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considerably, however, nearly 6% of its crude steel is stillproduced using the outdated open-hearth process.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