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Outsourcing & compliance for industrial relations

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Enterprises in India desiring to be a supplier to any of the leading international brands, especially in the apparel business need to be audited and have a valid certification that they comply with SA8000 standard, thinks Dr Rajen Mehrotra.

Companies were traditionally manufacturing products and performing various services, within their enterprise, including servicing their customers to whom the products were sold. For this the companies had their own staff, i.e., employees working at different levels within the company. This practice has gone through a major change where in the business strategy world-over for companies after the end of cold war (i.e. 1989) has been outsourcing wherever feasible and viable. The present day approach by many large companies in India is, to hire another party outside the company to manufacture components or the product if possible, and also obtain the services of an external agency for services needed by the company or for servicing the customers and the same is referred as outsourcing.

With this approach, the number of employees working for the company over a period of time has got restructured, leading to reduction of employees covered under the ambit of the Industrial Disputes Act, 1947. At the same time, the employees working for the enterprise carrying out the outsourced activity based on their job content are covered under the ambit of the Industrial Disputes Act, 1947. In the initial years, these enterprises carrying out the outsourced service were small and had a few employees, but presently most have grown in size and have a substantial workforce, hence unionisation of workforce does takes place and issues of industrial relations do come up.

While the enterprises manufacturing components or the product or providing the service to the company is an independent enterprise, but it is an important vendor of the supply chain for the company. Hence any industrial unrest or turbulence effecting the quantity and quality of the component or products or services in the supply chain from any of the vendors is bound to have an adverse impact on the functioning of the company.

Social Accountability (SA) 8000 International buyers, who have adopted a strategy of outsourcing, which involves getting their specified components or products, manufactured in another country in quite a few cases call upon the supplier to comply with social accountability standard called SA8000. This in many cases is a must. This standard is the leading social certification standard for factories and organizations across the globe. It was established by Social Accountability International in 1997 as a multi-stakeholder initiative. Over the years, the standard has evolved into an overall framework that helps certified organisations demonstrate their dedication to the fair treatment of workers across industries and in any country from where the international buyer gets the products manufactured. Enterprises in India desiring to be a supplier to any of the leading international brands, especially in the apparel business need to be audited and have a valid certification that they comply with SA8000 standard.

SA8000 measures social performance in eight areas [i.e. child labour, forced or compulsory labour, health and safety, freedom of association and right to collective bargaining, discrimination, disciplinary practices, working hours, remuneration and management system] that are important to social accountability in workplaces, anchored by a management system element that drives continuous improvement in all areas of the standard. International buyers to safe guard the reputation of their brands and to ensure social compliance in their supply chains, without sacrificing business interests, ask the supplier enterprises to be SA8000 compliant.

Code of conduct
The vast majority of supply chain codes of conduct by international buyers focus exclusively on the requirements to be imposed on suppliers. This is the traditional "top-down" approach wherein the buyer dictates their expectations to the supplier, as the buyer has ample choice and hence suppliers have to comply, except where suppliers are original equipment manufacturers (OEMs) and hence it is not possible for the buyer to dictate. There is need for a collaborative approach, as there are certain limitations of the supplier, and there is a tendency by the large size buyers on squeezing the supplier with reference to price.

Most suppliers are vendors to large scale companies that are outsourcing manufacturing of components or the products and desire uninterrupted supply. Most of these supplier vendor enterprises pay minimum wages or slightly higher than the minimum wages to their workforce and try to ensure that their operations run smoothly and there are no interruptions. At the same time those enterprises that are SA8000 compliant have one of the social performance indicator which states "Freedom of Association and Right to Collective Bargaining", hence the workers of these enterprises could have a trade union and also raise a demand for improvement in their existing conditions of employment leading to negotiations and collective bargain. In the event the demands are not mutually settled, it could lead to industrial relations issues.

Companies like IKEA and many other international buyers conduct periodic audits with their suppliers, and when they observe deviations in the prescribed code of conduct, they give time to the supplier to carry out the corrections in the deviation. If the corrections in the observed deviation are not carried out in specified time period, then the supplier is black listed and dropped from being a vendor.

There are vendors that are designated as preferred vendors by the buyers, which facilitate them in getting higher volume of business and in certain cases a better price.

ILO’s effort The Employers’ Wing of the International Labour Organization (ILO), Geneva through the International Training Centre (ITC) Turin, Italy with the support of The Walt Disney Company, USA designed a programme on Responsible Business Conduct (RBC) and Occupational Safety & Health (OSH) in supply chain intermediaries for enterprises. Under this programme, the ILO-trained participants from four countries (i.e. India, Indonesia, Philippines and Thailand) that underwent training, which involved distance learning of five weeks (i.e from 30 July to 2 September 2018) followed by a face to face learning of one week (i.e. from September 10-14, 2018) in Bangkok, Thailand.

The issues impacting RBC covered in the training were: child labour, forced labour overtime, minimum salary, discrimination, freedom of association and right to collective bargaining and social security. These are also part of ILO Declaration on Fundamental Principles and Rights at Work adopted by the Governing Body of ILO in June 1998 covering ILO’s eight core conventions {i.e. freedom of association and right to collective bargaining (C 87 & C 98), forced labour (C 29 & C 105), child labour (C 138 and C 182) and discrimination (C 100 and C 111)}. Violation of any of these cited above is being unfair to the labour that produces these components or the products for the buyer.

Also the issues impacting OSH covered in the training are [introduction to safety and health at work, risk assessment, accidents prevention and reporting, motivating workers: leadership and supervision, management of prevention, internal emergency plan, hazardous substances, fire and explosion, electricity, tools, machines and appliances, hoist, lift and bear, trip, slip and fall, work at height, special works, confined spaces, radiation, asbestos, noise and vibrations, ergonomics, PPE, safety and health signalisation, harassment and violence at work, drugs and alcohol awareness , work permits, emergency responses, musculoskeletal disorders, and health and safety committees.

This is an effort by ILO to facilitate the employer organisations in India, Indonesia, Philippines and Thailand to have master trainers in each country that can facilitate enterprises in ensuring compliance of Responsible Business Conduct (RBC) and Occupational Safety & Health (OSH) in supply chain intermediaries of enterprises in each of these countries. For India eleven master trainers were trained and the author was a beneficiary of this training as a nominee of Employers’ Federation of India (EFI).

Presently the media as well as NGOs in certain parts of the world are active in undertaking investigation and bringing out violations in the area of RBC and OSH, which has an impact on the reputation of the brand of the buyer, thus effecting business both for the buyer as well as the supplier. It is in the interest of both the buyer as well as the suppliers in India that the issues mentioned under RBC and OSH is complied with and these can also be part of the code of conduct specified by the buyers in India.

Conclusion
Whenever a supplier fails to meet the quality and quantity requirement as per the agreed delivery schedule with the buyer, the supply chain of the buyer gets impacted. The problems can be for various reasons some of which are listed below:

  • Inadequate compliance with the regulatory frame work,
  • non timely supply of raw material,
  • non compliance of quality specifications with respect to raw material,
  • limitation of production capacity,
  • difficulties in the operation of the plant and machinery due to breakdowns,
  • insufficient availability of working capital
  • shortage of trained workforce including absenteeism, and
  • Industrial relations issues due to unresolved issues.

The suppliers in India need to develop and implement systems for managing not only the items listed above but also others that can affect the supply chain. In the event the supplier is likely to fail in the timely supply, then the supplier needs to keep the buyer informed in advance, so that the buyer can take appropriate timely action.

Presently, the number of employees working for the enterprise carrying out the outsourced activity based on their job content is substantial. In the context of India these employees are covered under the ambit of the Industrial Disputes Act 1947, hence issues of Industrial Relations are bound to come up at some stage wherein the employees will bargain for improved working conditions, better wages and improved welfare.

Buyers in India need to evolve a code of conduct with suppliers incorporating items covered under SA8000, RBC and OSH as mentioned above.

