Federal-Mogul Corp. (USA) is seeking to lay off at least 600 workers from its Goetze plant in Bangalore, India. The company's Indian arm has filed for the needed permission from the government, but approval is not guaranteed. Goetze has already laid off at least 600 contract and temporary workers from the Bangalore plant; this layoff petition is needed because F-M now proposes to lay off another 600 or more full time employees.
In 2006, F-M bumped its ownership of Goetze India from 49% to majority in order to claim its sales as an owned subsidiary. Goetze India had employed approximately 1,900 workers primarily producing pistons, pins, and rings. It also produces sintered parts such as cylinder liners. But it is suffering along with other suppliers as the economic weakness spreads across India's automotive and industrial sectors. Goetze had been shut down for a week last November.
Goetze has gone to the workers' union with a proposal that the factory shut down to half time -- 15 days per month -- all the way through December 2009. The union immediately rejected Federal-Mogul's plan, which also would have required employees to give up all paid vacation days through the end of 2009. In a separate offer, Goetze proposed a retirement option, along with Rs 250,000 (USD $5,000) cash payout.
Beyond Goetze, F-M said it will probably ask for permission to lay off a third of its entire workforce across all plants in India.
A Federal-Mogul spokesperson said: "As a result of the current economic climate and the downturn in the automotive industry, Federal-Mogul corporation will be adjusting workforce schedules at its global operations to reflect the reduction in customer orders and the need to reduce costs. These schedule adjustments will impact employees in our Bangalore facility as the company streamlines operations and adjusts to the industry outlook."
However, the Punjab government has refused F-M's layoff petition for now. In India, layoff petitions are not approved strictly based on declining demand. Instead, there must be other factors such as excessive inventory buildup, a systemic shortage of raw materials, massive equipment failure, and/or a systemic fuel or power disruption.
The workers union claims Goetze is using scare and pressure tactics by seeking the 15-day-per-month work schedule. It claims Goetze simply wants full-time employees to quit so they can be replaced by lower-cost contract and temporary workers.
A final decision on the layoff petition is expected by early May.
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