When Osamu Suzuki, the patriarch of Suzuki Motors, left India after his first visit in the early 1980s, he promised the newly formed senior management of Maruti Suzuki a “gift” on his return to Japan. When several large packages that finally arrived were opened, out came time-clocks to be punched by all employees. Thus was born the modern Indian corporation. Many practices Indian companies take for granted today—mandatory attendance, relentless punctuality and perpetual productivity—began with Maruti. So did the company uniform, the common canteen for all employees and even common toilets for workers and managers. As Maruti’s people’s car sales soared up the charts, its workers became the subjects of envy. Wearing the uniform became a matter of pride.
Sure, there were some labour issues at the automaker, and a few major strikes—one in 1988 and a three-month biggie in 2000—but nothing that upset the image of Maruti being a worker-friendly company. Obviously, something has dramatically changed since. The $7.5-billion Maruti Suzuki is since 2007 a fully-owned Japanese company that still lords over 50 per cent of the Indian car market. It made $290 million in profits in 2011-12. But its massive unit at Manesar, 91 km from Delhi, has been such an unhappy place over the past year or so that you could be forgiven for thinking it’s another company.
The ancillary economy A 100 villages around Manesar hold a mahapanchayat over the Manesar violence. (Photograph by Manoj Kumar)
Ask both workers and managers at Manesar, and they agree it has been a matter of “unbearable tension” to work there. There have been two strikes in the past 13 months. And now, the factory has been in a lockout since the July 18 outbreak of labour violence that claimed the life of HR manager Awanish Kumar Dev and sent over 100 professionals and workers to the hospital. In the villages in and around the area, economic gloom is slowly setting in. Most of the 3,000-odd workers at the unit are in hiding, and the police, in a bid to catch the culprits, have started picking up family members of workers to exert pressure.
What has gone so terribly wrong at what was once considered one of the best places to work in India? While we still don’t have a complete picture of what exactly led to matters going out of control, by all accounts Manesar was a combustion waiting to happen. Fuelled by a deteriorating working environment, abusive supervisors and bouncers, employees were under pressure, depressed and scared. Why, even the deceased Dev had wanted to quit the company! Many blame the Japanese management for its insensitivity and inability to understand or handle a situation that was careening out of control. While relentlessly chasing higher production targets, they seemed oblivious to the urgent signals being sent out by restive workers. “The management did not quite know how to deal with a new band of people representing workers,” says Tamaki Tsukada, minister (economic), Japanese embassy, New Delhi.
At the heart of the problems facing the company has been the workers’ demands for better wages and working conditions. Over the last 15 months or so, the workers have been complaining about the huge disparity in salary between contract and permanent workers. While the permanent workers earn between Rs 16,000 and Rs 21,000, contract workers get just around Rs 6,000. Since both groups do the same work, the demand for pay parity has grown strong with every passing month, given the rising prices and inflation. “The middle management,” says former Planning Commission member-secretary Sudha Pillai, “is being exposed to the danger of having to impose inequitable policy and violation of the policy of equal pay for equal work.”
That’s not all. The workers have often complained of inhuman treatment at the hands of supervisors who have the sole mandate of extracting as much as possible from them. The result was constant confrontation and abusive behaviour from the supervisors, and cases of retaliation from workers when matters reached a flashpoint. “If someone is late for a shift, supervisors behave abusively with them. It amounts to a big mental stress for all of us,” says one of the workers in hiding who spoke to Outlook.
Body blow Injured Maruti employees in a Gurgaon hospital
Since a majority of the workforce is under contract—that is over 2,000 out of the 3,000-odd workers at the Manesar unit—the company has always managed to rein in labour activism. Hiring contract workers also helps reduce the wage bill and buck India’s archaic labour laws that prevent companies from easily hiring and firing employees. Last year, the management even pushed the workers to sign a Good Conduct Bond, where the workers had to agree that they would maintain decorum in the factory. Only a few signed.
Meanwhile, working conditions were being stretched. The workers say they were provided two 7.5-minute breaks within which they had to travel a good half a kilometre to either the canteen or the toilets and get back to work on the dot. The contract labour was also aware that despite being hired in large numbers, no effort was being taken to impart additional skill to them. Says P.P. Sahu, a professor with the Institute for Studies in Industrial Development in Delhi, “The labour situation is getting very bad. No one is thinking of the worker; the industry has created a class of pseudo-workers or supervisors who are tasked with carrying out management policy, including exploiting workers, and take home fat salaries.”