Also the vendor enterprises need to not only comply with the issues listed under SA8000, RBC and OSH, but also take preventive action to avoid industrial relations turbulence, which affect the business and the supply chain.

About the author
Dr Rajen Mehrotra
is an Immediate Past President of Industrial Relations Institute of India (IRII), Former Senior Employers’ Specialist for South Asian Region with International Labour Organization (ILO) and Former Corporate Head of HR with ACC. and Former Corporate Head of Manufacturing and HR with Novartis India.

He can be contacted on: rajenmehrotra@gmail.com

Published in February 2019 issue of Current Labour Reports

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Concrete

We consistently push the boundaries of technology

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Swapnil Jadhav, Director, SIDSA Environmental, discusses transforming waste into valuable resources through cutting-edge technology and innovative process solutions.

SIDSA Environmental brings decades of experience and expertise to the important niche of waste treatment and process technologies. As a global leader that is at the forefront of sustainable waste management, the company excels in recycling, waste-to-energy solutions and alternative fuel production. In this conversation, Swapnil Jadhav, Director, SIDSA Environmental, shares insights into their advanced shredding technology, its role in RDF production for the cement industry and emerging trends in waste-to-energy solutions.

Can you give us an overview of SIDSA Environmental’s role in waste treatment and process technologies?
SIDSA is a leading innovator in the field of waste treatment and process technologies, dedicated to delivering sustainable solutions that address the growing challenges of waste management.
SIDSA is a more than 52-year-old organisation with worldwide presence and has successfully realised over 1100 projects.
Our expertise is in the engineering and development of cutting-edge systems that enable the conversion of waste materials into valuable resources. This includes recycling technologies, waste-to-energy (W2E) systems, and advanced methods for producing alternative fuels such as refuse derived fuel (RDF). The organisation prioritises environmental stewardship by integrating energy-efficient processes and technologies, supporting industrial sectors—including the cement industry—in reducing their carbon footprint. Through our comprehensive approach, we aim to promote a circular economy where waste is no longer a burden but a resource to be harnessed.

How does SIDSA Environmental’s shredding technology contribute to the cement industry, especially in the production of RDF?
SIDSA’s shredding technology is pivotal in transforming diverse waste streams into high-quality RDF. Cement kilns require fuel with specific calorific values and uniform composition to ensure efficient combustion and operational stability, and this is where our shredding systems excel. In India, we are segment leaders with more than 30 projects including over 50 equipment of varied capacity successfully realised. Some of the solutions were supplied as complete turnkey plants for high capacity AFR processing. Our esteemed client list comprises reputed cement manufacturers and chemical industries. Our technology processes various types of waste—such as plastics, textiles and industrial residues—breaking them down into consistent particles suitable for energy recovery.

Key features include:

  • High efficiency: Ensures optimal throughput for large volumes of waste.
  • Adaptability: Handles mixed and heterogeneous waste streams, including contaminated or complex materials.
  • Reliability: Reduces the likelihood of operational disruptions in RDF production. By standardising RDF properties, our shredding technology enables cement plants to achieve greater energy efficiency while adhering to environmental regulations.

What are the key benefits of using alternative fuels like RDF in cement kilns?
The adoption of RDF and other alternative fuels offers significant advantages across environmental, economic and social dimensions:

  • Environmental benefits: Cement kilns using RDF emit fewer greenhouse gases compared to those reliant on fossil fuels like coal or petroleum coke. RDF also helps mitigate the issue of overflowing landfills by diverting waste toward energy recovery.
  • Economic savings: Alternative fuels are often more cost-effective than traditional energy sources, allowing cement plants to reduce operational expenses.
  • Sustainability and resource efficiency: RDF facilitates the circular economy by repurposing waste materials into energy, conserving finite natural resources.
  • Operational flexibility: Cement kilns designed to use RDF can seamlessly switch between different fuel types, enhancing adaptability to market conditions.

What innovations have been introduced in waste-to-energy (W2E) and recycling solutions?
SIDSA’s machinery is meticulously engineered to handle the complex requirements of processing hazardous and bulky waste.

