Surya Nepal shuts down major garment unit
KATHMANDU, Aug 17:
In a major setback to the industry, Surya Nepal - a subsidiary of ITC Ltd, India - has decided to permanently shut down its readymade garment production, citing long-running labor problems.
The company was established in 2004 with an initial investment of around Rs 300 million and fast became the largest readymade garment manufacturer of the country. Its popular international brand John Players was well received in major markets like India, the US, Canada, France and other European countries.
Springwood, another brand of the company, was gradually becoming popular in Nepal. Annual turnover last year had touched Rs 1 billion.
The shutdown decision could instantly render 650 workers jobless. It will also affect another 1,400 workers who have been hired by other factories producing for Surya Nepal.
\"It was a tough decision, but continuing to manufacture in the present mess was impossible. So, our board decided on Tuesday to close down the factory,\" Ravi KC, managing director of Surya Nepal, told Republica.
The company has attributed its decision to shut down operations to ´irreparable losses´ emanating mainly from continuing labor stir which has left its production closed since three months. \"The closure prevented us from filling orders then. Now we have no orders from importers,\" said KC.
The factory had closed down production on June 15 after the labor agitation took a nasty turn, with workers locking up 37 members of the managerial staff. The management says workers threatened to harm the staff physically.
Like every other manufacturing unit, Surya Nepal has been suffering persistently from labor unrest ever since it came into being. But the situation worsened after the workers shut the factory for eight days from March 25, demanding a pay hike.
\"We were already paying our workers better. Even those paid the least were receiving some Rs 300 higher than the new government-revised monthly minimum wage. Those in the middle rank were earning Rs 15,000 a month, which is almost double what other factories pay,\" said KC.
Some 3,000 workers to lose jobs. Surya Nepal turnover in 2010/11 was Rs 1 billion.
Market share: 85% exports, 15% domestic consumption.
Workers were paid better than at other garment factories.
Even though the two sides agreed over the pay hike issue, tensions escalated after workers demanded pay for the strike period also when production was halted. However, management said it values the concept of ´no work, no pay´ and will not pay for days when production was shut.
KC said unruly behavior by workers has not only hit Surya Nepal but also eroded the credibility of the Nepali readymade garment industry as a whole. \"Unfortunately, this has happened at a time when demand was gradually increasing,\" he stated.
With its decision, Surya Nepal has become a fresh example of how ´militant trade unions´ have hurt the industrial sector and driven away investment. Multinational companies like Colgate Palmolive had pulled out citing similar reasons and security threats.
KC, however, did not disclose any divestment plans.
Interestingly, trade union officials said they did not believe the management will shut the factory permanently. \"It is just a ploy to lay us off and restart operations with fresh recruits,\" said Tej Lal Karna, member of All Nepal Trade Union Federation-Revolutionary (ANTUF-R).
Karna claimed that the company cannot shut down just because its board has so decided. \"It must first clear all liabilities as provisioned in the Labor Act,\" he stated.
Managing Director KC said Surya Nepal will start clearing its liabilities to all workers and laying them off from Wednesday.
Source: Republica
In a major setback to the industry, Surya Nepal - a subsidiary of ITC Ltd, India - has decided to permanently shut down its readymade garment production, citing long-running labor problems.
The company was established in 2004 with an initial investment of around Rs 300 million and fast became the largest readymade garment manufacturer of the country. Its popular international brand John Players was well received in major markets like India, the US, Canada, France and other European countries.
Springwood, another brand of the company, was gradually becoming popular in Nepal. Annual turnover last year had touched Rs 1 billion.
The shutdown decision could instantly render 650 workers jobless. It will also affect another 1,400 workers who have been hired by other factories producing for Surya Nepal.
\"It was a tough decision, but continuing to manufacture in the present mess was impossible. So, our board decided on Tuesday to close down the factory,\" Ravi KC, managing director of Surya Nepal, told Republica.
The company has attributed its decision to shut down operations to ´irreparable losses´ emanating mainly from continuing labor stir which has left its production closed since three months. \"The closure prevented us from filling orders then. Now we have no orders from importers,\" said KC.
The factory had closed down production on June 15 after the labor agitation took a nasty turn, with workers locking up 37 members of the managerial staff. The management says workers threatened to harm the staff physically.
Like every other manufacturing unit, Surya Nepal has been suffering persistently from labor unrest ever since it came into being. But the situation worsened after the workers shut the factory for eight days from March 25, demanding a pay hike.
\"We were already paying our workers better. Even those paid the least were receiving some Rs 300 higher than the new government-revised monthly minimum wage. Those in the middle rank were earning Rs 15,000 a month, which is almost double what other factories pay,\" said KC.
Some 3,000 workers to lose jobs. Surya Nepal turnover in 2010/11 was Rs 1 billion.
Market share: 85% exports, 15% domestic consumption.
Workers were paid better than at other garment factories.
Even though the two sides agreed over the pay hike issue, tensions escalated after workers demanded pay for the strike period also when production was halted. However, management said it values the concept of ´no work, no pay´ and will not pay for days when production was shut.
KC said unruly behavior by workers has not only hit Surya Nepal but also eroded the credibility of the Nepali readymade garment industry as a whole. \"Unfortunately, this has happened at a time when demand was gradually increasing,\" he stated.
With its decision, Surya Nepal has become a fresh example of how ´militant trade unions´ have hurt the industrial sector and driven away investment. Multinational companies like Colgate Palmolive had pulled out citing similar reasons and security threats.
KC, however, did not disclose any divestment plans.
Interestingly, trade union officials said they did not believe the management will shut the factory permanently. \"It is just a ploy to lay us off and restart operations with fresh recruits,\" said Tej Lal Karna, member of All Nepal Trade Union Federation-Revolutionary (ANTUF-R).
Karna claimed that the company cannot shut down just because its board has so decided. \"It must first clear all liabilities as provisioned in the Labor Act,\" he stated.
Managing Director KC said Surya Nepal will start clearing its liabilities to all workers and laying them off from Wednesday.
Source: Republica
