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Who Should Be Held Responsible

By Marketing Reseach Team, 3EA
Who Should Be Held Responsible

The case is about Alang Ship Breaking Yard. It is considered as the Asia's largest ship breaking yard, which gives last bid to almost 350 ships of various sizes and generates 40,000 direct employment opportunity.

The case talks about the Ethical Dilemma faced by Mr. Amit Mehta, techno-managerial by education and later on joining the family business. Learning was mainly in the organized sector, where as application is in the so called unorganized sector. If you are at the place of Amit, how would you tackle this situation?

Amit at the age of 24 years inherits the business which was started by his father - Vijay Mehta two decades back. Right from 4-5 years of age, whenever any holidays in school, he used to go to with his father to the business place. As being the only son, he was always reminded that he has to inherit this business whenever such need arises in future.

This family business is of the Ship Breaking. They own a plot in Alang, which is located on the western coast of Gulf of Cambay, in the western part of India. The plot they owns right from the inception in early 80s. Now, Alang is considered as Asia's largest shipping break yard, which breaks almost 350 ships in a year, having almost 200 yards to carry out this activity.

Amit is a techno-managerial person as he completes his graduation in Mechanical Engineering and master's degree in Business Management, specializing in Human Resource. After one and half year of successful career in the organized sector, he comes back to the native to take care of his father's business due to certain family circumstances.

Being the formal study and career in organized sector, he comes back to the place which he now considers as mostly unorganized one. And he is also aware that now this is the place where he has to be.

Before actually joining the business, he simply used to come, sit and observe but was never involved in the business tactics. So, he started learning from the scratch itself. There was a time to bid for the new ship, and advice came from his father what should be considered while opting for the breaking. He told that you need to consider the age of the ship, trips which it has done so far, type of customers which it served, interiors and other information about the steel, wooden, etc. used. In short, Amit needs to make it sure that condition is proper so that he can get advantage in this deal. The moment deals were finalized, it was informed that it will take another 30 days to reach the ship in Indian shore and by that time, he needs to complete the remaining formalities. The day the ship entered the Alang boundary, government procedure came that he needs No Objection Certificate (NOC) from the concerned government authorities. By law, it needs personal verification by the concerned officers and subject to their approval, ship can be brought at the plot. He gave the formal request for the visit, and reply was given that official is busy and he needs to wait for few days. By this time, he understood that in the business where foreign exchange price is fluctuating on one hand and steel prices are varying on the other hand; one should reduce the number of days between actual deal and breaking so as to earn fast. When reminded again, he was informed that you come and meet in person. He was also informed by his father that you need to deal off the records to get your work done. In the meeting, when he asked for the date and time of visit, he was told that we trust you so if you say there is no hazardous material inside, I can issue the NOC. In this business your family is from the years, so your father knows everything and you convey him to complete the remaining deal. Amit got the first shock of his professional life that any hazardous material cancreate havoc for the workers and owners; no one cares to even visit it in person. Everything works on the verbal assurance.

By this time, he even contacted the Labour contractor to get work done with the help of contractual labours. Their own staff was less than 10. The remaining ones are always hired as and when needed. The agreement was done with the contractor that he had to identify the right labourers and provide them the safety equipments. The day ship arrived at the plot, rest of the formalities were over. From the next day work began with both own and contractual labours. When he said that working hours would be 8 hours each day, there was a little bit of dissatisfaction seen on the face of the workers but no comment was made by them. During this visit, he realized that less than 10% of the labourers have any sort of safety equipments like helmet, glasses, gloves, etc. When he enquired the labourers, they said, "We work like this only. It is not the first time that we are doing this task. From last 5-10 years we are doing it in the same way." Listening to this, he counterchecked with the contractor and the way response came from the contractor, it gave him a life-time shock, "Are bhai, yahan to aise he chalta hai! Aadmi to tin (3) mangoge to das (10) mil jayenge par aaj agar paisa nahi bachaya to kal kya karoge?" as if there is no value for the human life! At dinner table, he told this incidence to his family and conveyed that 'I am going to provide this facility to the workers.' The response from his father was 'I have really done a mistake to let you study so much and then involving in the business. You will wind up this business in another five years. This is the practice in this area, and don't try to be like King Harishchandra, who gave away everything to follow the truth.'

