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Norad-supported alloy workshop with a ban on trade unions: - We never thought about this

In 1987, the steel goods producer Einar Øgrey AS from Søgne, Norway, together with a local partner, started a new company in Sri Lanka. Alloy Fabricators International has had economical problems, and would not have survived without goodwill and support from NORAD and Einar Øgrey AS. The Norwegian interests have gone far in giving economic support to keep the company alive. Contrary to Norwegian practice, the company has a ban on trade unions.
Artikkelen er mer enn to år gammel. Ting kan ha endret seg.
In 1987, the steel goods producer Einar Øgrey AS from Søgne, Norway, together with a local partner, started a new company in Sri Lanka. Alloy Fabricators International has had economical problems, and would not have survived without goodwill and support from NORAD and Einar Øgrey AS. The Norwegian interests have gone far in giving economic support to keep the company alive. Contrary to Norwegian practice, the company has a ban on trade unions.


By Tarjei Leer-Salvesen
Norwatch

Alloy Fabricators International (AFI) is not the only company with a ban on trade unions here. We are just complying with the recommendations of the Board of Investment (BOI). Trade unions are not prohibited on Sri Lanka. In fact, they are sanctioned by the country's Working Regulations Act. However, the BOI does have a certain influence... And they have said no to traditional trade unions and encourage us to have separate meetings with the workers, says Wikramaphala Hewawitharana, managing director and co-owner of AFI.

Political trade unions
Several times, Hewawitharana returns to the point that getting organised in traditional trade unions is not allowed for the company's workers. And, repeatedly he refers to the BOI, even though his company is located outside of the free zones. The AFI is subject to the BOI guidelines in spite of its location. The company follows the BOI recommendation to arrange talks with some selected workers twice a year. In no way do these talks constitute a worthy substitute for trade unions in the country. But the arrangement causes a bit of confusion when NorWatch confronts NORAD with Alloy Fabricators International's ban on trade unions, and the AFI refers to the mentioned talks with employees and the circumstances surrounding them as a union. However, there is little doubt regarding the views of the local company management:

- Trade unions of this country are concerned much more about politics than the jobs of their members. They are spearheads for political groups in the country, says Hewawitharana.

In a telefax to NorWatch, following our visit, Hewawitharana defines what he feels is a correct description of the talks between the workers and management:

"In stead of the trade union, we have a workers representative council who liase with the Management for their grievances."

Good relationship with the workers
Alloy Fabricators International is specialising in producing processing components made from stainless steel. They also manufacture a substantial quantity of steel reinforcing material for airless rubber wheels used for trolleys and the like in various types of  industries. The company also produces a range of other steel components on commission, along with products made from other metals.

The AFI factory is not fenced in, and there are no physical barriers preventing contact between outside trade unions and the workers. NorWatch did get a positive impression of the working conditions in general. The accident statistics showed only one serious injury during the twelve years of the company's operation. This happened last year, and made the 1998 statistics look considerably worse than it would otherwise have been. One worker was away from work for eight months after hurting his hand in a drilling accident. The areas surrounding the production halls are messy. Discharge from cleaning the machines is scattered on the ground or lying in small piles here and there. Everything will be collected, says Hewawitharana. The steel refuse is sold as scrap iron. Like other Norwegian companies on Sri Lanka, AFI are slow to repay the loans from NORAD, and not until later this year will they finish the long round of repayments for their last NORAD loan. Wikramaphala Hewawitharana is full of praise of his Norwegian partner and of NORAD, and says that without their efforts, the company would never have existed. Today, the AFI is a resource to other companies, and they supply important components to a number of development projects around the country. However, all companies affiliated with the BOI are obliged to export a substantial part of their production. In 1998, 5% of the production was exported to Norway and a great deal was exported to Belgium. It is expected that Norway will increase their import to 20% of the company's production in 1999. Of all the companies visited by NorWatch on Sri Lanka, AFI are paying their workers best. Wages vary between LKR 5500 and 7000 (Sri Lankan Rupees - 8,5 LKR equals 1 NOK) for fully and partly trained workers. A beginner's salary for the first six months at the factory is LKR 4000. Working hours are from 8 a.m. to 5 p.m. on weekdays and 8 a.m. to 1.15 p.m. on Saturdays. The workers, 55 in all, work 2 shifts.

- It has been a very successful strategy to approve interest-free loans to our employees, for example, when they want to build new houses, says Hewawitharana.

NorWatch talked to a couple of workers, who had a lot of good things to say about the company management. However, they were puzzled as to why there is a ban on getting organised in the country's trade unions.

- The time is not ripe
The Alloy Fabricators International company was established in 1986, and production began in 1987. It was initially owned by Wikramaphala Hewawitharana, along with Hydralift AS and Einar Øgrey AS from Norway. When Hydralift was sold to Bjarne Skeie, the company's shares in AFI were sold to Øgrey. Now, the company is a 50-50 joint venture between Øgrey and Mr. Hewawitharana. As NorWatch calls up managing director Einar Øgrey to confront him with the ban on trade unions at Alloy Fabricators, his reply comes swiftly.

- We have done so many good things! We have created employment, and given our workers a good salary. We give interest-free loans to workers who want to build houses. We run our business well, and we even make money from it. Ban on trade unions, you say? Actually, I have never thought about the question of trade unions on Sri Lanka. Never.

- We were asked by NORAD to get involved in the country. They visited our factory in February, and they had no negative comments at all.

Øgrey, however, quickly points out that he wishes nothing but the best for his workers, and that he is by no means against trade unions per se, at least not in Norway.

- I'm not against trade unions at all. In Norway, I have a trade union at my company, which is a good thing. It helps communication with employees run better. But on Sri Lanka? I do not know if the time is ripe yet, Øgrey says.

Einar Øgrey AS on Sri Lanka
Einar Øgrey AS owns 50% of the steel goods producer Alloy Fabricators International (Pte) Ltd (AFI) at Mt. Lavinia on Sri Lanka. The other 50% are owned by Wikramaphala Hewawitharana, who is the local partner and managing director. NORAD has supported the AFI several times. At the moment, the company is setting up a joint venture company together with the Norwegian company Jiffy (from Krisitansand), to produce flowerpots at a location south on Sri Lanka.

Norwatch Newsletter 9/99