A STUDY ON THE IR ASPECTS OF HEAVY ENGINEERING CORPORATION

ABSTRACT
In recent years we have been noticing a drastic change in the industrial relations of various sectors.
Industrial relations deal with every kind of relationships that exist within an organization. In India the
trade union movement is generally divided on political lines. About 7% of the 400 million strong force
was employed in the formal sector (comprising government and corporate) in 2000 contributing 60% of
the nominal GDP of the nation. The trade unions act 1926 provided recognition and protection for a
nascent Indian labor union movement. The number of unions grew considerably after independence, but
most unions are small and usually active in only one firm.
In this paper we are going to have a study on labor unions at Heavy Engineering Corporation that existed
before and the present conditions of labor unions that is prevailing there. Our purposes in this paper are
fourfold. First, we summarize the existing definitions of and arguments regarding recent industrial
relation at HEC. Second, we briefly analyze the manner in which several of these definitions have been
applied to a particularly contentious and narrow down the study into three major stages since its inception
to its present state. Next, we analyze the list of events that considerably affected the management-union
relationship, analysis of major decisions taken then. Last but not the least we have focused on the
solutions that can be used during the agitations of the trade unions.

KEYWORDS
Industrial relations, Sustainable Development, Trade Unions, LPG, Organization, VRS, WPM,
competition, labors, Industry, sick unit, culture, technology, personnel, B.I.F.R., Revival Policy, skilledsemi skilled workers, union elections

INTRODUCTION
H.E.C. backs up a long and proud history which was established way back in 1958, inaugurated by Pt.
Jawahar Lal Nehru. It was set up as a Mother Industry to provide infrastructural development by setting
global standards to meet industrial requirements across the country. That time was the blooming phase of
Indian economy after the independence; hence a project like this was of mammoth importance for the
nation.
The primary reason for its establishment was import substitution and infrastructural development to
emerge as one of the strongest players in the world economies. With a gigantic land area of 8000 acres
and 24,000 massive workforces, it started off its operations from the year 1966. It proved to develop a
Model Society in the form of an ideal employer which hired people from each level of social and
cultural backgrounds. To venture into a new area of business, HEC had discussions with one of the Italy
based Company, having its associates based in Italy, Ireland and USA. HEC plans to create a dedicated
manufacturing base to execute the orders pertaining to the new area of business as a supplier from India
with the technical support on the front of design, technology and technical manpower to train HEC
personnel in India.
Here in this study we have dealt about the working of trade unions and the industrial relation that exist
there. After having made this research study, the paper is dividing into 3 phases i.e. before 1992, after
1992 and after 2004. If we look into the past of HEC we can surely make the change today. The past have
been really fruitful and had a strong trade union and cooperation among the employees. This study is
going to tell us the rise and fall of the HEC plant and the consequences that it faced during its life time.

LITERATURE REVIEW
According to Walpole, Participation in Management gives the worker a sense of importance, pride and
accomplishment; it gives him the freedom of opportunity for self-expression; a feeling of belongingness
with the place of work and a sense of workmanship and creativity.
The concept of Sustainable Development according to Brundtland Report aims to meet the needs of
present without compromising the ability of future generations to meet their own needs covering two
main ideas: unlimited needs and limited resources respectively.
According to Belfour Committee (1920) gave the term industrial relation as an enquiry into methods of
industrial remuneration the main cause of unrest and disputes and the method of avoidance and or
settlement of disputes.
According to John R. Commons (1924) endowed all the actors with legitimacy and functionality and
formulated the essential logic of industrial relation-worker is a property less seller of himself unable to
bargain from a plane of equity.
According to Dunlop (1958) describes industrial relation as a system at any one time in its development is
regarded as comprised of certain actors, certain contexts, an ideology which binds the Industrial relation
system together and a body of rules created to govern the actors at the workplace and work community.
Henry Richardson (1961) explains industrial relation as an art of living together for the purpose of
production. The parties involved in IR are workers and employers where both involve themselves for the
purpose of production and learn by acquiring the skills and learn to live together by the process of
accommodation and adjustment.
Another author i.e. Walter Mckersie (1965) describes industrial relation or employee-employer relations
as a process of negotiation by which we mean the deliberate interaction of two or more complex social
units attempting to define or redefine the terms of their interdependence. Later this was redefined by

