31 October 2011 Business business: labour

A Grinding Of Gears

The Maruti strike becomes a crucial test

A Grinding Of Gears
A Grinding Of Gears

Logbook Of Trouble

  • The dispute at Maruti’s plant in Manesar began with a 13-day strike in June. Workers wanted to form a new union.
  • Current strike on since Oct 7. Union wants 1,100 contract workers and 44 other workers taken back. Maruti says it will take back only contract workers.
  • Workers not keen on signing ‘good conduct bond’
  • Production down 50%. Manesar making only 200 cars daily now.


The two-week-old strike at Maruti Suzuki India Ltd, Manesar, has reached a point of no return: no one wants to step back. For the labour unions, it’s a do-or-die situation. In recent times, most strikes have fizzled out. If they can crack Maruti, it will be a major victory. And the management is afraid. If it concedes ground on this strike, labour will naturally become more demanding in times to come. Of course, everyone is watching: whatever the outcome, it will become a precedent for managements and unions alike.

What began four months ago as a demand to set up a parallel union has snowballed into a full-blown industrial dispute. State government mediation, declaring the strike illegal, a high court order vacating workers from the factory: these measures haven’t helped. Talks between workers and the management are on, but a solution is nowhere in sight.

“It’s in Maruti’s interest to solve the problem. It should take a long-term view, bite the bullet, or it will be hit hard.”
Hormadz Sorabjee, Editor, Autocar India

Support for workers is gathering in the region and across India. During the 13-day strike in June, 65 unions in nearby industrial belts of Gurgaon, Manesar, Dharuhera and Noida voiced their support. Today, there is support from unions at Maruti’s sister concerns, like Suzuki Powertrain, which manufactures engines for Maruti’s diesel vehicles and transmissions for its petrol cars, as well as from Maruti’s casting plant. Workers at Suzuki Motorcycle India, who do not have a direct link with the carmaker, have also struck work. With unions tasting blood, many fear the unrest may spread.

The Maruti workers’ demands are clear—reinstatement of 1,100 contract workers and another 44 who were terminated for indiscipline. Union leader Satbir Singh told Outlook, “We are firm in our demand that the victimised workers should be taken back and police cases against them withdrawn.” The unions are unfazed by rumours of Maruti shifting facilities to Gujarat (a la Tata Nano). But, in reality, the Gujarat project was planned nine months ago for a separate export-oriented unit, something the workers were already aware of. The company is to decide on the fate of the proposed unit by month-end.

Not surprisingly, the management is also firm. It is ready to accommodate the contract workers, but cannot agree on the remaining, citing a few incidents of manhandling in the factory and serious quality lapses in its products in August, which, it believes, was motivated by some unruly elements among the workers. Says a company official who wished to remain anonymous, “On the 1,100 workers, we are very clear (to take them back) and there is no dispute, but on the 44 people, the management wants an inquiry.” (The two sides had entered into an agreement on October 1, with the management agreeing to take back the 1,100 contract workers who were terminated, but insisting on workers signing a good conduct bond. On October 7, the workers struck work.)

“The perks given at big companies like Maruti aren’t provided by other Manesar factories. Violation of labour law is rampant.”
P.P. Sahu, Professor, ISID, Delhi

In the past, Maruti has addressed labour relations rather effectively. In its early days, then CMD V. Krishnamurthy started a system whereby the management and the union worked in close cooperation, a practice later followed by R.C. Bhargava when he became MD. Because of this, Maruti was relatively free of labour unrest, barring a few minor incidents. Obviously, the current situation is different. Seetha, a senior journalist who co-authored a book, The Maruti Story, with Maruti chairman R.C. Bhargava, says, “It is not a pure Maruti issue anymore and relates to labour-management relations across the industry. The problem is, companies are using old industrial relations practices which don’t work in today’s changed environment. They are not communicating enough with workers.”

That’s true, as there is a huge change in the social profile of workers. Earlier, workers were less educated and submissive; now, the younger lot is educated, aware, assertive and aggressive. A change that, perhaps, the Japanese management at Maruti—which has been in control in the last five years—did not factor in while bringing in new strategies and practices into the company. In fact, mutual mistrust has fuelled allegations around wages and “ill-treatment” of workers, who are not given adequate breaks between shifts.

Prof P.P. Sahu of the Institute for Studies in Industrial Development (ISID), Delhi, emphasises the connection between the change in management, management style, and the response of the working staff. “The bone of contention in Maruti’s case is the ‘good conduct bond’ that workers are being asked to sign. This must not have been expected earlier,” he says. ISID also studied the industrial belt of Manesar for wage practices among companies and found non-payment of minimum wages was widespread. “Even the minimum perks available at a big company like Maruti are not provided by other Manesar factories,” says Sahu. “Labour law violations are rampant in the area.”

“It’s no longer about Maruti alone. It’s about labour relations across industry. Old IR methods don’t work now.”
Seetha, Co-author, The Maruti Story

That’s why the Centre has steered clear and put the responsibility of finding a solution solely on the state government. The Bhupinder Singh Hooda government, which brokered the October 1 agreement, is also playing it safe. Labour is always a sticky issue and it does not want to be seen prominently on either side of the fence. After the recent electoral debacle at Hisar, it will probably be more cautious in dealing with workers.

As expected, the strike is hitting Manesar badly. A majority of households here have people employed in local factories; they want a solution before it spills over to other companies. Industrial relations at vendors are equally tense. “This (the strike) will affect the industry badly as millions are at stake,” says Ashok Kapoor, head of the Maruti Suzuki Suppliers’ Club and one of its top five vendors.

Maruti itself is in bad shape, with production suffering heavily. Hormazd Sorabjee, editor of Autocar India, says, “It is in Maruti’s interest to solve the problem. If the strike continues, it will hit Maruti hard as there are many good alternatives in the market. The company should take a long-term view and bite the bullet.” Against a capacity for 4,000 cars, the company is producing fewer than 2,000 vehicles, with the Manesar plant producing just about 200 a day.

In an auto market that is seeing nil to negative growth in the last few months, that’s not good news. Both sides must realise this. But who will blink first?


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