Working paper titled ‘Multiplying Multi-Plants and Large Plant Size: Consequences, Costs and Rationale’ highlights concern about “midgets making widgets” i.e., the growing trend of "multi-plants" in Indian manufacturing.
Key highlights
- "Midgets making widgets" phenomenon
- Indian firms are increasingly setting up multiple factories (multi-plants) in the same state instead of expanding a single large factory.
- Multi-plants now account for 35% of employment in large firms (those with over 200 workers).
- Large plants either stagnated or shrunk in the last two decades despite sharp increase in contract workers.
- Silver lining: There have been a series of investments in which worker size has been 10,000 and upwards in electronics, apparel and footwear in Tamil Nadu and Karnataka
- This could have been triggered either by China plus one opportunity or new subsidy schemes.
Reasons for midgets making widgets
- Indian businesses deliberately keep their operations small to manage the risks and regulatory pressures (like Industrial Dispute Act, 1947).
- Example, in case of dispute shutting down a plant with five hundred employees is less costly than one with five thousand employees.
Consequences of midgets making widgets
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