Manesar re-opens, labours over output

After a month’s lockout at its Manesar plant, Maruti Suzuki resumed production at the plant on August 21. However, normal production is still some way off as the carmaker still comes to terms with the labour strife that began in mid-July which resulted in the killing of a senior HR official and over 100 employees injured.

The fact that there are underlying tensions is borne by the fact that the plant was started amidst very tight security. While a 500-strong Rapid Action Force has been stationed outside, another 40-strong force has been deployed alongside the company’s own security staff to provide protection to employees both at work and at their homes.

Maruti’s labour strife has brought the focus squarely on the relationship between management and workers, and some may say, in particular, the tenuous relationship between labour and management at Japanese companies. In the recent past, there have been smaller labour issues at Honda Motorcycle & Scooter India, for example, but the sheer scale of what took place at Maruti has no precedent.

Maruti has taken a few, first cautious steps. With the support of the Haryana government, a probe was ordered into the violence and is still ongoing. While 500 employees have been sacked including 12 trade union functionaries, the company has begun to roll out cars at Manesar with just 300 employees. Accordingly, it has set a target of small target of 150 Swifts and Dzires to be rolled out every day. Production will be ramped up in phases.

Regularising workforce

Perhaps, the most important decision that Maruti has taken is to take on staff and regularise some of the over 1,800 contract workers it had. This group of workers had become the bone of contention since they apparently earned a lot less in salaries as compared to permanent staff which did the same work. Maruti has decided, and for the better, to hire these workers on its own and not via agencies that supplied these workers as was the case before. It will hope that a combination of disciplinary action (the sacking of 500 workers) and the hiring on permanent workers will alleviate the problem.

The Manesar plant was also the venue of labour strife on 2011. That resulted in the plant being shut in the weeks ahead of the festive season. As a result production halved in that month, affecting the company’s overall sales performance.Maruti will hope it can avoid a repeat of that scenario but that remains to be seen.

Gunning for Gujarat

Meanwhile, Suzuki chairman Osamu Suzuki was in India to meet with the team at Manesar as well as meet the Gujarat state authorities. It has been reported that the Gujarat government has granted Maruti a 640-acre plot for a facility, much smaller than the company might have wanted initially. With a plant in Gujarat, Maruti will be closer to the ports on the Gujarat coast that it uses. Gujarat is now India’s brightest spot in the automotive firmament thanks to big-ticket investments from Ford and Peugeot. As this area around Sanand evolves into a mature automotive cluster, it will attract an increasing numbers of players from the component side as well.

Most of Maruti’s existing vendors are placed in the northern belt which itself has expanded into Rajasthan where the Hero Group plans to set up its R&D unit. Honda Motorcycle & Scooter India too has begun to make its products there.

What the labour strife at Maruti has clearly indicated is the role of the state government. While state authorities can make the process smooth for industry by providing land for greenfield facilities (Gujarat and Tamil Nadu are cases in point), the government can also play a role in helping maintain law and order. The Suzuki chairman has gone on record to say that Manesar continues to be the home of Maruti. He could not have afforded to say otherwise. Maruti has much more than its oldest facility, Manesar, at stake. It has its state-of-the-art Gurgaon plant, as well as an R&D centre coming up at Rohtak.

Maruti is still the engine of growth in India’s northern automotive cluster. The stakeholders involved would do well to ensure that the company stays invested in the region.