Toyota Kirloskar Motors: Labor Unrest and Crisis
Management
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Author: K R Radhika, Pravat Surya Kar
Pub. Date: 2023
Product: Sage Business Cases
DOI: https://doi.org/10.4135/9781529611724
Keywords: crisis management, labor, workers, India, management, stakeholders, organizations, students,
automobile industry, employment relations
Disciplines: General Business & Management, General Business & Management, Business & Management,
Human Resource Management (general), Human Resource Management, Managing Conflict
Access Date: August 23, 2023
Publishing Company: SAGE Publications: SAGE Business Cases Originals
City: London
Online ISBN: 9781529611724
© 2023 SAGE Publications: SAGE Business Cases Originals All Rights Reserved.
Sage Sage Business Cases
© Radhika K R and Pravat Surya Kar 2023
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Abstract
This case describes the background and fallout of a takt time revision at the Toyota Kirloskar Motors
(TKM) Limited Bidadi plant, Karnataka, India. Takt time is the rate at which products are manufactured
to meet customer demand. In the context of TKM, takt time indicates the number of minutes required
to produce each car. Toyota Kirloskar Motors is a joint venture between Toyota and the Kirloskar Group
in India and is a major player in the Indian automobile market, which is the fourth largest in the world.
The management of TKM decreased takt time from 3 to 2.5 minutes to meet market demand through
increased efficiency, which led to worker unrest. The worker unrest at TKM is common in the automo-
bile industry in India. This case study presents the perspective of both the workers and the manage-
ment about the current labor unrest, the Toyota Production System, and the work culture in India. The
case considers how, if the disruptions in production owing to lockout continue for an extended period,
this would impact the interests of the investors, workers, and management. Students will be asked to
analyze labor-management challenges and their complexities in the automobile industry in India and
to prepare an interactive plan for managing takt time revision.
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Case
Learning Outcomes
By the end of this case study, students should be able to:
• analyze the impact of organizational issues on stakeholders in the given case;
• describe labor-management challenges and their complexities in the automobile industry in India;
• evaluate the pros and cons of the interactive planning process in TKM; and
• prepare an interactive plan for managing takt time revision.
Toyota Kirloskar Motors: Labor Unrest and Crisis Manage-
ment
The labor minister of Karnataka said, “I always work for the interest of laborers and defend their
rights, but I also wish to remind (the workers of Toyota Kirloskar Motors, or TKM) of their responsi-
bilities. This strike was triggered by ego.” The Economic Times (Balasubramanyam, 2020)
Down! Down! Toyota management sees its workers as enslaved people echoed through the streets
outside TKM’s manufacturing unit in Bidadi, Karnataka. TKM’s management maintained that the
protest was illegal, and workers continued to question their right to dissent while the state govern-
ment tried to resolve the stalemate. The News Minute (Suresh, 2020)
Introduction
On December 27, 2020, the Toyota Kirloskar Motors (TKM) Limited’s Bidadi plant near Bengaluru, Karnataka,
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in southern India, had been under lockout for about one-and-a-half months. Toyota Kirloskar Motors and the
auto industry in India have historically experienced sporadic instances of short labor unrest (Appendix 1).
However, the current episode of unrest was unusual because the management of TKM and the workers—rep-
resented by the TKM Employees Union—were not willing to talk to each other. Several rounds of mediation
by the state government had proved futile. Hence, the stalemate stretched indefinitely. Management had im-
posed the lockout because 3,500 of its workers had gone on strike (Mirror Now, 2020)
The apparent trigger of the unrest was the revision and reduction of takt time—the time required to produce
each car unit—from 3 to 2.5 minutes. Takt time is the rate at which products are manufactured. It is a word of
German origin that means “beat” or “pulse” in music. In the context of TKM, takt time indicates the number of
minutes required to produce each car. Management introduced the revision to improve production efficiency
and meet market demand. Implementation of the revised takt time led to worker dissatisfaction because it
increased the workload. Earlier, whenever there was a reduction in takt time, management would deploy an
enlarged workforce. If, however, workers resented the revision or the number of defects increased concomi-
tantly with the workload, disciplinary actions against workers occurred. Collectively worker dissatisfaction led
to agitation and culminated in the management’s decision to impose the lockout. As the lockout and the unrest
continued, TKM investors became restless (Sharan, 2021). Hence, TKM management was under pressure
to resolve the issues with workers quickly and devise a process for mitigating the possibility of future strikes.
