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Copy of Maruti Suzuki India Ltd

Copy of Maruti Suzuki India Ltd

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Published by Vidya Swaroopa

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Published by: Vidya Swaroopa on Sep 04, 2012
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09/04/2012

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Maruti Suzuki India Ltd. has been having a harrowing time since Wednesday when about 3,000workers rioted, leaving a senior manager dead, more than 100 people injured, and part of thepremises charred.
The incident renewed global concern about workers’ violence at industries in India, especially in
the automotive sector, and at Maruti in particular.
India’s largest car maker by volume was wracked by labor unrest for much of last year at its
plant at Manesar, in the northern state of Haryana. But a nearby plant at Gurgaon, a suburb of New Delhi, has been functioning relatively smoothly.Underlying the tension at the Manesar plant has been a year of strained relations, especiallybetween managers and the new Maruti union, whose leaders have been accused by the car maker
of instigating Wednesday’s violence.
 Labor woes at the facility, located about 50 kilometers from New Delhi, date back to June 2011when workers halted all activity, demanding recognition fro
m Maruti’s management of their 
newly-formed Maruti Suzuki Employees Union. Workers had pressed for a union that, they said,
fairly represents them and functions independently from the one at Maruti’s Gurgaon plant,
which they claim is pro-management.A 10-day agitation then ended after the management agreed to take back 11 workers who were
sacked for disciplinary reasons. The company, however, didn’t agree to recognize the new
Manesar union. In August, Maruti asked workers from Manesar to sign a so-
called “
good
conduct bond” after the company found what it claimed were “serious and deliberate” quality
problems in cars made at the plant. Workers were prevented from entering the factory beforethey signed the bond, leading to an impasse that lasted more than a month.The workers at Manesar finally relented, signed the bond, only to re-organize their protestswithin the factory premises. Production was stalled for another two weeks. Their principaldemand was recognition for the union though they also called for the reinstatement of more firedworkers.The strike ended on Oct. 21 only after intervention from the Haryana state government.
As part of a tripartite agreement between Maruti’s management, the workers’ union and the
Haryana government, Maruti agreed to take back 64 suspended workers but continued its inquiryagainst 30 other suspended employees.The 30 workers who remained under suspension included two of the top office bearers of theMaruti Suzuki Employees Union, Sonu Gujjar and Shiv Kumar. In November, The EconomicTimes reported that Maruti paid Mr. Gujjar and Mr. Kumar 4 million rupees ($72,365) to leavethe company. The report also alleged that the remaining 28 expelled workers were asked to quittheir jobs in exchange for 1.6 million rupees each.On Saturday, R. C. Bhargava, chairman of Maruti, said the 30 workers took voluntary retirementbut declined to elaborate. Sonu Gujjar and Shiv Kumar have been unavailable for comment sincelast year.
 
With that, Maruti may have thought its days of unrest were over. But workers at the plant foundnew leaders and regrouped under union chiefs Ram Mehar Singh and Sarabjeet Singh. Theybegan negotiating with the management on issues such as wages and the registration of theirunion.
This time, Maruti agreed to recognize the workers’ union. “The state government, taking a cuefrom the incidents in the past, wasn’t interes
ted in registering the union. But we insisted and the
union was finally registered in February this year,” S.Y. Siddiqui, Maruti’s chief operatingofficer for administration, said on Saturday. “In fact the workers sent me a box of sweets after 
we helped th
em in registering the union.”
 
The new Maruti Suzuki Workers’ Union took charge at Manesar with Ram Mehar Singh and
Sarabjeet Singh spearheading it as its president and general secretary, respectively. The two mentoday are among 12 union leaders and several others workers wanted by the Haryana state police
for their alleged involvement in Wednesday’s riot. They were not available for comment.
 
“The relations were improving bit
-by-bit. We learnt our lessons and established acommunication channel that never b
roke down,” Mr. Bhargava said on Saturday at New Delhi.Wednesday’s incident came as a complete shock to us, we were still talking to the workers.
 
Maruti Suzuki said last week’s violence began after a worker and a supervisor got into a scuffle.
Workers claim that the supervisor made a caste-based insult, but both the company and policedeny that.
The Manesar union isn’t affiliated to any of the umbrella organizations of trade unions in India.
But, expressing its solidarity with the Maruti workers, D. L. Sachdev, national secretary of theAll India Trade Union Congress Thursday blamed the Maruti management for the current crisis.
“The discontent among regular and contract workers has been going on. Unfortunately, themanagement hasn’t been able to resolve the
 
issue,” Mr. Sachdev said.
 
A burnt out section of the Maruti Suzuki manufacturing plant at Manesar, July 19
 
Four reasons behind Maruti Suzuki'sManesar problems
 Last year, labour unrest resulted in a loss of over Rs 2,500 crore for the company. So, what'scausing Maruti such big problems at Manesar? ET Magazine looks at four reasons that could have resulted in the simmering tension between the management and workers at Maruti Suzuki.
 
The Missing India connect
 Since 2007, two important changes have happened at Maruti. One, Shinzo Nakanishi,the current MD of Maruti Suzuki, took over the reins from Jagdish Khattar. RC Bhargava, who was adirector, was made chairman. Two, Maruti and the India market are also becoming increasinglyimportant for Suzuki Motors. Till recently, Maruti contributed more than half of the parent'sprofits.As Maruti's contribution to Suzuki has increased, the latter's tendency to control India operationshas increased. Agreed, it has an Indian chairman but Bhargava is 78 years old. It does have manysenior Indian executives who have been 'lifers' at Maruti. But insiders who will speak on thecondition of anonymity say the Japanese voice counts and often tends to dominate crucialdecisions. Culturally, Indians and Japanese are far apart. Their sense of discipline, punctuality,employee connect too are very different. Some loss of connect with Indians is expected.
Leaner, Meaner Pressures
 The challenges of running manufacturing outfits have surged. Costs and wages have increasedand sales are poor & volatile. Doing business is difficult. Doing profitable business is even moredifficult. Every company is figuring out ways to bring down costs and improve productivity.Most have contract labour to bring in flexibility and reduce costs. At Maruti's Manesar factory,40% workers are on contract and their salary could be half of the regular workers. Maruti isamong the better pay masters.Amid all this, competitive intensity in the marketplace for Maruti has never been as severe.Being a volume player, the only way for it to survive and flourish is to churn out more and morecars. All this has translated into relentless pressure to improve productivity and margins at alllevels. For Maruti, this pressure is particularly high. Not surprisingly, the Manesar plant, thatchurns out two top-selling models in the Maruti stable
 — 
Swift and Dzire
 — 
is at the heart of allthe strife.
Young & Restless Workers
 In Haryana, young blue-collar workers have seen dramatic changes around them. Land priceshave surged as Gurgaon has become a commercial hub. Overnight, people have become rich and

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