er in steel sector - india

8/9/2019 ER in Steel Sector - India

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ER in Steel Sector - India

GroupRoll Nos. 13-24


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Steel Industry in India Steel Industry in India is on an upswing

because of the strong global and domesticdemand.

India's rapid economic growth and soaringdemand by sectors like infrastructure, realestate and automobiles, at home andabroad

India is the 5th largest steel producer inthe world - International Iron and SteelInstitute (IISI),


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History written in Orissa The origin of the modern Indian steel industry -

1953 contract for an integrated steelworks inRourkela, Orissa was signed bet the GOI andthe German companies Fried Krupp und Demag

AG.

The initial plan was an annual capacity of500,000 tonnes, subsequently= 1 mt -Now 2.2mt plan for 4 mt

Former USSR and a British consortium part of

other modern steel industry in India. This resulted in the Soviet-aided building of asteel mill with a capacity of 1 million tonnes inBhilai and the British-backed construction inDurgapur of a foundry which also has a milliontonne capacity.


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The Indian steel industry is organized in three categories

The main producers and other major producers have

integrated steel making facility with plant capacities over 0.5mT and utilize iron ore and coal/gas for production of steel. The main producers are Tata Steel, SAIL, and RINL, Other major producers are ESSAR, ISPAT, JSW, BHusan

etc

The secondary sectoris dispersed and consists of:(1) Backward linkage from about 120 sponge iron producersthat use iron ore and non-coking coal, providing feedstock forsteel producers;

(2) Approximately 650 mini blast furnaces, electric arc furnaces,

induction furnaces and energy optimizing furnaces that useiron ore, sponge iron and melting scrap to produce steel(3) Forward linkage with about 1,200 re-rollers that roll out

semis into finished steel products for consumer use.


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Structural Weaknesses of Indian

Steel Industry Although India has modernised its steelmaking

considerably, however, nearly 6% of its crude steel is stillproduced using the outdated open-hearth process.

Labour productivity in India is still very low. Crude steeloutput 144 tonnes per worker per year against 600tonnes in Western Europe

Require increased production of stainless steel for plantand equipment, pharmaceutical and chemical industries.

Production hampered by power shortages. India is deficient in raw materials (High grade coal) and

tech in mining Insufficient freight capacity and transport infrastructure


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Strengths of Indian Steel

Industry Abundant raw material

Low labour wage rates

Abundance of quality manpower Mature production base

Positive stimuli from construction industry

Booming automobile industry New Policy


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Outlook India's lower wages and favourable energy

prices will continue to promise substantial costadvantages compared to production facilities in(Western) Europe or the US.

Steel industry will undergo a process ofconsolidation since industry players areengaged in an unfettered rush for scale.

This is evident from the recent acquisition ofCorus by Tata.

The deployment of modern production systemsis also enabling Indian steel companies toimprove the quality of their steel products

thus enhance their export prospects.


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Role of Iron and Steel Industry in

India GDP-Consumption The domestic consumption of steel has grown by12.5%in the past three years

The domestic steel consumption in the year 2009-10was 61mt

The average growth rate of the Indian Iron and SteelIndustry is 11.36%

The construction projects all over India are majorconsumer of steel

The per capita consumption of steel in India is 35kgs As the per capita consumption of steel is lower than

other countries, so the steel industry has hugeopportunities in the future


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Role of Iron and Steel Industry in

India GDP-Growth in Future The Arcelor Mittal, which is the largest steelmaker in the world,plans of three Greenfield steel projects with capacity of 25 mtannually, in India

Acerinox SA, one of the important stainless steel manufacturers incollaboration with Nisshin Steel, Japan is setting up a steel plant in

India The Tata Steel ranks 5th in the world steel production and plans ofexpanding its capacity by the year 2015

SAIL, India's biggest producer of steel has plans of increasing theproduction to 24.98 million tonnes annually

Sinosteel Corp, China are planning to invest US$ 4 billion to set up

a 5 million tonnes capacity Greenfield steel plant The acquisition of the Corus, the Anglo-Dutch steel manufacturer bythe Tata Steel

The Algoma Steel, Canada was acquired by Essar Global for US$1.63 billion

POSCO 12mt plant in Orissa


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Changes in Government policy

1991-92- major changes in the iron and steelindustry Removal of iron and steel from the list of

industries reserved for the public sector.