Last October, things reached a head when the company management refused to register a union of the workers’ choice and imposed one of its own. This angered workers and led to a two-week closure. “This led to the employees feeling their problems were not being taken care of by the management. The trust deficit started building up when the management refused the formation of a union,” says Mahantesh Sabarad, senior VP, Fortune Equity Brokers, who tracks the Maruti stock. From the management’s perspective, it was a simple matter of discipline. The workers, however, saw it as an infringement of their right. The matter was resolved when the state government intervened and a tripartite agreement was signed under which the company agreed to allow the union and for it to negotiate new wages.
Clearly, the Japanese management has not been able to pick up from there and resolve issues with its workforce. Its Indian operations are one of Suzuki’s few profit zones—so it is desperate to keep it going that way. On the other hand, with the arrival of the global automotive biggies in India and increased competition, Maruti Suzuki’s marketshare, though still the largest in India, has been losing heft. The company sold a staggering 11.34 lakh units in 2011-12, down 10.8 per cent thanks to the Manesar shutdown and the shift away from petrol cars.
If you add factors like increased local and import costs, it is evident that Maruti Suzuki has been completely out of the comfort zone it has enjoyed in India for a long time. So the management has been pushing workers and continuously making demands to increase their productivity through increased workload (measuring workers, for instance, by new systems like “actions per minute”). In the last few years, while production figures and profits have increased, workers have remained more or less in the same place. The last wage revision took place in 2009.
It is not a coincidence then that the labour issues have heated up in the past few years, soon after Maruti Suzuki became a fully Japanese company. An auto sector veteran agrees that the absence of Indian management could have played a role here. Says an HR official who works in the automobile sector, “Unlike Koreans who work together with the workers on the shopfloor, Japanese are not present, and observe from a distance only.” This cultural factor could have had an impact on worker-management relations, with the supervisors bearing the brunt of it on the shopfloor. Labour problems have been surfacing in other Japanese and Korean firms of late, but that could also have to do with a more demanding workforce.
Maruti’s bosses have, of course, asserted that the company was making every effort to look at the workers’ demands and was in the process of wage negotiations both at Manesar and Gurgaon (see box). It is not clear then why the present agitation, with wage revision as one of its main demands, erupted at all. Analysts feel there was a gap between the management’s understanding of the labour issues in India in general and the Manesar plant in particular. “Recent labour issues at the Manesar plant are totally different from previous strikes on many aspects that reflects more psychological issues rather than being mere materialistic issues,” says a report on the developments by Karvi Stock Broking. Manesar does have a younger workforce than Maruti’s other plant in Gurgaon (which also has more permanent employees).
Many in the auto industry also feel that, like any other industrial belt, political influence is casting its long shadow over Maruti’s affairs—unlike in the past. Says Ravi Wig, chairman, Council of Indian Employers, “There are reports that several political appointees are working in Maruti. Such workers have their own vested interests. They may have been throwing their weight around, banking on their political patronage.” Interestingly, even though the Bhupinder Singh Hooda-led Haryana government was involved in last October’s settlement, it has not been able to play any role in resolving this matter.
Caravan stops rolling Trailer trucks outside Manesar plant. (Photograph by Tribhuvan Tiwari)
Of course, it has now stepped in to calm the waters, given the sudden appearance of Gujarat CM Narendra Modi on the scene. While there’s no way Maruti Suzuki can shift out of Haryana, the nervousness is understandable after the experience of Tata’s Nano plant. The local villages have also jumped into the act in order to protect their local economies that are so dependent on Maruti’s massive 600-acre plant. It is also not surprising that the trade unions—carefully weeded out by the Maruti Suzuki management from influencing its workers—are using this occasion to now make inroads into the company.
Says Manish Sabharwal, CEO, Teamlease, “There is large-scale politicisation of unions and criminalisation of politics which is a combustible cocktail and is trickling down to unions in companies.” In their defence, union leaders say that the workers could not have resorted to violence if they were not provoked or even manhandled by guards, police or the company-hired bouncers. “It is strange that for over two months there was not a single incidence of violence. How can it happen that without provocation the same set of workers resort to such mindless violence?” asks Tapan K. Sen, general secretary, CITU.
Maruti Suzuki officials say they won’t resume operations in the Manesar plant till the security and safety of the workers and managers is ensured. That, given the current situation, could take a long time, seriously affecting the company’s balance-sheet. About 35 per cent of the company’s production comes from Manesar, which accounts for revenues of around $220 million a month. The plant also produces Swift, D’zire and A-Star, Maruti’s new money-spinners that are much in demand and also have a waiting list.