Hyman in (1977) describes industrial relation as the study of the process of control over work relations
and among these processes those involving collective worker organization.
Before Hyman various other authors also gave their views on industrial relation such as Marx and Engels
(1970) have viewed industrial relations as a class struggle. In the same year, Allen Flanders (1970)
defined industrial relations as a subject that deals with certain regulated and institutionalized relationships
in industry.
In 1977 Sadri, S viewed industrial relation as the relationship between management and trade union
regarding the employment, unemployment, terms of employment and terms of unemployment, conditions
of employment and unemployment and conditions of work.
Followed by Clegg in 1979 defined industrial relation as the rules governing employment together with
the ways in which the rules are made and changed and their interpretation and administration.
Dale Yoder in 1984 defines IR as the problems of human relationships arising from the sale of services for
a wage and working on the premise of employers under their control.
In 1993, Purcell defined Industrial Relation as the predominant concern of employee relation is no longer
about the role of collective bargaining and the union as its agent as about securing employee assent and
expressing managerial commitment to achieving that assent.
Again after two years in 1995 Jerome Joseph views Industrial Relations as a dynamic process wherein the
employer organization continuously defines and redefines the IR environment in terms of structures,
systems, mindsets and values.
AM Sharma in 1988 mentions industrial relations as a comprehensive and total concept embracing the
sum of total relationships that exists at various levels of organizational structures. According to the
American law journal 2013 define IR as to include a broad range of market, organizational and
institutional processes related to the world of work

OBJECTIVES OF THE STUDY

1.
2.
3.
4.
5.

To study the emergence of unionism concept in India, particularly in H.E.C.

To identify major trade unions and their relationships with the management.
To analyze various phases through which organization went over the years.
To find out causes of decreasing labor turnover and increasing labor clashes
To examine how H.E.C went out of B.I.F.R. successfully.

RESEARCH METHODOLOGY
A research methodology is a sample framework or a plan for study that is used as a guide for conducting
research. It is a blueprint that is followed in processing research work. Thus in good research
methodology the line of action has to be chosen carefully from various alternatives.
A research design is the arrangement of conditions for the collection of data and analysis of data. In fact
research design is the conceptual structure within which research is conducted. Descriptive Research
Design has been used by the authors to solve each and every factor of given task. In the descriptive
research study, the main purpose is that of formulating a problem for more precise investigation. The
study is essentially a descriptive research where we have conducted scheduled interviews as a part of
primary data collection and annual reports, magazines etc. as secondary data. H.E.C holds back a 65 year
old history of operations and a massive history of milestones: both positive and negative which give rise
to major external factors that influence our study. The study is hence based on convenience sampling.

INDUSTRIAL RELATIONS IN H.E.C.

The journey of H.E.C. can capture ones imagination as having seen all the seasons of nature over 55year
old existence which boils down to the following categories:
-HAVING HANDS FULL: Early Years
-BEARING THE BRUNT: 1992 Economic Reforms
- TURNING TABLES: 2004 Onwards

Before 1992
Since its inception to 1992, H.E.C. managed to achieve a net profit only for 4 years. Being a major
employer to the tribal population of the eastern India, the era of Unionism began to develop. Needless to
say, the success of an organization is deeply embedded in the relationship and culture shared by the
management and the union. H.E.C. once had 40 trade unions which was highest of that time any
organization had. This was the time when politics galloped in the spirit of unionism to make it more
powerful in the eyes of management. Pretty imaginable, there were strikes from time to time on petty
issues but the hands of the management were tied due to deficits and lower recovery of fixed costs.