Exemption of iron and steel industry from theprovisions of compulsory licensing. Inclusion of iron and steel in the list of high

priority industries for purposes of foreigninvestment.

Deregulation of pricing and distribution of ironand steel.

Reduction of duty on import of capital goods. Liberalization of import and export policy.


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Technological changeThe major deficiencies in steel production like poor

productivity, obsolete technologies and lack ofquality consciousness.

The major problems facing the Indian industry in

two categories viz., technological andinfrastructural sector.

The technological problems identified were poorquality, low yields, high energy intake and

obsolete and outdated technologies. The infrastructural problems had been identified

as unavailability of adequate and timelyinvestment.


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Research and Development

The following areas require a major thrust:

-- upgrading of quality of raw materials and other keyinputs;

-- appropriate technologies to improve production andquality of iron and steel and ferro alloys;

-- development of relevant technologies for steel making;

-- development of relevant steel casting and finishingtechnologies;

-- development of new and special steel products.


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Human resource management

The diversity and complexity ofemployment relations in SAIL areenormous.

Plants are located in several states and itsmarketing operations are locatedthroughout the country and, in the last

couple of years, at a few locations outsideIndia.


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Recruitment policy

-- recruit mainly local people for non-supervisory,clerical, manual (machine-tending) production and othersemi-skilled or unskilled jobs;

-- comply with the caste-based affirmation policies forScheduled Castes (SC) and Scheduled Tribes (ST) andin recent years for Other Backward Classes (OBC) aswell; and

-- guarantee at least one job for each of the familiesdisplaced due to acquiring of land by the company tolocate the plant(s).

Additionally, due to collective agreements with tradeunions, the company is also obliged to give jobs to thespouse or one of the dependants of employees who diein harness and give substantial weight to seniority inpromotions in non-supervisory cadres.


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Technology - Recruitment

Changes in technology, modernization andrationalization of manpower mean that the valueof equipment handled by each employee is

increasing, leading to greater emphasis onrecruiting people with the relevant knowledge,skills and attitudes

Job structures are being reviewed, jobspecifications upgraded/tightened and therecruitment process streamlined and made moresystematic.


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The link between low literacy and

low labour productivity

most steel plants have undertakenmassive adult literacy programmes, oftensupplemented by assistance from thestate government, so that within a 3-5years at least all those employees underthe age of 45 years would qualify as

literates.


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Training of new entrantsNon-executive production workers training

-- unit training (functional training in relevant job skills); -- refresher and redeployment training (in case the

current job/skill becomes redundant);

-- training in basic maintenance skills (whether the

person is engaged in maintenance or not); and -- developmental training (based on performance review,potential for career growth and also the general need forindividual development).

unit-based functional training where training inputs are

predetermined for each trade/category/level, The training manuals for each critical position in

production departments, adapted as necessary in thelight of experience.


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Retraining for redeployment

Even construction labourers wereretrained as crane operators or drivers ofmotor vehicles.


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Thrust areas Attitudinal change

optimal utilization of existing human resourcesby redeployment and multi- skill training,

preparing employees for impendingmodernization projects,

enhancing efficiency,

safety and pollution control and qualityimprovement

In view of the highly capital-intensive andincreasingly automated nature of the steelindustry, whose technology has been fastchanging


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Labour-management cooperation

Collective bargaining and wages The National Joint Committee for the Steel Industry (NJCS) was setup in October 1969.

Between 1970 and 1995, it entered into five long-term wagesettlements at the industry level.

These agreements cover the workers in all the plants of SAIL

(including IISCO from the time it was in the private sector), TISCOand VISL.The NJCS decides its own terms of reference -its scope presently

covers: Negotiations for wage agreement and its implementation. Steps to improve production, productivity, and quality.