This includes:

  • Robust construction: Our equipment is designed to manage heavy loads and challenging waste streams, such as industrial debris, tires and large furniture.
  • Advanced safety features: Intelligent sensors and automated controls ensure safe operation when dealing with potentially harmful materials, such as chemical waste.
  • Compliance with standards: Machinery is built to adhere to international environmental and safety regulations, guaranteeing reliability under stringent conditions.
  • Modular design: Allows for customisation and scalability to meet the unique needs of various waste management facilities.

How does your organisation customised solutions help cement plants improve sustainability and efficiency?
We consistently push the boundaries of technology to enhance waste management outcomes.
General innovations and new product development focus on:

  • Energy-efficient shredders: These machines consume less power while maintaining high throughput, contributing to lower operational costs.
  • AI-powered sorting systems: Utilise advanced algorithms to automate waste classification, increasing material recovery rates and minimising errors.
  • Advanced gasification technologies: Convert waste into syngas (a clean energy source) while minimising emissions and residue.
  • Closed-loop recycling solutions: Enable the extraction and repurposing of materials from waste streams, maximising resource use while reducing environmental impact.

What future trends do you foresee in waste management and alternative fuel usage in the cement sector?
Looking ahead, several trends are likely to shape the future of waste management and alternative fuels in the cement industry:

  • AI integration: AI-driven technologies will enhance waste sorting and optimise RDF production, enabling greater efficiency.
  • Bio-based fuels: Increased use of biofuels derived from organic waste as a renewable and low-carbon energy source.
  • Collaborative approaches: Strengthened partnerships between governments, private industries and technology providers will facilitate large-scale implementation of sustainable practices.
  • Circular economy expansion: The cement sector will increasingly adopt closed-loop systems, reducing waste and maximising resource reuse.
  • Regulatory evolution: More stringent environmental laws and incentives for using alternative fuels will accelerate the transition toward sustainable energy solutions.

(Communication by the management of the company)

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Concrete

FORNNAX Technology lays foundation for a 23-acre facility in Gujarat

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FORNNAX Technology, a leading manufacturer of recycling equipment in India, has marked a major milestone with the Groundbreaking (Bhoomi Pujan) ceremony for its expansive 23-acre manufacturing facility in Gujarat. Specialising in high-capacity shredders and granulators, FORNNAX is strategically positioning itself as a global leader in the recycling industry. The new plant aims to produce 250 machinery units annually by 2030, making it one of the largest manufacturing facilities in the world.
The foundation stone for this ambitious project was laid by Jignesh Kundaria, CEO and Director, alongside Kaushik Kundaria, Director. The ceremony was attended by key leadership members and company staff, signifying a new chapter for FORNNAX as it meets the growing demand for reliable recycling solutions. Speaking on the occasion, Jignesh Kundaria stated, “This marks a historic moment for the recycling sector. Our high-quality equipment will address various waste categories, including tyre, municipal solid waste (msw), cables, e-waste, aluminium, and ferrous metals. this facility will strengthen our global presence while contributing to India’s Net Zero emissions goal by 2070.”
FORNNAX is actively expanding its footprint in critical markets such as Australia, Europe and the GCC, forging stronger sales and service partnerships. The facility will house an advanced Production Department to ensure seamless manufacturing.

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Concrete

Decarbonisation is a focus for our R&D effort

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Dyanesh Wanjale, Managing Director, Gebr. Pfeiffer discusses the need to innovate grinding technologies to make the manufacturing process more efficient and less fuel consuming.

Gebr. Pfeiffer stands at the forefront of grinding technology, delivering energy-efficient and customised solutions for cement manufacturers worldwide. From pioneering vertical roller mills to integrating AI-driven optimisation, the company is committed to enhancing efficiency and sustainability. In this interview, we explore how their cutting-edge technology is shaping the future of cement production.