After 1992
Opening of doors for the economy seemed quite ironical to the situation at H.E.C. as such LPG implied
higher performance standards, increased global competition, and privatization of the organization and
ultimately the declining monopoly of H.E.C.

H.E.C. being declared as a Sick Company by BIFR came as a shock to the employees which dwelled in
insecurities and endangered future of the company for the coming years. H.E.C. had to eat a humble pie
again in 1998, when it was again declared sick by the BIFR. The govt. however expressed its desire to
revive the company in Parliament in the last session and had worked out a revival plan for it of about
2100 crore. By this time, H.E.C. lost its employees moral support and increased dissatisfaction which
came up as strikes and lockouts, some raised against the management, wage reconstruction or govt.
policies. H.E.C. left no stone unturned to put it back to the track but it seemed like a Penelopes web.

After 2004
This phase has been the revival or reconstruction phase for the organization the start off of which began in
October 2004, the Jharkhand Labor Department by verifying the strength of trade unions was undertaken
to weed out fake memberships to streamline the other labor bodies active in the state.
In June 2004, the ailing Heavy Engineering Corporation Ltd. (HEC) Ranchi has requested the Centre of
about 165 Cr. to meet statutory requirements like outstanding payments, salary, P.F. and V.R.S. payments.
As they say, the fish finally came out of troubled waters; H.E.C. has never been in loss since 2004. The
relationship between the management and unions were on a way to heal by the commendable efforts of
former CMD G.K. Pillai.

Research Instrument
Overview of H.E.C. over the years and its impact on major sections using the Likert scale displaying the
effect of such favourable/unfavourable events during the three phases to have a comprehensive
understanding.

1. Very low
2. Low
3. Moderate
4. High
5. Very high

Basis

Phase 1

Phase 2

Phase 3

OPERATIONS

FINANCIAL

WORKFORCE

UNION CLASHES

Our major observations were based on the decisions made by the management to control its downfall,
struggling to survive and finally to revive it again: their effect on the labor union in terms of participation,
support, suggestions or distress.

ANALYSIS OF VARIOUS PHASES IN H.E.C

PHASE 1
However launched as an extremely ambitious project to cater to national and international technological
requirements, it was on wane for a long period of time leading to lower net profits and increased union
dissentient. Being the onset of the nascent growing economy of India, Government was mostly the price
maker though H.E.C. enjoyed the much hype monopoly in the market leading to slower recovery of
fixed costs. Few trade union members often asked parity in decision making which was against the
policies of H.E.C.

PHASE 2
The management strained every nerve to bring out peace and harmony reducing strikes but it seemed
quite difficult for them to satisfy all their wants as they were facing a major liquidity crunch for a long
period of time. Keeping the backstairs influence apart, union and the management always worked for the
prosperity of H.E.C.
The average age of employees during that time was 55years. Needless to say, payment of retirement
benefits had always been a bone of contention during that phase.
It was the time when many hard decisions were taken by the organization such as voluntary retirement
scheme which shook the roots of trust and cordial relationship between HEC and trade union
The primary reasons for H.E.C coming under Red are identified during our study were the launch of
L.P.G. Scheme in 1992, contributing to Increasing competitors in terms of cost, quality and technology.
Due to lack of surplus, continuous cash and credit crunches was observed which continued for a very long
time and the worst of all, payment of a colossal amount of retirement benefits led to increasing union
demands, prolonged strikes and lockouts.

PHASE 3
H.E.C. never had their hands full or at least, to even suffice. None but the brave deserves the fair goes
perfectly with the transformation H.E.C. after 2004 which is emphatically a result of various crests and
troughs it saw in its life taking it out of red and achieving remarkable success till date.

This phase was crucial, particularly for labour unions because of the Labour elections in 2004 weeding
out 30 out of 33 unions to bring out uniformity and transparency in workings.
Excellent tenure and achievements of Mr. G.K. Pillai cannot be glossed over who worked relentlessly to
increase workers morale and loyalty towards H.E.C.
The external and internal blend of support made its revival possible in the forms of Centre's sanction of a
rehabilitation package of Rs 2106.98 crore and Internal audit and deep revival policy by the company.
After this period, Heavy Engineering Corporation has never been into losses which is surely a result of
few commendable decisions taken by the management which

EVALUATION OF MAJOR DECISIONS/EVENTS OCCURRED IN H.E.C.

