Collecting Michelin Debt on Their Ethical Code

On March 6th 2019, Michelin, a France based multinational tire manufacturer company, acquired 80 percent of Multistrada Arah Sarana (MASA) majority stocks, valuated at 439 million USD. Since 2017, Michelin was a major buyer of Multistrada motorcycle tire products, and then it was change into an acquisition intend. This interest based on Michelin’s calculation that MASA’s market outlook will increase. When MASA was bought out, its stocks priced at 11 percent, while the motorcycle tire line was at 9-10 percent.

What Michelin didn’t know is that Sum Hing Indonesia Ltd.’s (PT. SHI) labor force is the backbone of Multistrada’s chain of production. They are the workers who carry out the moulding production of Michelin branded tires, both the motorcycle line and the car line.

Sum Hing labour force, united under Labor Fighter Trade Union (SPPB PT. SHI), is in the midst of fighting for their right to become permanent employees through industrial relations dispute proses in the legal system.

The workers’ demands originated from contract practices, including outsourcing contract, which deemed unfair and in fact, are a violation of the labour laws. Sum Hing Indonesia Ltd. was hiring outsourced workers from NIndy Putri Mandiri Ltd. They were assigned in the production sections which are permanent, which consist of storage, disassembly, mould repair, assembly mould, finishing and machining, and quality control.

Meanwhile, according to Article 65 and 66 Regulation Number 13 of 2003 on Manpower (Labour Laws), outsourced workers only allowed to be hired in the supporting sections of the production department. Production jobs have a permanent nature to it, so the workers that employed in that section supposed to be permanent contract workers. Thus, they were not supposed to be hired under a Fixed Term Employment Contract (PKWT). They were supposed to be hired as permanent workers under an Unfixed Term Employment Contract (PKWTT), in accordance with Article 59 of Labour Laws.

Article 59 regulates the usage limit of Fixed Term Employment Contract workers. It stipulated that workers that operate under a Fixed Term Employment Contract (PKWT) are only allowed to work in the impermanent production section, have the character of seasonal jobs with no more than three years period of working. Yet some of Sum Hing Indonesia Ltd.’s workers have been working under Fixed Term Employment Contracts (PKWT) for five years.

This case had been through the mediation step of the legal process under Bekasi District’s Municipal Representative Office of the Manpower Ministry (Disnaker). As the result of this mediation, the government institution issued two official recommendations. The first one, Recommendation Number 565/91/Disnaker, recommended that the disputed workers, or Sum Hing Indonesia Ltd.’s workers who have been employed under Fixed Tem Employment Contract (PKWT) yet they have been operating the main sections of the production process, should be promoted as permanent workers, as stipulated in the Article 59 Clause (7) Regulation on Manpower. Second, Recommendation Number 567/1660/Disnaker dated march 18th 2020, recommended the outsourcing workers to be promoted as permanent workers.

Michelin is committed to manifesting the OECD’s vision. OECD or The Organisation for Economic Co-operation and Development is an intergovernmental economic organisation which aims to stimulate economic progress and world trade. And Michelin demands all of their suppliers, vendors and subcontractors to abide by OECD’s standards. In the publication released by OECD, one of the standards that mandatory for all company which operates in the OECD’s country members, in terms of their labour and employment policies, is:

“Companies should be guided by the principles of equal opportunity and equal treatment in all of their operational activities. Thus, in terms of employment relations and titles, companies should not discriminate against its workers on the basis of race, skin colour, sex, gender, religion, political ideology, nationality, social origin, social status, or any other status for that matter. Exceptions are only allowed if and only if workers characteristics are further determined by government policies, which aim for further advancement of greater equality, in terms of work opportunity and in relation with special needs of a specific job.”

Sum Hing Indonesia Ltd. using outsourced workers in the production section for jobs that have permanent nature and not for supporting jobs such as cleaning service, shipping and courier service, catering service, security, and mining.  There is no reason for Sum Hing Indonesia Ltd. for employing outsourced workers.

The principles of equal opportunity and equal treatment in terms of labour and employment relations in the OECD standard can be deemed violated by Sum Hing Indonesia Ltd. as Michelin supplier.

Another content of OECD standard is “When a multinational company operated in a developing country, and could not found comparable companies within the country, thus the company have to provide the best possible options for: wages, benefits and work conditions, in accordance with government policy frameworks. This requirement has to be aligned with the company’s economical capacity, but at the bottom line is that the company should provide sufficient basic needs of its workers and their families.”

As it was referred to “providing the best possible options..”, so the best possible option for the workers is for the company to fulfil the recommendation of the Bekasi District’s Municipal Representative Office of the Manpower Ministry (Disnaker) to change their contracts, to turn them into permanent workers, and to give the terminated workers their rights.

On this ground, the workers intended to report Sum Hing Indonesia Ltd. to Michelin and held everal protests to collect the promise of Michelin’s ethical code. The first protest was held in front of Michelin Indonesia Lt’s office at Pondok Indah Office Tower, Sultan Iskandar Muda Street, South Jakarta, on July 19th 2020. The next protest was held on August 11th 2020, at the same location. Then again, the same protest at the same location on August 30th 2020.

One of the workers who works in the storage section, let’s just call him AN, explains that there are twelve workers in his section but only two of them who are permanent workers, “there are twelve people in one section, but only two who are permanent workers, including the leader. I myself signed a direct contract with the company, but some of my colleagues are outsourced workers from Nindy Ltd.”

Intensifying his colleague’s assertion, AR from the Assembly section, mentioned that in his work section, only the supervisory positions have status as permanent employee, “Leader and Foreman have permanent employee contracts, the other operator don’t have that privilege.” He also mentioned that there are 259 people working as Sum Hing Indonesia Ltd’s employee.

The workers’ demand for Michelin to insist on enforcing their ethical code is not the same as severing the supplier relation or to stopping their supply order. They only wish for Michelin to make sure their products are derived from ethical chain of production, which consider human rights in their business practices. Michelin’s ethical code is recognition of human rights standards in business. The implementation of this ethical code is assuring all Sum Hing Ltd.’s workers have their permanent employee contracts.

The dispute which filed by the workers should be seen as a self-check mechanism or self-control medium which helps the company to make sure its products produced from ethical business model which guided by human rights standards. If Michelin not ready to be held responsible for their own ethical code, then the ethical code itself is just a lip service to manipulate stakeholders and public perception.

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References:

[1] Bisnis.com. (2019, 06 Maret). Michelin Resmi Beli Saham Multistrada Arah Sarana (MASA). Accessed 27 Agustus 2020 from https://market.bisnis.com/read/20190306/192/896860/michelin-resmi-beli-saham-multistrada-arah-sarana-masa;

[2] Michelin. (2020). Michelin Code of Conduct. Accessed on 27 Agustus 2020 from https://www.michelin.com/en/documents/michelin-code-of-ethics-2/

[3] Organisation for Economic Co-Operation and Development. Pedoman OECD bagi Perusahaan Multinasional. Accessed 27 Agustus 2020 from https://industriallindah.files.wordpress.com/2012/10/oecd-versi-indonesia-11-okt12-fa-cetak.pdf

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