Indian market could well have been catered from Birgunj, as well. But the choice of Biratnagar as the manufacturing site came for two reasons. First, of course, is that in spite of Biratnagar´s standing as a political and industrial hub much of the populous countryside has been economically backward. Labor availability and the presence of basic industrial infrastructure led Surya Nepal to choose Biratnagar.
The second reason is strategic in many ways. Biratnagar is closest to any of the ports for third country exports. It is also closest to markets in India but had no congenial environment for local productions then. Troubled places normally do not allow local productions to flourish but allow import of any product without any hindrance just as we feel comfortable in brushing our teeth every morning with imported Colgate tooth cleaning materials but found serious threat to our national pride when Colgate was having its own manufacturing operations in Nepal.
There is also another strange point about the beginning of Surya Nepal Garments. It did not just open its business at presumably the most difficult political environment in Nepal´s history, it was the time when garment industry as a whole was about to be written off as irrelevant. The privilege of multi-fiber agreement was waning and the entrepreneurs who made hefty profits in the period prior to that had already planned their exit. Surya Nepal Garments wanted to be a phoenix and prove that nothing is invincible.
Seven years later, they found that they were wrong!
What really pushed these people, with apparently challenging zeal, to lose their grit? Why did they lose their patience? Why are they so willing to waste millions of rupees of investments and not accept any rapprochement by iPhone-brandishing labor unionists?
Much of the story of the genesis of Surya Nepal Garments is not known to anyone. Even the promoters cannot narrate it in the same spirit as it was foreseen then. For almost two years at the outset, the promoters started marketing garments under their name, which was produced in other factories in Nepal under a mechanism known in business as “business outsourcing”. Within two years, their factory was ready, which was an acquisition of a manufacturing set up in the vicinity of Biratnagar. The business had an impeccable beginning with workers trained by an Italian trainer for over six months. Such was the zeal of the company to get perfection that they brought trainers from Italy. They did not hire anyone who approached them. They went to villages and selected women who should be given a job. They trained them. The objective was that that those without jobs should be given one so that they don´t have to take to guns. The objective of selecting women was also with some intent. The company management thought that elevation of women´s standing in the family is necessary for peace in the community. Grand objectives!
For four years, the company ran reasonably well by Nepalese standards (as frequent but short production disruptions are taken as routine in Nepal) with some seven hundred - mostly women - laborers. The company was outsourcing to other companies, as well, providing employment to over 1,300 workers in those companies. The problem seems to have started for trifling reasons because one splinter faction of Maoist Trade Union wanted to prove its mantle. Back in March, there was a strike for almost a week for no fault of the company but on the call of the central level Trade Unions. As per the “no work no pay policy” of the company, no payment of wages and salaries for that period was supposed to be made. The company had already paid, but there was an understanding that such payment would be deducted at the earliest. In June, the time came for such an adjustment.
Even before the adjustment was to be made, the workers in apprehension of such a deduction picketed Human Resource Manager´s office. They did not just do the picketing. They put nearly 40 senior management staff in confinement for almost 36 hours in the middle of June this year. Government agency charged with overseeing the operation of industries - the Ministry of Industries - did not know this. It did not even care what´s going on out there. The local administration, however, did all it can from the beginning. Morang Chief District Officer deserves all the credit for trying to resolve the dispute amidst all chaos, although he also could not succeed as the company itself found going out of the business because of the order-cancellation by major buyers in India and European countries. Companies do not produce for inventory build-up, they produce for markets. In today´s competitive business, markets do not have patience.
Trade Unions do not realize this but, in trade, compliance with time is extremely important. Surya Nepal Garments was exporting to India and a few prominent European countries to the tune of Rs 300 million annually. This market was growing. Recent trend in global garment trade indicated that traditional advantage of Chinese companies was eroding as the general wage level in China has been going up. There was prospect for Nepalese companies. But in fashion business - just as the garment is - timely supplies more than the prices is important. Stores in Europe, particularly in Italy with discerning customers, wanted their shelves to have predictability of supplies. The orders from Italy and France were cancelled when the news of Surya Nepal Garments being under trouble circulated in this age of rapid communications. When orders got cancelled, Surya Nepal had no other options but to think of something drastic.