Measures for the reduction of costs and wastages, etc. Review of welfare amenities and facilities. Any other aspect NJCS feels appropriate to bring to the attention of

the Government.


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Labour disputes and their

settlement

Pay and benefits are revised throughout India inindustry level negotiations facilitated through theNJCS which concerns itself not only with wage

negotiations, but also with implementation,monitoring and review as well as with broadissues facing the industry.

Steel is the only industry in India where, during

the last 25 years, five industry level nationalagreements were concluded without the loss ofa single manday.


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Workplace governance and

employee participation

Technological and human resourceobsolescence, an underemployed, overmannedworkforce and excessive regulation adverselyaffected quality, customer satisfaction andcompetitiveness in the steel industry

Employees collectively identified the followingareas as "priorities for action" and came up withdetailed action plans to implement them:

Improving work culture.

Utilization of installed facilities. Improving production and productivity. Generating profits through cost control. Improving customer satisfaction.


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Employee participation

SAIL has institutionalized employee participationand provided for consultation and cooperation atvarious levels:

Industry level -- National Joint Consultative

Committee for the Steel Industry. Enterprise level -- Joint Committee onProduction and Productivity.

Plant level -- Joint Committees for Production,Safety, Grievances, Welfare, etc.

Zonal level -- Joint Committees for Production,Safety, Grievances, Welfare, etc.

Shopfloor level -- Production, Safety, Welfare,etc.


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Suggestion schemeMeasures undertaken in its various plants and other

establishments

Personal letters from senior managers invitingsuggestions from employees.

Message inviting employees to offer suggestions was

printed on the pay slips. Poster and slogan competitions.

Display of posters all over the plants, township, etc.

30-minute films on suggestions.

Campaign in various workplaces with an eventual targetof one suggestion per employee per year.

Presentation of suggestions before all senior executivesat the respective shopfloors once every month.

Employee participation


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The strategic components of a 15year perspective plan

Market-led product mix;

Cost reduction to enhance pricecompetitiveness;

Quality improvement of products and productionsystem;

Emphasis on value-addition;

Stress on customer service; Marketing to reach new areas and customers

Steady increase in exports.


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Environmental managementManagementis obliged is obliged to

Provide and maintain a safe plant and healthy workingatmosphere

Train and supervise employees with respect to safeworking procedures and health care;

Provide all information to employees and the unionregarding hazards to health and safety at work; Provide health assessment and surveillance of all

employees on a continuing basis; Provide safe system of work;

Provide safe place of work; Provide required safety appliances Ensure implementation and compliance of the statutory

provisions of the safety, health and environment andalso ILO health and safety recommendations.


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Employee is obliged to Take reasonable care of the health and safety of himself

and another who may be affected by what he does;

Cooperate with management to perform or comply withhis/her duties with respect of safety and health

Cooperate with management in implementation of dutiesenumerated above.

The Employees' Union will continue to: Educate and cooperate with the management to educate

the employees regarding their duty with respect to safetyand health;

Participate in management's efforts on training and

supervising employees to follow healthy workingprocedures; and Cooperate with management in all bipartite discussions

on safety and health of employees


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The challenge of changeMajor changes point to the changing profile of steelworkers

in the 21st century: Automation of routine, blue collar, jobs andrationalization of white collar jobs - flatter organization.

Greater use of microelectronics technology - the removalof walls between planning and doing & cross-functional

teams. Fewer people, broad-banded jobs with greaterresponsibilities. Job design should provide forenrichment and enlargement

Diverse workforce. Greater representation by womenand disadvantaged under-represented social groups.

Age/skill-mix planning with a greater focus on younger,literate persons with technical inputs, multi/crossfunctional skillsM

Multiple skills and multiple careers. Continuous training, retraining and redeployment.


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Sectoral, structural

and geographical shiftof unemployment is

the key


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Thank you

er in steel sector - india

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