The challenge was how to achieve the above-stated two objectives.
Toyota Kirloskar Motors Limited
In 1997, Toyota and the Kirloskar Group entered into a joint venture to manufacture and sell Toyota cars in
India. In TKM, Toyota Motor Corporation, Japan, and Kirloskar Group, India owned 89% and 11% shares. At
the time, Toyota had more than 55 manufacturing units worldwide and successfully sold its products in 170
countries. In contrast to global giant Toyota, the Kirloskar Group was a household name in India with more
than a century of successful market existence (Toyota Kirloskar Motor, 2021). The company’s stated visions
were to “Win India, win the world,” and “Become the most admired manufacturer of ever-better units.” The
mission was “Enriching the lives of all stakeholders with safe and eco-friendly products” (Vision, n.d).
From its inception, TKM emerged as a significant player in the Indian automobile market (Table 1). Toyota
established itself as a premium brand in this competitive market and was known for its ‘Quality, Durability,
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and Reliability’ (Partners Groups, 2019). The TKM, Bidadi plant—35 km away from Bengaluru—occupied 432
acres and housed two manufacturing units, one for TKM and the other for Toyota Kirloskar Auto Parts. The
combined annual production capacity of the plant was 350,000 cars. In addition to those two units, the com-
pany had many subsidiary units that supplied the required materials and spare parts. In India, TKM was the
only car manufacturing unit of Toyota. Toyota manufactured most of its brands in this plant (Table 2), with the
exception of a few, such as Camry and Vellfire, which were assembled elsewhere. Toyota Kirloskar Motors
had around 6,000 employees, of which 3,500 were permanent and the rest contractual (Singh, 2021).
Table 1. Indian Automobile Market Overview
Market share Year on year growth
Passenger car brands Country of origin
(%) (%)
Maruti Suzuki India India 50 142.4
Hyundai Motor India South Korea 17.4 89.9
Tata Motors India 7.0 111.1
Kia India South Korea 5.8 106.4
Mahindra & Mahindra India 5.6 112.5
Renault India France 3.3 31.6
Toyota Kirloskar India Japan 3.1 127.6
Honda Cars India Japan 2.9 241
Ford India United States 1.9 87
MG Motor India UK 1.2 76.8
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Volkswagen India Germany 0.6 8.1
Skoda Auto India Czech Republic 0.5 −7.1
Nissan Motor India Japan 0.4 508.2
Source: Auto, 2021
Table 2. Toyota Car Brands in India
Brand Model Price range (INR lakh* )
Glanza Cars 7.34
Yaris Cars 9.17
Innova Crysta MPV 16.53
Urban Cruiser SUV 8.63
Fortuner SUV 30.36
Camry Hybrid 40.61
Vellfire Hybrid 89.89
Lakh, 100,000; MPV, Multi-Purpose Vehicles; SUV, Sport Utility Vehicles.
Source: Carwale, 2021
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Indian Automobile Industry and Car Segment
In 2020, the Indian automobile sector was the fourth largest in the world, after China, the United States, and
Japan. Approximately four million units were sold. Domestic production grew at a 2.36% compound annual
growth rate from 2016 to 2020 (IBEF, 2021). The sector contributed 47% to the country’s manufacturing gross
domestic product and 7.5% to the overall Indian gross domestic product. The sector, directly and indirectly,
employed 32 million people; it could become a global leader by 2025 (IBEF, 2021). Accordingly, the chief au-
tomobile producers—Maruti Suzuki, Tata Motors, Hyundai, Toyota, Mercedes Benz, and others—aggressive-
ly invested to attempt to gain an edge over competitors. Chinese automaker MG Motors and South Korean
automaker Kia had also entered the Indian market, owing to the market’s lucrativeness. Overall, this sector
attracted foreign direct investment of USD 24.53 billion between 2000 and 2020 (Economic Times, 2020).
The market share for passenger cars in India was 12.9% of the industry (the largest component of this indus-
try consists of two-wheeled vehicles). The Indian car market segment was valued at USD 30 billion in 2020
and is estimated to become USD 52 billion by 2026. Changes in lifestyle, increases in middle-class income,
convenient financial support, latest brands in the market, and designs contributed to the increasing demand
for passenger cars in India. Furthermore, the demand for fuel efficiency and increasing fuel prices paved the
way for electric and hybrid vehicles (Economic Times, 2020). Sport utility vehicles and multi-utility vehicles in
India were the fastest growing segment of the industry and one in every fourth car sold in India was either a
sport or multi-utility vehicle. According to forecasts, this market will grow at a 9.6% compound annual growth
rate between 2017 and 2030 (Goldstein Research, 2020).