The company has indicated that it will reduce its exposure to contract labour, and employ more permanent staff through fresh recruitment as well as by absorbing the contract labour. This could further vex its balance-sheet, as the wage bill will go up substantially. According to analysts, if the lockout lasts for two or more months, the company stands to lose the production of 75,000-1 lakh vehicles, a significant dent in revenues. The prognosis is grim. Says Mitul Shah, automobile analyst, Karvy Stock Broking, “The lockout may go on for longer. This may affect its sales as the inventory too is exhausted.” Also taking a hit will be Maruti’s robust vendor ecosystem, spreading the pain for a company and brand close to the heart of a large number of Indians. For that, it has only itself to blame.
Suzuki’s 5-S formula
What employees should do to improve shopfloor efficiency
Suzuki’s 3-G Sutra
What employees must consider for problem-solving
Suzuki’s 3-M Recipe
What employees should eliminate on the shopfloor
Suzuki’s 3-k Mantra
How employees must interpret shopfloor orders
Catching All The Wrong Signals
Industrial relations at Maruti’s Manesar plant were a disaster in the making
By Arindam Mukherjee with Lola Nayar
Apropos your cover story The Autopsy Report (Aug 6), the Japanese work culture and their admiration for the Gandhian trusteeship approach to industrial relations works wonders. However, Japanese bosses are not all that sweet to their subordinates in foreign countries. The massive violence and industrial unrest at the Honda Activa plant in Gurgaon a few years back was triggered by Japanese managers’ derogatory name-calling of Indian workers. It was the latter, though, who were brutally put down by the Haryana police. Regarding Maruti’s troubles at Manesar, one needs to find out if the unheard-of worker indiscipline and trade union militancy were an act of sabotage by rival business interests. It must also be noted that industrial relations in the automobile industry have been at an all-time low in different parts of India, including at Kirloskar in Bangalore. In the post-liberalisation era, contract labour, increasing job insecurity, poor wages and dismal working conditions are, of course, reasons for labour unrest, but the government too is often pro-capitalist/ industrialist. If such employee grievances are not settled at the earliest through government initiative, such labour problems, as Netaji Subhash Chandra Bose (also a well-known trade unionist and industrial relations expert) had said, will metamorphose into major political issues.
G. Anuplal, Bangalore
It is regrettable that I have been quoted totally out of context in your cover story, as if I am of the opinion that the problems at Maruti were attributable to the nonchalance of the management. This is not only incorrect but misguiding. My basic position is that the recent Maruti Suzuki incident was not a matter of trade unionism or labour conditions, but a case of criminality, which is not mentioned anywhere. The correct quotation should have been “Difficult to say but with the benefit of hindsight one can always argue that they should have been more cautious to stop the escalating tensions or that Maruti Suzuki should have been aware of the pent-up emotions among the workers, but these are all easier said than done. In this particular instance there is no excuse for such a criminal behaviour.”
Tamaki Tsukada, Embassy of Japan in India, New Delhi
Why is it that all the unrest happens only in Manesar, and not any other Maruti plant? Is it because it is the plant that the competition fears the most, given that it produces India’s highest-selling cars—the Swift and the Dzire?
Gaurav Nigam, on e-mail
Political appointees on the shop floor, union leaders (social scums quite a few of them), goondaism by our political leaders, police inaction (because the constable has paid substantial consideration for the job), a self-centred, unaccountable and corrupt bureaucracy, absence of social and general discipline in our schools, society and polity leading to the degeneration of our collective moral fibre—these are some of the causes of such horrible events as the violence in Manesar.
D.C. Joshi, Jaipur
I have done consulting with the auto industry and have been on production floors. I can vouch that not only are these guys well-paid but also have perks and conditions that could be the envy of corporates. Nothing of the sort that your story seems to think actually happened. The fact is that unions exist today not to protect workers but to keep them in check for political gains.
Jatinjit Singh, New Delhi
Even a guard at an apartment complex earns Rs 5,000-6,000 a month for a job not requiring much skill. Surely a factory worker, that too at an automobile factory with a good market share and a global brand, can ask for more humane and fair compensation?
Rajesh Chary, Mumbai
It appears that in their quest for driving worker productivity, the Suzuki management ignored HR issues at the factory in recent years, and paid for it. They need to review worker motivation issues. In many instances, a change in a company’s personnel policies has resulted in better worker productivity. At the same time, asking for a change in HR management does not mean condoning workplace violence.