YEAR

1964-

DECISIONS/EVENTS

Minor strikes

REASONS

EFFECT

ON

EFFECT ON

Promotion, wage discrimination

OPERATIONS
Negative

UNIONS
Positive

Negative

Positive

1986
1987

72 day strike followed by

Demand of modification in faulty pay-

14 day lockout

revision.

1992

B.I.F.R. declared it a

Continuous losses over the years

Negative

Negative

1993
1998

Sick Unit
V.R.S. scheme
Again declared sick by

Incapacity to pay retirement benefits

Failure to implement revival policy

Positive
Negative

Negative
Negative

2004

B.I.F.R
Claimed its net profit

Better policies and govt. aid

Positive

Positive

2004

after 1984
Union elections

Overpopulation

Positive

Negative

Turnaround

operations
Mgt. and union join hands

Positive

Positive

2008

and

influence

over

All of these can be picturised as a gradual step by step process of plenty phase to handful and again to
reconstruction era making the foundation of H.E.C more concrete and making the nation understand the
necessity of such mother industry plant, however being enormously exploited by its kids in the race
towards global excellence and stiffest competition.
SUGGESTIONS
During our study, we found out that more than half of the workers and labors were contract labors;
implying company couldnt bear greater permanent staff, most of them being new to the organization
unaware of past experiences and knowledge. Government could have provided higher value for
production to reduce workers callous attitude. Hatia Projects Workers Union has been the oldest and most

supportive pillars of H.E.C. When it was having acute cash crunch, in the dilemma of whether to upgrade
machinery to latest technology or to settle retirement dues of workers, it chose the latter one which
inexorably paved way to future atrocities. Had it decided the other way round, H.E.C. would have come
off with flying colors way back. Also, the union elections could be held much earlier to avoid strikes,
lockouts.

FINDINGS
We would like to conclude our study by adding some strategies methodologies adopted by H.E.C. for its
reconstruction no matter how small contributions made by them to reconstruct H.E.C. like the
implementation of Workers Participation in Management policy (WPM) to provide scope for
employees in decision-making of the organization, the participation may be at the shop level,
departmental level or at the top levels. Additional facilities like betterment in employee benefits like
hospitals, schools, townships etc to rebuild goodwill of the organization in the eyes of employees Internal
checking of illegal facilities acquired by trade unions to take effective actions was an effective way to
bring uniformity in working peacefully. There was no wage revision since 1992 leading to decreased job
satisfaction. To increase job satisfaction not only monetary facilities should be provided but nonmonetary facilities too such as promotion, growth, challenging work, recognition, prestige so that
employees doesnt become lethargic and complete their work on time effectively and efficiently. Working
environment should be improved including the latest technology so that employees get updated and know
how to use that technology. For this purpose employees should get training classes at all levels so that the
technology should be used in a better way for new innovation in the organization.
To make this organization come out of as a sick unit a new starting should take place where there should
be a proactive head and proper delegation of authority and responsibility should be given to carry out any
work. For this purpose employees as well as employer need to work hand in hand with great motivation.
Today HEC has a lot of demotivated employees and thats why the work today is not carried out within

time. Employees should be made aware that the company works on their effort and they need to be
committed towards the organization. The main part of the organization is the trade unions that work
there. The trade union should be cooperative and think about the organization as well as about their
employees. Another role can be played by the government which can help it to revive from a sick unit.

CONCLUSION
For an organization which was forced to shut down twice, turning over a new leaf is itself a major
milestone. H.E.C. somehow failed to comply with the much essential concept of Sustainable
Development in due course which is the considered the power capsule of emerging economies like India.
Had it implemented a balanced strategy of modernization and technological up gradation and formalized
employee redressed system through participative methods, it would have weathered the storm
successfully. Recently HEC has been termed as a sick unit and letters have been passed for the shutdown
of this unit because its totally going into loss and is not fruitful for the country.

