September 23, 2008

Some Indian speed bumps on road to globalization

CEO murdered; Tata strike puts Nano on hold or nobody

As standards of living rise more in developing nations, their workers want more of the pie.

In India, that includes murdering a CEO who had apparently read one too many pages from Phil Gramm’s economics textbooks:
Lalit Kishore Choudhary, 47, the head of the Indian operations of Graziano Transmissioni, an Italian-headquartered manufacturer of car parts, died of severe head wounds on Monday afternoon after being attacked by scores of laid-off employees, police said.

Employees had long been demanding better pay and permanent contracts.

Meanwhile, at Tata Motors, the new owner of the Jaguar and Land Rover brands, the company had to stop work on its planned new Nano car, tentatively priced at below $3,000. Tata said it could not guarantee worker safety at its plant in West Bengal due to protests.

Not to condone any such violence, let alone murder, but there are a couple of things to note:
• That’s what Western companies get by being oriented to the lodestone of globalization. Once you outsource operations, let alone sell brand names, it’s tough going back. And, no, countries like Vietnam aren’t realistic alternatives. They don’t have the infrastructure to compete with India or China, and in today’s world of high prices for oil, concrete and steel, it’s simply not realistic to believe they can ramp up that quickly.
• Re India in particular, it is the world’s largest democracy. And, it has a British-derived history of trade unionism that communist countries don’t. You’re going to get protests that China won’t allow.

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