Financial Times

Dankotuwa says labour issue has been resolved

By Duruthu Edirimuni Chandrasekera

Dankotuwa Porcelain Limited (DPL), the leading porcelain tableware manufacturer says it has managed to see eye to eye with its employees pertaining to the thorny remuneration issues DPL has been having with them.

Sunil Wijesinha, Chairman/ Managing Director DPL told The Sunday Times FT the worker strike has been settled which was due to the Cost of Living Allowance (COLA) being restricted by the company. "The COLA was given to the DPL employees for the last 20 years and it is not easy to remove it, but if we did not limit it, none of the investors will invest in the company," he noted.

DPL initiated a dialogue with the unions last year for a compromise, but after several months, the discussions came to a stalemate. "The workers just would not budge. Then we repudiated the collective agreement with the employees, because we could not let things slide," Mr. Wijesinha said.

"We came up with a new formula which limits the COLA increase to Rs.1000 a year plus an increment of Rs.750 a year. This agreement will be operational till 2010," he added.

He said the bonus formula was highly biased towards the employees. "One third of the profits were given to the employees. This has a history to it, because the previous management (in 1996) had granted very high bonuses to them. It was difficult to reduce it," he explained. Dankotuwa pays high salaries (linked to cost of living index) to its workers which accounts for an average of around Rs.16,000 per employee, however the industry average remains low at around Rs.8,000 per employee.

"When we repudiated the collective agreement, it meant that we no longer will have to grant bonuses to employees on the former formula. DPL has 1,100 staff members, while the industry totals 2,500.

Mr. Wijesinha said that an average DPL employee tenure is 20 years. "We give them uniforms, shoes, subsidised lunch, cream biscuits twice a day, an annual trip and a host of other benefits. Our welfare cost per month is Rs.2 million," he added. DPL union officials could not be reached for comment on this issue.

Meanwhile the company is presently developing a new porcelain product to make use of their abandoned kiln.

"We have developed certain samples to manufacture 'fine china', which is a new product. Now we have achieved 75 percent perfection.

When we perfect this, we will take a final decision to manufacture this product with the Fast Firing Kiln (FFK) which is now unused," Mr. Wijesinha said. Presently the kiln is under impairment provisioning in the DPL accounts, which means it is not written off. "We will restructure it, but we need to do that in stages. We can do it once the fine china product is perfected," Mr. Wijesinha said. He said the decision will be taken to produce fine china in about four months time.
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