Bajaj reverses ‘final’ decision to shut down Akurdi plant

In a surprise turn of events, the country’s second largest two-wheeler manufacturer, Bajaj Auto Ltd today said that its 45-year-old mother plant in Akurdi “has not and is not being shut down...

In a surprise turn of events, the country’s second largest two-wheeler manufacturer, Bajaj Auto Ltd (BAL) today said that its 45-year-old mother plant in Akurdi “has not and is not being shut down” and all the workers are reporting to work six days a week as per normal routine. The decision comes barely a day after company managing director Rajiv Bajaj had said that “he will not bow down to any pressure and the decision to close down the Akurdi plant is final”.

Bajaj also clarified that there has never been any discussion internally or externally to use the land at Akurdi for any purpose other than automotive business, refuting reports that the company might sell the land to real estate developers or develop an IT park itself. Today’s announcement is in stark contrast to Bajaj’s earlier proclamations over the last 10 days and a clear indication that the state government’s attempts not to let the Akurdi plant close down have succeeded.

The company had earlier stated that the Akurdi plant would be completely shut down from September 1 and only component production for supplies to other plants would continue. The workers were being paid five and a half day’s wages per week but after the labour unions’ objection to the closure, the state government had intervened. The company had categorically cited “government policies on capacity rationalisation, chiefly the regional distortions created by inconsistent tax benefits, and the continuing evil of octroi in the state” as the reason for closing the plant.

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While it is not clear whether the state government has made any offer to incentivise production or do away with octroi, the company had declared after a meeting with minister for agriculture and consumer affairs, food and public distribution Sharad Pawar that the workers would be paid wages for six days a week instead of five and a half as decided earlier.

Further, Bajaj Auto had offered three options — jobs for all workers in its dealer network across the country, employment for children of displaced workers in the Chakan plant and a voluntary retirement scheme — at Saturday’s meeting. Even then the talks were inconclusive as the state government wanted the plant to be restarted at the earliest. Pawar is expected to hold another round of talks later this week.

The Akurdi Diary

July 12 Bajaj Auto MD Rajiv Bajaj first hints at a possible plant closure at the AGM. Reason cited: it was not price competitive

August 29 Bajaj announces closure of plant from September 1. No VRS offered but workers to get wages for five and a half days a week

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August 29 Octroi and high sales tax cited as reasons for Bajaj’s decision. The Akurdi plant does not get any tax incentive unlike other Bajaj plants

Sept 8 Unions cry foul alleging non-involvement. State government intervenes and wants plant to be restarted but talks are inconclusive. Company offers VRS, alternate jobs to workers

Sept 9 Rajiv Bajaj refuses to bow down to pressure. Says “no going back on Akurdi plant closure”

Sept 10 Company buckles under pressure. Says “plant not being shut down and workers are reporting six days a week”