Amid heated wage negotiations and alleged threats against management, Toyota (NYSE:TM) has temporarily idled two of its plants in India, shutting out 6,400 employees. Toyota India released a statement reading, “under the instigation of the union, certain sections of the employees have resorted to deliberate stoppages of the production line, abuse and threatening of supervisors.” It added that it had no other option but to declare a lockout “to ensure the safety” of workers and management, the Detroit Free Press reports.
Toyota spokesman Naoki Sumino said that there have not been any injuries or damage at its two plants, but the company is on high alert after riots in 2012 at automaker Maruti Suzuki killed a plant manager and injured many. That factory was closed for nearly a month, which analysts estimated cost the subsidiary of Japan’s Suzuki Motor Corp. about $18 million per day, the Free Press said.
The wage negotiations in question began nearly a year ago, and arbitration talks earlier this year fell through. The two plants, which are just outside Bangalore, have an annual cumulative output of 310,000 vehicles per year, including the Innova van, Fortuner sport-utility vehicle, Corolla subcompact and Etios models, according to the Detroit Free Press.
India is a hot market for Toyota, since China, a reliable sales stronghold for many manufacturers, hasn’t been the friendliest environment for Japanese automakers due to political tensions. Therefore, markets like India — massive populations with increasingly wealthy citizens — are especially important for Toyota to gain a toehold.
Toyota operates in the region through its Toyota Kirloskar Motor Ltd. subsidiary, which the Free Press notes was established in 1997 with Toyota owning an 89 percent share and its local partner, the Kirloskar Group conglomerate, owning the remaining 11 percent.
The labor unrest comes while Toyota has been ordered to pay a settlement of $1.2 billion in the U.S. to put to rest the legal claims stemming from the unintended acceleration crisis a few years ago. It’s one of the largest settlements of its kind, though General Motors might find itself in competition with it due to its current ignition recall debacle.