India Food Strike, Fatal Riots Hobble Push to Export Auto Parts

[FarCenter]

Nov. 13 (Bloomberg) -- Prem Kumar’s demand for higher pay and better food at the cafeteria at the auto-parts factory where he works near New Delhi forced General Motors Co. and Ford Motor Co. to shut three plants on the other side of the world.

The strike Kumar led at Rico Auto Industries Ltd., coming after managers were beaten to death in labor disputes at two other partmakers, may derail an Indian government goal to boost components exports about sevenfold to $25 billion by 2015. One global automaker already is reviewing plans to source as much as $3 billion in parts from India and may instead buy half from China, said Vikas Sehgal, a Chicago-based partner at Booz & Co. He declined to name the company, which is his client.

“People are suddenly looking at India with an eye of suspicion and concern,” he said. “When a single company’s strike jeopardizes the global value chain, the country suffers in the long run.”

GM, Ford and other automakers have increased their parts procurement from India and other emerging markets to lower costs. India’s overseas sales of components grew 10-fold in the past decade to $3.6 billion in the year ended March 2008, according to the Automotive Component Manufacturers Association of India.

Labor costs in India are a tenth of what companies pay in the U.S., and raw material costs are lower by 11 percent, said Puneet Gupta, an analyst at CSM Worldwide Inc., an industry consultant. That’s prompted Hyundai Motor Co. and Suzuki Motor Corp. to open plants in India to export cars.

“India’s biggest advantage is cost, especially labor costs,” said Koji Endo, managing director of Advanced Research Japan, a Tokyo-based equity research company. “Good quality parts can be made cheaply.”

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[thunder rising]

1. See if we give up food, shelter and healthcare we can have our jobs back

[madrchsod]

3. you forgot....osha and the epa.

[madrchsod]

2. there was dried blood on some parts imported from india.......

along with insects,dirt,oil,and something that caused rashes.....but the cost per unit is the cheapest in the world!

[blindpig]

4. Capitalism is a monster

When humans are nothing but a cost of doing business, this is the kind of filthy logic which ensues.