Strikes by Workers Led to a Contract Failure for Freight Car Production

Modern Industries, one of the largest freight car manufacturers in India, has faced significant difficulties in fulfilling its contract with Indian Railways (IR), this is reported by the railway transport news portal Railway Supply.

The contract, initially signed in July 2022, stipulated the supply of 9,200 wagons worth 37.8 billion rupees ($450 million).

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However, due to ongoing worker strikes, the company has managed to deliver only 71 wagons over two years.

Worker strikes at Modern Industries began shortly after the contract was signed and are still ongoing, which has significantly slowed down production.

In May 2024, IR decided to reduce the order to 3,100 wagons worth 12.9 billion rupees ($150 million) under the force majeure clause of the contract.

Worker strikes fall under this category, allowing IR to revise the contract terms.

However, even the reduced order remains unfulfilled, forcing IR to consider terminating the contract and redistributing orders among other suppliers.

As part of efforts to update the freight car fleet, the Indian government placed a large order for 79,800 wagons worth 314.2 billion rupees among seven suppliers, including Modern Industries, in July 2022.

The largest orders were placed with Titagarh Wagons and Texmaco Rail and Engineering, which received orders for 24,200 and 20,000 wagons, respectively.

The situation with Modern Industries has revealed serious problems in labor organization and management at the enterprise.

Ongoing strikes point to deep structural issues requiring immediate resolution.

While the company’s management attempts to resolve conflicts and resume production, IR is forced to seek alternative suppliers to ensure timely delivery of wagons for its needs.

The potential termination of the contract with Modern Industries could significantly impact the company’s financial condition and market reputation.

Other suppliers, such as Titagarh Wagons and Texmaco Rail and Engineering, may take advantage of the situation to strengthen their positions and secure additional orders.

The Indian government and IR continue to monitor the situation and take steps to minimize risks associated with delivery delays.

Additional measures to support manufacturers and improve working conditions to prevent similar situations in the future may be taken in the near future.

Photo, source: modernindustries.co.in

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