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Monday, September 24, 2007

Multi-Nationals in India- How's life? Part-II

Multi-National Corporations and India: Kabhi Khushi, Kabhi Gham
THE EMPLOYEES are having a nice time too, if truth be told. The slogan-shouting crowds have got it all wrong. The workers in the developed world are out of jobs, because their jobs have shifted to India and other developing countries. Yes, inefficiency, over staffing, time-pass at company’s expense has stopped. But what is wrong with that? We want a comfortable life, and we do not want to work hard for it? The world does not work that way any more (just look at communist China), and the MNCs have nothing to do with this change.
We ourselves have brought the Genie of job insecurity out of its bottle because we did not learn our lessons in time. As our scriptures tell us, when one avenues closes, others open. A Railway clerk’s son works with a call center that services an MNC. A VRS-after-30-years employee’s daughter works with a software MNC. Sure, it is hard to find work today because our population is bursting at the seams. However, if one re-trains for a new job and is willing to work hard, one need not remain unemployed. The MNCs are fast changing the lethargic work culture of India, and that is good for everyone. THE SUPPLIERS: A few are laughing all the way to the bank, others are crying. The good suppliers have to work harder and shed fat to remain viable –that’s good again – and the bad ones are being driven out very quickly. They in turn are trying to pull down the good ones by under-quoting, even taking a loss. Many vendor industries are busy cutting corner after corner, blindly copying, slashing prices, undermining competitors, never innovating, and still dying. This is a serious state of affairs, and will destroy many in its wake. THE PURCHASERS: Parallely, many MNCs have latched on to the typically Indian affliction of pulling appalling extents of credit out of the suppliers after mercilessly hammering them down on prices. 120 days’ and 150 days’ credit is unheard-of in the MNCs’ parent countries, yet they do it here with impunity. This is slowly emptying the working-capital base of the economy, but again, no one is bothered. The purchase guys, usually picked up from older domestic industries; bring all sorts of dubious practices into the purchase office, and though they can show quick gains, they actually harm their employer in the long run. The foreign-born (also Indian) CEOs of these MNCs often fail to keep a watch over employees harming the interests of the company, because “everybody is new and learning on the job!” THE FACTORIES: Nice-looking structures are coming up and all sorts of new technology is being brought in, but it is sad to watch the older domestic industry now bitterly pay the price of not investing in R&D during the post-imperial socialistic License-Permit Raj. Today, in just a decade of liberalization, the contrast between the factories of an old domestic and a new MNC manufacturing the same product has become horrendous. We wonder how such sordid junkyards passed as top-of-the-line factories just a few years ago, when we actually assumed that any factory necessarily had to be nauseatingly filthy! A very curious phenomenon is under way in very many MNCs’ factories: I see breathtakingly beautiful state-ofthe-art imported production machinery married to roadside-welder quality (say) conveying equipment bought from the proud local “atomization” guy. This conveyor has cost just (say) 4 lakhs against a landed price of 65 lakhs for an imported conveyor. It often breaks down. The VP Global Operations comes to India for a visit and disapproves of the monstrosity, then grudgingly acquiesces that it’s too late now. The CEO was influenced by the huge price-difference. A good, comparable-quality Indian conveyor would have cost, say, 12 lakhs – still a fraction – but its maker has long been pushed out of the market by the cheap welder. He has closed down his decent factory and started a fast-food joint. MNCs try and keep the initial investment abnormally low usually because of fickle Government policies. Also, foreign decision-makers usually know nothing of our industrial culture, and often make snap choices on inadequate information, then pay the price slowly. In stark contrast, try as you might in Europe, you simply cannot buy such trashy machinery! Soon a foreign conveyor manufacturer will walk in and our cheapo welder will “take” his agency! Another folly is going on too. MNCs who close their factories abroad and transplant the machines here try and play another self-defeating game. The original operators could diddle and run the aged machines somehow, and produce goods. The green Indian operators can’t get the hang of them. So the CEOs either try to foist the old machines onto even greener vendors, “You want business? Get this machine running at your cost!” Or they invite a few Indian “experts” to offer solutions, pit them against one another, and try and rip them off, so they can hog all the credit. This is Free Market at work in India! It’s not the MNCs who are destroying our entrepreneurship; it is our own guys who are merrily “taking the supari” for them. This is where we have failed as an emerging industrial nation, and very sadly, this scene shows no sign of changing.
Written By: Mr.Harshwardhan Gupta, is a graduate of I.I.T. Mumbai in mechanical engineering. He has been designing machines for the last 27 years. He founded Neubauplan Machine Design Studio, an independent consulting machine-design firm in 1981 in Pune. E-mail

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