Whole night he could not sleep. Things which he learnt said that Human Resource is very crucial for any organization to differentiate. The practice which he observes is shocking where human life and safety has no value. The workers are treated as the worst possible and the least important resources.

The next day he determines that let my profit be reduced by 5%, but I want to make sure that workers are safe. He arranges for the gloves, glass and helmets immediately. On the next working day, he asks all the contractual workers to wear these and then only enter the ship, most of them were furious at this decision. They said something like this, 'Saab ander aaker kam karo to pata chalega, kitni garmi hai ... Hum to iske bina hi kam karte the or karenge behi... Hamen aapki koi chij nahi chaihiye' - in short, they are not ready to wear these due to tremendous heat on one hand and habitual to work without it. When he insisted, someone said 'Saab aaj to kam par aa gaye, kal kisi aur ko bula len... Hamen to apni tarah se kam karne ki aadat hai'. After all the dialogues, workers were ready to wear the helmet but denied for gloves. Amit was very frustrated with this. When he was relating it with safety of the employees, they are so used to work without this safety measures that now even the workers are not understanding its importance. By this time, even workers conveyed that they normally work for 10-12 hours in a day. So they want longer hours to work rather than increasing the number of days to work. Even the labour contractor said 'if you insist on such things, better find an alternative source of contractor - who can send workers to you.' He just looked at the calendar and he realized that it's 1st May, which is celebrated as Labour's Day in this part of the world!

By May end, scrapping was over, and the most material was sold to the contractors by the time. They were some materials left and no buyer was available for that, so he asked his fathers what should be the way. Vijay replied wait for one or two days, I will make an arrangement. Since nothing was done for another couple of days, Vijay said, 'No use of keeping this. Whenever such materials remain, we simply burnt it at the plot.' When Amit commented about its goodness for the environment, he was told to follow the norms of the business, rather than creating something new. Amit simply followed the instruction. He looked at the calendar in front and he realized that it's 5th June, which is celebrated as an Environment Day worldwide!

Since the next ship is to arrive after 15 days, he was simply recollecting his experience of last two months. He was in dilemma whether he was right or wrong. Who should be held responsible for this? The questions which arise in his mind were like these:

  • What is the role of government? Simply enacting the law or even looking for the implementation?
  • What should be the norms for NOC?
  • What should the working hours?
  • Who should provide the safety measures? Who will convey the importance of these equipments to the workers?
  • Relationship between what is taught in the business schools and its relevance in the actual business world

INTRODUCTION ABOUT ALANG
Alang ship breaking yard located on the western cost of Gulf of Cambay, in the western part of India, is the largest ship-recycling yard in the world, which accounts for about 70 percent of the ship breaking in the world.

Alang was started in 1983 with 3 ship breaking yards. Now the ship breaking yards have expanded to the capacity of 200 yards. These yards carry out the ship-recycling activities which form an industry by itself, as it provided around 40,000 jobs in Alang itself. 99% of them belong to migrant workforce. Approximately 350 vessels are scraped over here every year. Alang has become as one of the choicest ship-scrapping destinations for the ship owners around the world.

It generates steel totalling to millions of tons every year, that too, with minimum consumption of electricity. Nowadays, Alang is the prime and the biggest source for re-rollable scraps in India. It plays major role for exporting second hand ship machineries and spares from India to the rest of the part in the world.

Despite all the plus of the place and the economic performance it brings, it is continuously in the news because of one or the other reason. The latest news item is that government is planning to develop it as a full-fledged yard, and is looking for the partners who can invest in the same.

CONDITION OF ALANG WORKERS - AS TOLD BY THE OWNERS, CONTRACTORS AND REPRESENTATIVE OF GMB

  • Minimum wage act is strictly followed
  • Safety equipments are given to all the concerned, equipments include helmet, gloves, glasses, etc.
  • Working hours are fixed and that is 8 hours
  • Workers are registered on the paper before deploying for any work
  • Only after thorough physical checking, NOC (No Objection Certificate) is issued to break the ship
  • Formal as well as Informal training - regarding the work and safety measures - are given on time-to-time basis

In short, the claim is that all the rules and regulations are followed.