Providing unions

decision making powers and authority as certain levels has been increased recently paving way for
forging profitable relationships within the organization through internal marketing practices. In July 2014
the current scenario is that HEC is running well with a total of 4,500 employees among which contract
workers are around 2,000 and retainers 500 and permanent employees in HEC are 2000. The contribution
of Mr. G.K. Pillai has been impeccable to bring H.E.C. out of Red using innovative methods of employee
and family members participation frequently to unite H.E.C. as a big family and bring back its lost glory.

BIBLIOGRAPHY
www.hec.org.in
www.industrialrelation.nsw.gov.au/biz/res

www.industrialrelations.nsw.gov.au/biz_res/oirwww/.../workplace_pp.pd...
http://www.ilo.org/public/english/iira/documents/congresses/world_13/track_4_kochan.pdf
www.eap-journal.com/archive/v38_i1_
http://www.ucu.org.uk/media/pdf/2/d/UCU_factsheet1_unions.pdf
www.timesofindia/industry/h.e.c./report

REFERENCES
Engineering Corporation to be listed, become Navratna- The Economic Times 2010
Erickson, C. L., & Kuruvilla, S. (1998). Industrial Relations System Transformation. Industrial and Labor
Relations Review, vol.52, Pp. 3-21

Marsden David, The impact of industrial relations practices on employment and unemployment, center
for economic performance, London school of management, May 1995, discussion paper no. 240.
Gyes guy, IR as a key to strengthening innovation in Europe, innovation paper no. 36

Silva S.R., Human Resource Management, industrial relations and achieving management objectives,
International Labour Organization ACT/EMP publications.
Nanda B.N.,Trade unions in India, labor bureau ministry of labor and employment government of India
Chandigarh/ Shimla.

ANNEXURE 1
LIST OF VARIOUS LABOUR UNIONS BEFORE ELECTIONS 2004
Sr. No.
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40

NAME OF UNIONS
Engg. Mazdoor Panchayat
Hatia Project Workers Union
Hatia Shramik Sangh
HEC Trade Union Abhiyan Samiti
Chotanagpur Khan Engineering Mazdoor Sangh
Supply Apprentices and Theka Mazdoor Sangh
Hatia Lal Jhanda Kamgar Union
HEC Employees Association
Hatia Mazdoor Union
Heavy Engineering Workers Union
Hindi Mazdoor Kisan Panchayat
Chotanagpur Industrial Workers Union
HEC Apprentices Association
Hatia Project Karamchari Union
Engineering Mazdoor Panchayat
Hatia Kamgar Union
All India Industrial Workes Union
Hatia Mazdoor Lok Munch
Sansadiya Rajbhasa Samiti
Heavy Engineering Labour Union
Heavy Engineering Mazdoor Union
Hatia Kamgar Parishad
Hatia Project Diploma Engineer's Association
HEC Vikash Samitee
HEC Trade Union Samanwai Samittee
Hatia Samajwadi Engineering Mazdoor Sangathan
Karkhana Shramik Sangh
Hatia Project Mazdoor Union
HEC Trade Union
HEC Shramik Sangathan Munch
HEC Shram Sangathan Sangharsh Morcha
Jharkhand Bihar Mazdorr Union
Progressive Mazdoor Union
Techincal Kamgar Union
Hatia Project Mazdoor Sangh
Basti Bachao Sangharsh Samittee / Jhugi Jhopri Bachao Sangharsh Samittee
Jan Kalyan Samittee
Jan Kalyan Samittee
HEC Samanwaya Samittee
HEC Ltd. Shramik Karmchari Union.