The 2020 Labor Unrest—Workers’ Perspective
In the last quarter of 2021, industry forecast indicated that the automobile sector would recover post-Covid.
Hence, the TKM management decided to revise the takt time. The takt time was decreased from 3 to 2.5
minutes to improve productivity and benefit from the potentially favorable market conditions. So, the workers
who were manufacturing 300 cars per day in two shifts under the old (takt) time had to produce 360 cars un-
der the new takt time. It meant an increase in production without an increase in the number of workers. The
increased production targets with the same workforce led to a stressful working environment and resulted in
a larger number of defects in production. The larger number of defects in production, in turn, led to greater
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numbers of disciplinary actions against workers. Hence, the workers resented the changed takt time; they
also complained of more work hours and an insufficient number of breaks (Suresh, 2020).
In early November 2020, management suspended a few workers on disciplinary grounds. Hence, a group of
employees approached the management to discuss the production schedule, workload, and workforce man-
agement (Business Standard, 2020). Instead of discussing with the workers, management declared a lockout.
In response, the TKM Employee Union initiated the strike, citing issues they faced at work (Suresh, 2020).
There were no talks between labor and management, which prolonged the strike. Management claimed the
strike was illegal and announced an indefinite lockout (Business Line, 2020). Thus, the increased takt time
implemented by the management, without the workers’ consent, led to the lockout in 2020 at TKM, Bidadi.
Labor unrest at TKM was not a new phenomenon. The relationship between workers and management was
never smooth at Bidadi. The unrest had led to the formation of the TKM Employees Union in 2001 Associa-
tion, A. I, 2021 Since then, the union has taken up issues of wage revision, employee workload, and worker
suspensions due to disciplinary reasons (). Often those unrests were resolved via third-party (government)
intervention. Some experts believed that the implementation of the Toyota Production System in India was
the root cause of these unrests (Mohile, n.d.). Hence, the trigger was not the suspension of a few workers but
the Toyota Production System (Appendix 2) and organizational culture (Association, A. I, 2021).
The crisis impacted how TKM shareholders thought about the company and if they should sell their shares.
The major investors linked future investments in Toyota Bidadi to conflict resolution (Sharan, 2021). During
the crisis, TKM managed the production of 80 cars per day with non-striking workers (Suresh, 2020). How-
ever, another factor for investors to consider is that TKM and Maruti Suzuki have a cross-badging strategy;
that is, they use the same car platform to manufacture their cars with only minor differences between the
two brands. Maruti manufactured Glanza and Urban Cruiser for Toyota. Due to this alliance, 50% of the TKM
sales units in India were produced by Maruti.
The Perspective of Toyota Kirloskar Motors Management
From 2018 to 2019, manufacturers in the Indian auto industry experienced a decrease in demand and thus
financial difficulties (Financial Express, 2019). The economic fallout from Covid has only added to the crisis.
In uncertain times, auto manufacturers must align their production strategy. Accordingly, there was a need to
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improve operational efficiency and long-term business sustainability. One of the elements in this process was
reduction of the workforce via a voluntary retirement scheme for the employees (Mukherjee, 2021). Howev-
er, TKM management claimed publicly, while launching the voluntary retirement scheme at Bidadi, that the
scheme had no relation to the business situation (Financial Express, 2019).
In the last quarter of 2020, when the COVID-19 pandemic was in a lull, the auto sector experienced an in-
crease in consumer demand. Company sales were recovering, and demand was forecast to grow in the fol-
lowing year (Business Today, 2020). Thus, the company wanted to gear up production with enhanced produc-
tion efficiency. So, the takt time was revised to increase production, yet care was taken not to put workers un-
der additional stress. According to the TKM management spokesperson, the decision to increase production
levels was made with proper adherence to human capability and safety. Toyota Kirloskar Motors management
claimed to strive for a conducive working environment at all levels for their employees without compromising
health and safety.
