Tata Motors stops work indefinitely at Nano plant
Published Wednesday, September 3, 2008 8:46AM EDT
MUMBAI, India - Tata Motors has suspended work indefinitely at a factory building the world's cheapest car following increasingly violent protests by farmers demanding the return of their land.
No one has reported to work at the West Bengal Nano factory since Friday, at the company's request, and some international staffers have gone home, the company said Tuesday.
The conflict pits several thousand of the world's poor against one of India's richest men, Ratan Tata, who wants to build them cars. At $2,500, the Nano has knocked the bottom out of the mini-car market in India, with other automotive players pushing to enter the super-economy market.
But several hundred local farmers have dogged Tata with protests for nearly two years, complaining they didn't receive sufficient compensation for part of the land where the Nano factory was built. They, along with West Bengal's leading opposition politicians and thousands of their supporters, have blockaded the highway running past the factory. The demonstrations have escalated, and the protesters trapped workers inside the factory last week.
"The situation around the Nano plant continues to be hostile and intimidating. There is no way this plant could operate efficiently unless the environment became congenial and supportive of the project. We came to West Bengal hoping we could add value, prosperity and create job opportunities in the communities in the State," a company spokesman said in a statement late Tuesday.
Tata has poured $350 million into its plant in Singur. About 60 key suppliers have invested millions of dollars more for plants and equipment in the area.
"It's unfortunate and ominous for the state. There is no doubt about that. It is a sad day for West Bengal," the state's Industry Minister Nirupam Sen said.
Suresh Rangarajan, a Tata Motors spokesman, said Tuesday that the company was exploring whether it could relocate Nano production to its other six factories scattered across India in an effort to meet production deadlines. The company has trained over 762 workers in West Bengal and says it is considering relocating those employees to its other plants.
Tata has pledged to launch the Nano by the end of the year.
"Mr. Tata is a business man. He has a deadline," Rangarajan said.
But he added that a "small window" remained open for Tata's continued presence in Singur. "If normalcy is restored, Tata Motors will come back," he said.
Mamata Banerjee, chief of the opposition Trinamool Congress party in West Bengal, said her party had not pushed Tata out.
"The decision to suspend work at the plant was Tata's own. We have not obstructed anyone," The Press Trust of India news agency quoted Banerjee as saying.
Indian business leaders have lined up behind Ratan Tata in recent days, warning that a pullout would have a chilling effect on investment.
The Indian government is eager to transform the country into a hub for small car manufacturing.
Two-thirds of Indians still live off the land, and as the nation lurches toward industrialization, land conflicts have become increasingly common.
India is also a nation of stark regional variation, and even as West Bengal boils, leaders in Maharashtra state, home to the nation's business capital of Mumbai, boasted Tuesday of their pro-business credentials.
Speaking at the opening of a new $300 million General Motors Corp. factory in Pune, a fast-growing manufacturing hub about two hours outside Mumbai, the state's chief minister reiterated his invitation to the Tata Group, saying he would "roll out the red carpet" for a Nano plant.
Vilasrao Deshmukh also thanked local farmers for "giving their land and their livelihood" to bring the GM project to life.
More than 80 per cent of the 1,000-plus employees at GM's new factory are from the local area, company and government officials said.