ANNEXURE 2

RECOGNISED / REGISTERED UNION DETAILS AFTER ELECTIONS

Sr.
UNION NAME

REPRESENTED BY

No.
HATIA

PROJECT

WORKERS

UNION,

INTUC

Mr. Rana Sangram Singh

Mr. Liladhar Singh

(RECOGNIZED)
Mr.
2

HATIA MAZDOOR UNION, CITU (REGISTERED)

Bindeshwari

Mr. Bhawan Singh

Singh

HEC

LTD.

SHRAMIK

KARMCHARI

UNION

3
(REGISTERED)
4

HEC SAMNWAYA SAMITTEE

a)

Hatia Mazdoor Lok Munch, JMM (Registered)

Mr.

Jan

Mr. Ram Kumar Nayak

Mohammad

b)

Hatia Kamgar Union, AITUC (Registered)

Mr. G C Sudhanshu

c)

Janta Mazdoor Union

Mr. Uma Shankar Singh

d)

Vidhwa Ashrit Sangh

Mr. Yaswant Kr. Mishra

e)

Guild of Executive Association

Mr. P K Singh

f)

HEC Supervisor Association

Mr. V N Choudhary

JAN KALYAN SAMITTEE

Mr. Ratan Tirkey

Mr. S B Swasi

Mr. Dilip Singh

Mr.

Mokhtar

Ansari
6

HATIA BISTHAPIT SANGH

Mr. Meghnath Mahto

Mr. Karma Uraon

ANNEXURE 3
GROSS SALES PER EMPLOYEE V/S NET PROFIT BETWEEN 2005- 2013

Rs. in Crore
GROSS SALES

NET PROFIT
44.27
38.14
30.99

30.17
24.6
13.8

20.38

18.37 18.42
15.83

9.13
5.15
2.4
2005-06

8.58

2.86

4.17

2006-07

2007-08

2008-09

2009-10

2010-11

2011-12

2012-13

PRODUCTION IN H.E.C.

Rs. in Cr.
701

800
700
500

383

400
200

677

538

600

300

688

281
166

100
0

ANNEXURE 4

419
PRODUCTION

INTERVIEW SCHEDULE- Mr. RANA SAMGRAM SINGH, H.P.W.U

Good Morning sir
Q. Since how many years you have been working in HEC?
A. We have been working here since the inception of H.E.C.
Q. What is the difference in the number of workers and the unions in 1960s and in present?
A. The company was established in 1958 and started its operations from 1962. At that time there were
40 unions in total, 22500 workers and 10000 contract workers. Now there are only 2500 permanent
workers and 2000 contract workers.
Q. How do you see the relationship between the management and the workers over the years?
A. The relation between us has always been healthy. Management has always worked for the
development of the workers and has always tried to solve out the problems of the workers and the
union representative.

Q. Can you put some light on the management practices adopted that time for the skill development
of workers?
A. The company was started with Employee Generated Policy as there was over employment in the
organization with an increased number of unskilled workers. Therefore, the skilled workers per
machine were less. So they took the initiative and started a training program for 6 months in which
they transformed the unskilled workers to semi-skilled. This program not only helped in the
development of the workers but also boosted motivation and loyalty of employees towards the
organization.
Q. Sir, can you put some light on the major strike which took place in H.E.C. in 1987?
A. In 1980, the company started incurring heavy losses due to which the workers were not paid
wages for over 6 months which infused dissentient among workers. This lead to strike which

continued for 72 days followed by a lockout for 14 days. It all contributed to a loss of 80Cr. to the
company.
Q. Any other incident would you like to share on this topic?
A. This was the only major strike that took place but apart from this in 1970s one strike took place
for 21 days which was regarding the wage revision
Q. What kind of inter-union relationship is shared in H.E.C.?
A. We all work for the rights of the workers since years not defying the fact that we differ in
ideologies and approaches breeding competency but with a common objective towards the
organization...
Q. How did you react when the shocking news of H.E.C. declared sick by B.I.F.R.?
A. Workers have always stood for the company and extended their support through every ups and
downs of its tenure. Even in its sick phase, we did not dump the organization.