – all important growing tier 2 cities. Clearly, companies and the government are bullish on the state’s prospects. The state has effectively advertised its infrastructure as world-class and labour as highly skilled. In an op-ed, Stalin touted the state’s commitment to diversity, equity and inclusion (DEI) with incentives to hire women, trans people, and persons with disabilities.
Reference Links:
- Samsung India plant workers in Tamil Nadu boycott work for better wages – Frontline
- Samsung workers in India continue their strike and demand recognition of union – People’s Dispatch
- Samsung Strike In Tamil Nadu Risks Repeating Nokia’s Decade-old Collapse – Business World
- Employee welfare top priority: TN minister on Samsung factory strike – Deccan Herald
- ₹7,000 crore deals, 11,516 jobs, and Ford’s comeback: What TN CM Stalin bagged from his 17-day US trip – Business Today
What is your opinion on this?
(Only subscribers can participate in polls)
a) The Samsung strike will dent the state and India’s image as a manufacturing hub.
b) The Samsung strike won’t dent the state and India’s image as a manufacturing hub.
Previous poll’s results:
- The first 100 days of Modi 3.0 have been successful: 44.4%
- The first 100 days of Modi 3.0 have been unsuccessful: 55.6% 🏆
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