No privatisation, No Job loss, OFB says on its corporatisation plan

Kolkata: A day after the three unions of civilian employees at the Ordnance Factory Board (OFB) launched a countrywide month-long strike at 41 Ordnance Factories to protest against the Centre's attempt of corporatisation of the government-run defence production establishment, the OFB has ruled out any privatisation and threat of job-loss of workers.

It also came out with a list of advantages if the corporatisation takes place.

On Wednesday the OFB stated, "There is no privatization of OFB. There is no threat to the job security of the workers. The proposal is to corporatize OFBs. This is being made in the long term interest of the workers to improve efficiency and productivity of 41 Ordnance factories spread all over the country. The need for corporatization to make the OFB autonomous and transparent was recognized a long time ago. Three committees - T.K.A. Nair committee (formed in May 2000), Dr Vijay Kelkar Committee (formed in 2004), Raman Puri Committee (formed in April 2015)- have given various recommendations to improve the working of Ordinance factories."

The Ordnance Factories were set up to serve the needs of the Armed forces, but have been facing the performance issues for a long time, according to the OFB statement.

"The issues are: (i) OFB has all along supplied products to Armed forces on nomination basis which has not really given incentive to OFB to improve its quality of products
(ii) Poor quality issues of OFB products have been constant cause of concern of the armed forces
(iii) High cost of OFB products have been primarily due to high overhead charges in OFB including high maintenance charges, high supervisory and indirect labour charges.
(iv) There is minimal innovation and technology development in OFB products as there is no incentive for the same
(v) There is low productivity of plant and machinery and manpower. There is variation of productivity across the factories," it said.

The OFB elaborated that its proposed transformation from a government department to a public sector corporate entity will have several advantages which it has listed as following:

(i) Improvement of the efficiency, move towards optimal costs
(ii) Reduce import dependency for arms and ammunition.
(iii) Enhanced combat efficiency of the Armed Forces and ensuring customer satisfaction through timely delivery.
(iv) Greater penetration in defence export market.
(v) Leap frogging technology and innovation for self-reliance in defence.
(vi) Sustainable business model and creation of jobs in the long run.
(vii) Increase production capacity and retention of capability & knowledge base.
(viii) Improve flexibility and dynamism in decision making as corporate entity without shackles of Government procedures.
(ix) Move away from cost plus mechanism to competitive pricing.
(x) Under-utilized capacities in factories will be better utilized.
(xi) Timely supply and quality of supplies by the factories will be improved.
(xii) Currently OFB is a production centre with dependence on expensive foreign technology. Corporate entity to move from production based to technology based organization enhancing self-reliance.
(xiii) Greater export focus.
(xiv) Increased turnover/profitability to lead to enhanced employment and better service conditions for employees.
(xv) Greater flexibility in technology acquisition through overseas assets.
(xvi) Top management in the corporatized structure would be in a position to   provide leadership and could initiate change process to respond to competition. The factories may be able to create new streams of revenues by leveraging engineering and technological capabilities.
(xvii) Corporatised Ordnance factories may not require finances from the   Government to fund modernisation and R&D and can become financially self-supporting organisation.
(xviii) Corporatised Ordnance factories can form strategic alliances with Indian and overseas companies to develop new products and carve out a niche in the international armament industry.
(xix) It is seen that in the last three -four years Chairman’s tenure has been less than one year (two of them having tenure of 6 months each). This hampers continuity in the working of OFB as also impedes bold decision making for the benefit of the organisation. Corporate OFB will ensure fixed secure tenure for top management based on DPE guidelines.