Thursday, December 14, 2006

Factories in the city

I read a piece yesterday about Century textiles finally shutting shop in Bombay and moving its operations to other areas. Theres a larger piece today on how textile mills are moving to Gujarat. Companies are continuing to move operations out of the city; Morarjee has moved out of Bombay to Nagpur as have dozens of others.

The textile mills of Bombay are more of a glorious past. The areas of Parel and central Mumbai were the home to these mills. Even today you can see chimneys, old 12 foot high walls. These mills were doing well until the textile strike of 1982 broke their back.

Bombay was a port city and because in the old days factories were constructed closer to ports, the central Bombay area began to house textile mills. Once textile mills happened, it acted as a magnet for other industries (including cars, pharma, chemicals and also fertilizers). A lot of land was reclaimed and factories were built. Over time the city grew to encompass them, so much so that Thane Belapur industrial belt - a chemical zone- was in fact stated to be "out of Bombay", but today the city has expanded into these areas as well. As the city grew, so did land prices and wages. So, pure economics suggests that they should move out to places where labour and land rates are lower and the high cost land put to better use. As we were once told at a briefing on how Piramal came to acquire the space that the Crossroads mall sits at - this space belonged to a pharma company that they had taken over (Roche?) and it was actually a factory - legend has it that they manufactured Crocin (or equivalent) there. Why should someone manufacture Crocin or textiles or cars or fertilizers (RCF is still there) in the middle of a city?

It is one thing to be nostalgic about it and it is another thing to view it pragmatically and say, well, obviously, there is no reason for factories to be in the city since they dont make money being there. Among other things, in the heart of a city (any city, why Bombay), it is difficult to get daily wage workers cheap and results in high cost of operations. Most industries have found it unviable to continue in a zone of high wages like Bombay and they have moved out. Then land prices are very high. As of today many textile mills and other mills have morphed into land holding companies, housing colonies, malls and bowling alleys. And they are minting money through their land in a way that they never did producing textiles.

No comments: