MARUTI’s LANKA-

‘A Sensational IR Case at Manesar Plant’

SUBMITTED BY: SAMAN AFROZ

AYESHA REHMAN

About Maruti Suzuki:

• Type: Public• Traded as: BSE: 532500

NSE MARUTI BSE Sensex Constituent

• Industry Automotive• Predecessor(s) Maruti Udyog

Limited• Founded 1981• Headquarters New Delhi India• Key people Shinzo Nakanishi

CEO & MDProducts Automobiles

• Revenue 37,522 crore (US $ 6.79 billion) Net Income 2,288 crore (US $ 414.13 million)

• Employees 6,903 (2011)• Parent Suzuki Motor

Corporation• Website www.marutisuzuki.com

INDUSTRIAL RELATION

Industrial relations is a multidisciplinary field that studies the employment relationship.

1997Change in ownershipConflict between the United Front Government and Suzuki

2000Employees went on an indefinite strikeDemanding revisions to their wages, incentives and pensions.Employees used slowdown in October 2000, to press a revision to their incentive-linked pay.

IR Continue….

The standoff between the union and the management continued through 2001.

The management refused union demands citing increased competition and lower margins.

2011

In September and October 2011 production at Manesar was severely affected due to labour unrest

Later union leaders resigned after accepting hefty dues.

Manesar violence July 2012

18 July 2012

Maruti's Manesar plant was hit by violence

The incident is the worst-ever for Suzuki since the company began operations in India in 1983.

Workers attacked supervisors and started a fire that killed a company official and injured 100 managers

The violent mob also injured nine policemen.

The company's General Manager of Human Resources had both arms and legs broken by his attackers, and was charred to death.

How it happened?

Cont…

Cont…

PROBLEM FROM WORKERS VIEW POINT

• “If the floor supervisor is rude and even slaps us, he is awarded with a promotion but in case a labourer dares to reply, he is issued a notice on grounds of disciplinary action," said Rajender Kumar, a technician

Other causes…

• A supervisor had abused and made discriminatory comments to a low-caste worker.

• Workers union demanded the reinstatement of a worker who had been suspended for beating a supervisor.

• Harsh working conditions and extensive hiring of low-paid contract workers.

Contd…

•The company doctor give heavy doses of ‘instant’ medicines even on minor complaint so that disruption of work could be prevented.

•One day’s wage cut of Rs.1500, two days Rs.2200, three days cut of Rs.7-8000 is implemented, so that almost the total month’s wage is cut.

•One second late into punching-card entry is a day’s wage cut, but they have to give full production for that day too.

• Forced to fill an undertaking form, which means that in case of any problem, workers cannot raise any objections against management.

WORKER’S DEMAND

Five-fold increase in basic salary

A monthly conveyance allowance of Rs.10,000

A laundry allowance of Rs. 3,000

A gift with every new car launch

A house for every worker who wants one or cheaper home loans for those who want to build their own houses.

4 paid weeks of vacation be increased to 7 weeks

Each worker have 40 days allowance of sick and casual leave - for a total of 75 days.

MANAGEMENT VIEW OF PROBLEM

“ Unhappy workers have found out a new way to disrupt ongoing work at the plant by creating serious defects in quality of the cars, so they would fail the compulsory vehicle inspection quality test.”

Cont..• Workers indulging in deliberate attempts to reduce output and are

compromising customer interests.

• Revenge for the June strike.

• Refused to sign good conduct form which aims at ensuring the production of good quality products.

• Employees are being charged with sabotage and causing quality problems in the cars produced.

• "In the last three days, a series of serious quality problems had been observed in the vehicles produced. For example, vehicle door was not properly clamped leading to doors falling during production, wiring harnesses were found cut in produced vehicle etc. Such deliberate acts, if not detected during quality checks, would have led to serious implications and directly harmed customers," a senior company official said.

Action taken by the Management

On 18th July 2012, Maruti's Manesar plant was hit by violence as workers at one of its auto factories attacked supervisors and started a fire that killed a company official and injured 100 managers, including two Japanese expatriates.

An FIR was filed with the police.

91 employees were arrested & 55 accused were searched.

The recorded CCTV footage has been used to determine the sequence of events and people involved.

All work at Manesar plant was suspended indefinitely.

S. Nakanishi, MD & CEO of Maruti Suzuki India declared a lockout saying that safety is more important than business.

The shut down of Manesar plant lead to a loss of about Rs 75 crores per day.

WORK RESTORED(21st August 2012)

• Maruti Suzuki India finally started partial operations at Manesar plant under tight security arrangements.

• Over 500 Police-men and security personnel were deployed in and around the plant to ensure the security and peaceful start of operations.

• Only 300 workers joined for a single shift, which rolled out 150 cars per day which was about one-tenth of the total capacity of the plant which is capable of producing 1500+ cars when running at full capacity.

‘Manesar Workers are the Villians’: Truth or Prejudice???

• The events of 18 July in the Manesar plant of Maruti Suzuki which ended with the murder of a manager were not a sudden conflagration.

• Anger at the plant had been building up for months over the management’s refusal to recognise an elected union; workers were increasingly frustrated over their inability to exercise their constitutional rights and the demand of equal pay for equal work was falling on deaf years.

• Rather than portraying the workers as villains, managements in this industrial belt of Haryana have to ask themselves why they have not been able to develop a democratic industrial relations framework that can address the concerns of workers.

Fighting for Recognition

• What is clear is that workers and the union leaders had been increasingly frustrated by Maruti Suzuki management’s disrespect towards their elected union, to establish which they had sacrificed much and had also adhered to all pre-conditions laid down by the management so that it would “allow” the Haryana Labour Department to register the union!

• Workers of Maruti Suzuki were also pressurising their union not to give in to management demands to form a grievance committee and welfare committee, as agreed to by the previous union (the Maruti Suzuki Employees Union) in the October 2011 settlement. Workers feared that the management would use these committees to build a parallel system of governance and subvert the functioning of their democratically elected union and deny its legitimacy and recognition.

• Managers and labour officers, who regularly visited the shop floor in Manesar, were fully aware of the mounting concerns, anger and frustration of the workers and yet did nothing to address and defuse the situation. Instead the Maruti Suzuki management escalated tensions by trying to intimidate the union leaders to agree to its terms – no collective bargaining and no serious discussion on the charter of demands until the union agreed to form the grievance and welfare committees! It refused to yield to the union’s conciliatory gesture that the formation of these committees could be a part of the negotiations and not a precondition.

Four Industrial Relations insights from the Maruti

Suzuki Strike

Negotiation b/w management & MSWU

The determination of the permanent workers of Maruti Suzuki to redress the injustice being meted out to their fellow workers in the name of business exigency and need for flexibility is evident from their stand taken during negotiations as reported by them.

The MSWU(Maruti Suzuki Workers Union) offered to give up one year’s worth of arrears and economic benefits if the Maruti Suzuki management ensured implementation of the long-term agreement (LTA) on all casual and contract workers employed at the Manesar plant.

Maruti Suzuki fixes Wage Settlement Agreement

Maruti Suzuki India finally reached a wage settlement agreement with its workers at its Gurgaon plant, under which

The employees will get an average salary hike of Rs 18,000 per month spread over three years.

Under the three year agreement, to be implemented with retrospective effect from April this year, the workers will receive 80 per cent of the increased salary in the first year and the rest in the following two years.

It is a satisfactory agreement considering that even a junior level employee will get a hike of Rs 15,000 per month.

The workers will get transport allowance of Rs 1,200 per month.

Cont.. Besides, MSI has agreed to increase the medical allowance of the workers apart

from increasing the number of yearly scheduled holidays to 12.

"Gurgaon plant workers have readily agreed to the offer and the new three-yearly agreement will be signed in the next few days in presence of Labour Department officials. However, in absence of any union at Manesar plant, workers there will have to give individual acknowledgment to their superiors.

The company has also reduced the probation period for technician trainees to two years from three years.

Besides, MSI will bear 90 per cent of medical expenses up to Rs 1 lakh for workers' parents, while it will be 80 per cent in case the expenses is over Rs 1 lakh.

Maruti Suzuki management’s recent announcement, that by 2013 it will ensure no contract worker is employed in its core production processes.

Latest News

• New Swift launch delayed due to strike.

• Contract worker regularization to be done soon.

• Full worker strength had been achieved by September end.

• Planning to manufacture 850 cars per day.

THANK YOU!!!