Can you tell us about the grinding technology your company offers and its role in the cement industry?
We are pioneers in grinding technology, with our company being based in Germany and having a rich history of over 160 years, a milestone we will celebrate in 2024. We are widely recognised as one of the most efficient grinding technology suppliers globally. Our MBR mills are designed with energy efficiency at their core, and for the past five years, we have been focused on continuous improvements in power consumption and reducing the CO2 footprint. Innovation is an ongoing process for us, as we strive to enhance efficiency while supporting the cement industry’s sustainability goals. Our technology plays a critical role in helping manufacturers reduce their environmental impact while improving productivity.

The use of alternative fuels and raw materials (AFR) is an ever-evolving area in cement production. How does your technology adapt to these changes?
Our vertical roller mills are specifically designed to adapt to the use of alternative fuels and raw materials. These mills are energy-efficient, which is a key advantage when working with AFR since alternative fuels often generate less energy. By consuming less power, our technology helps bridge this gap effectively. Our solutions ensure that the use of AFR does not compromise the operational efficiency or productivity of cement plants. This adaptability positions our technology as a vital asset in the industry’s journey toward sustainability.

What are some of the challenges your company faces, both in the Indian and global cement industries?
One of the major challenges we face is the demand for expedited deliveries. While customers often take time to decide on placing orders, once the decision is made, they expect quick deliveries. However, our industry deals with heavy and highly customised machinery that cannot be produced off the shelf. Each piece of equipment is made-to-order based on the client’s unique requirements, which inherently requires time for manufacturing.
Another significant challenge comes from competition with Chinese suppliers. While the Indian cement industry traditionally favoured our technology over Chinese alternatives, a few customers have started exploring Chinese vertical roller mills. This is concerning because our German technology offers unmatched quality and longevity. For example, our mills are designed to last over 30 years, providing a long-term solution for customers. In contrast, Chinese equipment often does not offer the same durability or reliability. Despite the cost pressures, we firmly believe that our technology provides superior value in the long run.

You mentioned that your machinery is made-to-order. Can you elaborate on how you customise equipment to meet the specific requirements of different cement plants?
Absolutely. Every piece of machinery we produce is tailored to the specific needs of the customer. While we have standard mill sizes to cater to different capacity requirements, the components and configurations are customised based on the client’s operational parameters and budget. This process ensures that our solutions deliver optimal performance and cost efficiency. Since these are heavy and expensive items, maintaining an inventory of pre-made equipment is neither practical nor economical. By adopting a made-to-order approach, we ensure that our customers receive machinery that precisely meets their needs.

The cement industry is focusing not only on increasing production but also on decarbonising operations. How does your company contribute to this dual objective, and how do you see this evolving in the future?
Decarbonisation is a key focus for our research and development efforts. We are continuously working on innovative solutions to reduce CO2 emissions and improve overall sustainability. For example, we have significantly reduced water consumption in our processes, which was previously used extensively for stabilisation. Additionally, we are leveraging artificial intelligence to optimise mill operations. AI enables us to monitor the process in real-time, analyse feedback, and make adjustments to achieve optimal results within the given parameters.
Our commitment to innovation ensures that we are not only helping the industry decarbonise but also making operations more efficient. As the cement industry moves toward stricter sustainability goals, we are confident that our technology will play a pivotal role in achieving them.

Can you provide more details about the use of digitalisation and artificial intelligence in your processes? How does this improve your operations and benefit your customers?
Digitalisation and AI are integral to our operations, enabling us to offer advanced monitoring and optimisation solutions. We have developed three distinct models that allow customers to monitor mill performance through their computer systems. Additionally, our technology enables real-time feedback from our German headquarters to the customer. This feedback highlights any inefficiencies, such as when a parameter is outside the optimal range,
and provides actionable recommendations to address them.
By continuously monitoring every parameter in real time, our AI-driven systems ensure that mills operate at peak efficiency. This not only enhances production but also minimises downtime. I am proud to say that our mills have the lowest shutdown rates compared to other manufacturers. This reliability, combined with the insights provided by our digital solutions, ensures that customers achieve consistent and efficient operations. It’s a game-changer for reducing costs and enhancing overall productivity.

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