Dipto C., New York
You blame the Japanese management ethos and the Indian work culture. However, if goonda elements enter the workforce, any company would be helpless. Ditto with Maruti.
Dinesh Kumar, Chandigarh
Wages can be raised, of course, but they may make the plant uncompetitive because other costs like transport and energy are higher in India, the price of having a shoddy infrastructure. The only way to be competitive in India is to keep salaries low.
M.K. Saini, New Delhi
Both the management and the workers’ union at Maruti are to be blamed for not taking recourse to the grievance redressal mechanism available in the Industrial Disputes Act. It’s also sad that, despite the earlier violence at Manesar and the subsequent 33-day lockout, the management did not do anything to address worker issues. It’s time the government too amended outdated and archaic labour laws, to draft legislation that protects both management and worker interest.
K.R. Srinivasan, Secunderabad
The Japanese had quite a different approach to work culture in their industrial establishments till the arrival of western capitalistic companies in the country. They used to give their employees a lifetime attachment to their industries, so much so that two-three generations often remained employed with the same firm.
H.C. Pandey, Delhi
Nothing, absolutely nothing justifies the brutal killing of the HR manager at Maruti.
Great companies are not built on the foundations of the misery of labourers. The Manesar imbroglio is a case in point.
K. Chidanand Kumar, Bangalore
How is it that there are no riots at other Japanese automakers or even at other Maruti plants?
Arun Murthy, Bangalore
So, we don’t want foreign management ethos, but don’t mind FDI! Remember Kanpur, once called the Manchester of India, had big companies fleeing it due to the communist unions.
Dinesh Chauksey, Bhopal
India has lost the top manufacturing position to China already. Services alone can’t provide jobs to our teeming youth. Nor are such jobs sustainable.
Shubhang Pandya, Ahmedabad
None can hold brief for the violence petpetrated in Manesar plant of Maruti. But is it in any way justified on the part of the management for its continued intransigence of turning a deaf ear to the grievances of thousands of contract workers, whose owes had started overflowing for years? What really went wrong with the committes constituted an year hence,to attend to the grievances and welfare of the employees? When Satyam hit headlines for the fraud committed by its chairman Ramalinga Raju for causing huge loss of 3000 crores, the need for a purposeful trade union was widely debated. Sadly the globalisation spawns unfair,unethical,unlawful labour practise for the avaricious corporates like Maruti to exploit.When are we going to have a relook at the inhuman reforms?
If the employees felt the management was doing something illegal, it should have taken legal action.
Firstly, there are terrible labour laws against the management already. Secondly, they have no business murdering a human being just because they felt he did something wrong ( did not give them employment in this case )
The rule of the law says that if a worker is employed for more than 11 months , his name must be included in " muster roll " which means an attendance register which can be examined by labour department.
Once in a muster roll, the worker can still be dismissed because he/she as an employee, is considered to be on probation for a period of 11 months only. Once a probation period is also finished an employee would be entitled to certain rights including medical benefits of ECI and others which include PF, gratuity, annual CL's and EL's etc., He cannot also be removed from job without a strong reason and a stipulated notice period.
What employers do is that before the end of 11 months , the workers or their contract is terminated and a fresh contract or an employment is made as if he/she were working for the first time. This vicious circle would never end. Another problem is that such a worker slowly loses an ability to do any other types of work or he would not get opportunities.
Those employers who do not want to employ so many workers outsource their components or spare parts or other services for customers. That is in other words try to depend on ancillaries. But for cleaning jobs or manual labour , ancillaries would not help. Contractors who supply cheap labour cannot supply man power who can work in a highly sophisticated industry like car making industry. Test drivers for example in TELCO get high salaries due to seniority and some of them may be paying income tax.
In Maruthi something went wrong in a drive to maximize profits. Maruthi since beginning has been earning huge profits, more profits than one can imagine for a car maker. Obviously work ethics and worker and employer relations suffered. Proof of eating is in the pudding.
There are many car making companies, not just Maruthi alone. In Indian bike making industry the volumes come from Indian bikes like Bajaj and TVS rather than foreign makers. TATAs in their whole history had no strikes in their plants or it was extremely rare. Same is the case with TVS.
Utter crap from a commie hand in glove with the murderers. Why are there no riots/major problems at other japanese auto plants or even at other Maruti plants? Go, sell your dung in Cuba or North Korea (even China will throw you out).
You have tried to blame Japanese management ethos and Indian work culture. However, if goonda elements enter the work force, any company would be helpless. Maruti, it seems, could not keep the goonda elements out.
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