Some four days after 40 managerial staff were held hostage by the workers in most inhuman conditions, not allowing them either drinking water or access to toilets, the management following due legal procedures called for a lock-out. It was back in June. Some of the middle-level staff recall how horrendous was the behavior of the workers that even pregnant managerial staff were not given humane treatment during that time.
During much of these two months, the top level management of Surya Nepal Garments made all attempts to present the reality of the problems to top-level politicians of all political parties in Kathmandu. But, who would hear? Procrastination has been the feature of political leaders in this country. Important issues are best postponed, but trivial issues, such as, distributing cash dole-outs in the name of financial assistance remains top priority in the agenda of any prime minster. Nepal is perhaps a rare country in the world where Prime Ministers pull out chits from their pockets in the Cabinet meeting with the names of individuals to be given financial assistance and get them approved as though the government treasury is his fiefdom. But very few prime ministers pay attention to what is happening to companies giving employment to hundreds of people and contributing to foreign exchange earnings. It was natural that a prime minister, struggling to have his tenure in office free from all political problems, not to pay attention to economic woes of a company and that too of an Indian heritage, as Surya Nepal is apparently a subsidiary of ITC India Ltd. Politics in our country is not about economics. It is just traditional feudal politics no matter what the progressive elements claim in theory. The behavior is totally feudal, contrary to what they claim in speeches and brainwash the rural youths.
When there was no one to help them except the Chief District Officer of Morang, who happened to be a rare government official acting as a professional, the management of Surya Nepal decided to permanently shut down the factory. The loss of orders and business was irrecoverable. The fixed investments made in the factory became irrelevant or “sunk cost” in the current context as there was no other recourse.
When the company declared its intention to close the factory, it received panic calls from so-called top-level leaders from major parties and almost all trade unions. But there was not a single call from either the prime minister or from his office. It was only then the private secretary of Industry Minister thought appropriate to call the factory asking if they can do anything. Nothing, when there was hardly anything to do in the context of investors putting in so much in spite of annual losses in anticipation of profits in the future. The future for the investors did not come. And with the closure, it would never come.
Hours after the announcement of the closure, the company outlined payment schedule of retrenchment benefits to workers. In less than 24 hours, 677 of the 700 workers took their payments. All of those were women. The company management says that there was no problem at all, although there are media reports that Trade Union leaders want the company to continue doing business. Yes, political party leaders have also been asking for the continuation of the factory. Fantastic! Which of the political party leader risks his or her personal asset for the employment and the happiness of others? Nobody, for sure! Asking others to give employment even when there is a loss is very easy, but practicing oneself is possibly not so easy. You got to be doing business.
Throughout the process, the company management noticed a strange point, however. This is important. This is even more important for the workers who lost their jobs and who will realize the loss in the near future as Dashain festival is coming so close. Most of the trade union leaders who came to negotiate with management came in either very expensive motorbikes or cars and almost all of them were sporting iPhones. Every now and then during the negotiations, they would produce very expensive hi-tech mobile handsets, while poor management officials would attend calls in cheap Nokia handsets. Where does the money for iPhones to so called proletariat trade unionists come from? Clearly, this is not what we are led to believe. This is something else.
Surya Nepal decided to close. It is sad. But it seems they did it for a reason. It does not really send good signals. But you can send good signals only when there is something good about it. It was a bold decision. I admire the decision. I still remember that decades ago just after my SLC examination, I read a novel titled “A stone for Danny Fisher” by not-so-mentionable writer Harold Robbins and I had cried for Danny Fischer on his death while he too was non-mentionable, my tears on the closure of Surya Nepal Garments!
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