In November 2020, the management suspended a worker (union member) who had a long record of mis-
conduct and a series of breaches of discipline within factory premises. He had a record of violating company
policy and rules, and hence was suspended pending an inquiry as per company policy. About 1,200 workers
opposed this action and sat outside the factory premises; management claimed this protest was illegal (Busi-
ness Standard, 2020). Hence, it stopped the operations in the plant and imposed a lockout. Subsequently,
another 39 workers were suspended, pending an inquiry, due to misconduct as the strike continued (Hindu,
2020).
Company officials approached the government seeking intervention to break the stalemate as the strike pro-
longed (Suresh, 2020). Following the government’s directions, management canceled the lockout on Novem-
ber 19 and invited the workers to resume work. A few workers resumed work. However, the company could
not start production because production could not run without at least 90% of the workforce. Thus, the lock-
out continued. Soon thereafter, a group of 400 to 500 workers barged into the factory, vandalized equipment,
and threatened workers who were willing to work. Management intended to fix all issues peacefully through
dialog, with mutual trust, following the law, but without compromising company discipline, rules, and policies.
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Managerial Constraints and Outlook of the Sector
The automobile industry in India was one of the primary drivers of growth in the economy of the country. The
sector was also an integral part of international value chains. The government of India supported the growth
of this sector. Furthermore, to meet future customer needs, such as electric vehicles, manufacturers must
maintain their position relative to competition. However, one bottleneck in the process was due to the adop-
tion of automation (Miglani, 2019). There was also a call for better labor management, and cordial industrial
relations were a prerequisite for the success of the manufacturing sector. However, industrial relations in India
had remained a problem. The labor unrest and violence, especially in the automobile sector, were hampering
manufacturer profitability and retarding the country’s economic growth (Ghosh, 2010). Appendix 3 lists vari-
ous general challenges that this sector faced in 2021.
Lastly, the practitioners and researchers from the development sector knew of, and confronted, the productiv-
ity gap between developing and developed countries. The productivity gap in the context of this case implied
that workers in the developed countries were more efficient than their counterparts from the developing world,
especially in the manufacturing sector. Researchers have reported that the productivity gap could be ascribed
to differences in work culture between countries, in this case between Japan and India, as summarized in
Appendix 4. Management tried to enhance productivity by applying quality improvement tools and methods
such as Kaizen and Lean Production. However, little was known about the effectiveness of these tools in in-
creasing productivity in developing countries (Hosono et al., 2020). Sometimes implementation of these qual-
ity improvement tools was met with resistance by workers owing to various misconceptions. In such situations
elsewhere, research has indicated the utility of interactive planning in resolving deadlock and evolving con-
sensus (Appendix 5).
Conclusion
Could a different planning orientation, which would introduce a change in the system, help management?
Specifically, how might the interactive planning approach be adopted to obtain better acceptance of the Toyota
Production System? Interactive planning overcomes the challenges in the execution process through coop-
eration in the ecosystem. All the actors of the ecosystem, considering their roles and responsibilities, set
goals in a control-free environment. Interactive planning could help attain organizational and personal goals
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and objectives more efficiently (Hosono et al., 2020). The Toyota Production System had been a time-tested
method across the globe. Why was this system failing at Bidadi? Do the key elements of this system—e.g.,
Just in Time and Jidoka—require a re-evaluation, with the cultural context in India better accounted for? The
pandemic had deteriorated the work environment, but was there something fundamentally wrong with TKM’s
planning and execution of the takt revision? Can the disruptions in production owing to lockout be allowed
to prevail over a more extended period? If the labor unrest continued over an extended period, how would it
impact the interests of the investors, workers, and management?
Discussion Questions
1. Who are the stakeholders of TKM, and who is responsible for the crisis discussed in this
case?
2. Why did TKM’s approach to increasing the workload fail?
3. What is the Toyota Production System, and why does it seem to fail in India?
4. Can you suggest an interactive plan to implement takt time reduction at TKM?
Further Reading
George, K. S. (2006). Labour practices and working conditions inTNCs: The case of Toyota Kirloskar in India.
In K.Das & K. S.George (Eds.), Labour in globalising Asian corporations a portrait of struggle.
George, S. (2014). Lockout at Toyota-Kirloskar: The future space for labour. Economic and Political Weekly,
49(17), 18–20.
Hofstede Insights. (n.d). Country comparison. https://www.hofstede-insights.com/country-comparison/in-
dia,japan/
Vision. (n.d.). https://www.toyotabharat.com/toyota-in-india/vision/
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