ACTUAL CONDITION OF ALANG WORKERS - AS TOLD BY WORKERS AND NEARBY VILLAGERS (ON THE BASIS OF ANONYMITY) ---

  • There is nothing as such minimum wage and hours fixed as far as working is concerned. Violation of all the acts as no implementation is done.
  • Living condition of these workers is totally unhygienic.
  • Less than 10% gets any sort of Informal Training, whereas work is mostly semi-skilled type.
  • No question of using safety equipments as most are unaware about these and its importance.
  • NOC is given more on the verbal assurance rather than physical checking.
  • Less than 10% of accidents are reported. The rests are buried so as to avoid any sort of compensation to the family of deceased worker.
  • The constant inhalation of fumes containing arsenic, lead, carbon monoxide and other elements lead to irreparable damage causes to the human immune system, reproductive system, etc.

ENVIRONMENT:
Economic

  • It generates 40000+ direct employment opportunity, 99% of whom are migrant workers
  • Business is created for the local community
  • In India, ship breaking contributes to over 10 per cent of the country's annual steel production, recovering about 2.5 million tonnes.

Social & Cultural

  • Nearby community is getting richer compare to their counterparts in the other area.
  • System of 'gharjamai' i.e. bringing son-in-law is increasing in the local community.
  • Migrant workers come alone, leaving its family behind. This leads to illegal sexual relationship - which includes both homo and heterosexual in nature.

Ecological

  • On one hand, with the least consumption of electricity and power, the fast depleting material like steel is saved, i.e. by reusing the same.
  • Burning of unwanted material is open creates hazardous situation for the workers and others
  • Normal temperature is on higher scale than what it should be on the any place near sea shore
  • When ship breaking is on, if you stay there for couple of days, it's difficult to breathe as lots of toxicants are in the air.

ECOSYSTEM CONCEPT:
It says that identify each partner/stakeholder in the business. Robust ecosystem is created when each one of them happy with what they are getting. The moment, even one is unhappy, dissatisfaction would be created and this will lead to disequilibrium in the industry. And the one who is unhappy will look for alternative ways.

Every business ecosystem develops in four distinct stages - birth, expansion, leadership and self-renewal, or, if not self-renewal, death.

Birth - work with customers and suppliers to define the new value of the business proposition and simultaneously protect yourself from the competitors who are even working on the same issue.

Expansion - of the business, in terms of product and/or market on one hand, and simultaneously defeat the alternative implementation of similar ideas

Leadership - provide a vision to lead the business in the changing condition, be the technical leader for your industry and simultaneously have strong bargaining power over the other players in the ecosystem

Self-renewal - bring new ideas to the existing system and on the other hand, create high entry barriers for the new comers to product the self-interest.

From an ecological perspective, it matters not which particular ecosystems stay alive, rather it's only essential that competition among them is fierce and fair - and that the fittest survive.

GLOBAL BUSINESS ISSUES

  • It is to be noted that ship breaking has become a mega private industry in various parts of the world, giving large profits to the owners.
  • The main purpose is to recover steel from the ships.
  • After these ships have exhausted their average life of 25-30 years in the sea, they are sent by the advanced capitalist countries to the ship breaking yards, mostly in India, Bangladesh, Pakistan, China, etc. for breaking.
  • In these developing countries, they recover the steel and other materials, and sell them in local markets, garnering huge profits.
  • The entire process is notorious for extreme hazards. In the name of international trade in ships for scrap, ships laden with highly toxic and hazardous substances like asbestos in all its forms, poly-chlorinated biphenyles (PCBs), zinc, lead, inflammable oil products, explosives, etc. are sent to developing countries for breaking - in contravention of the Basel Convention on Control of Transboundary Movements of Hazardous Wastes, held in 1989 under the auspices of the United Nations Environmental Programme (UNEP). It further called upon the OECD countries to decontaminate the ships at the port of origin before sending them to the non-OECD countries for breaking. However, this unanimous decision of the convention is being violated by the all OECD countries including the USA, the Netherlands, Greece, Belgium, Italy, Luxembourg, UK, etc.
  • Recently the Greenpeace successfully fought a case in the Supreme Court of the Netherlands to stop a Dutch ship "Sandrein" from sailing to Alang for breaking. In India too, the Supreme Court gave a verdict not to import the hazardous substances in the contaminated ships, as per the Basel convention.

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Article by: Marketing Research Team, 3EA