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CRISIS AT MARUTI SUZUKI’S MANESAR PLANT

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TABLE OF CONTENTS

S.NO. CONTENTS SLIDE NUMBER

1 OVERVIEW 3

2 PROBLEM 4

3 FALL IN DEMAND 5

4 LOSS IN OUTPUT 6-7

5 WORKERS PERSPECTIVE 8-10

6 MANAGEMENT PERSPECTIVE 11-13

7 ACTIONS TAKEN 14-15

8 FACTS 16-19

9 SOLUTION 20-23

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OVERVIEW

India's largest passenger car company, accounting for over 45% of the domestic car market

First company in India to mass-produce and sell more than a million cars

Annually exports more than 50,000 carsManufacturing facilities are located at two facilities

Gurgaon and ManesarIt offers 14 brands and over 150 variants ranging from

peoples car Maruti 800 to the stylish hatchback Ritz

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THE PROBLEM

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FALL IN DEMAND

Expected fall in demand during crucial festive season, when car sales touch the peak.

The Manesar plant is the hub for the key 'Swift' model, which runs a huge backlog in the retail market.

The bookings for the new Swift and waiting list of customers are very high.

Delay in production affect the delivery of cars resulting in disappointment among customers.

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LOSS IN OUTPUT

Estimated loss of more than 90 million dollar.On August 24, 1,230 cars were planned to be produced,

but only 437 were assembled. Out of which, just 96 cars could pass quality check.

Halt in production on the 5th September, around 4000 workers rallied till the highway to block it.

Poor dispatch numbers with respect to meeting targets and quality control

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CONT.

With only around 20-25 of 950-odd workers agreed to sign the “Good Conduct” undertaking

Production was stalled as the company barricaded various entrances to prohibit entry of those who refused to sign the 'good conduct bond'.

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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

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CONT.

Revenge for June's strike.Cockroaches and dead flies found in the food in the hurried lunch-

break that workers earn in the canteen ½ km from the working station. The tea was without tea leaves or sugar in the 7 minute breakThe 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.

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WORKER’S DEMAND

Worker’s demand to establish an independent union Maruti Suzuki Employees Union (MSEU)in the company.

Currently, the company has one recognized union – Maruti Udyog Kamgar Union which is dominated by workers at the Gurgaon plant

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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 (VI) quality test.”

Source: http://www.ndtv.com/

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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.

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CONT.

"In the last three days, a series of serious quality problems have 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, dents were noticed on the body and critical components were not fitted on to vehicles. Such deliberate acts, if not detected during quality checks, would have led to serious implications and directly harmed customers," a senior company official said.

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ACTION TAKEN AGAINST EMPLOYEES

Suspension of 10 workers Dismissal of five Discontinued the services of six trainees.Also suspended four workers for "instigating indiscipline" a

week beforeAnother four suspended in late July for manhandling

supervisors.Charges of sabotage and causing quality problems in the cars

produced.On 14th August; police force of 500 send to occupy the

factory to ‘prevent violent activities’

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CONT.

The company terminated 11 workers and suspended 38 on August 29th and 30th on false charges demanding a ‘good-conduct bond’ with the state police and administration, the media, and ‘bouncers’ on its payroll as its willing pawns.

The Maruti Suzuki Employees Union (MSEU) is demanding as an immediate measure, the withdrawal of the charge-sheet, termination, suspension of the 49 workers. The workers are sitting day-and-night at the factory gate, peeling off the layers of Maruti Suzuki’s “way of life”.

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Facts

June –

1) 13-days strike demanding the recognition of the MSEU at the Manesar plant

2) Production loss of 12,600 cars, valued at about Rs 630 crore.

July –

1) Production stopped for a day at the same plant because of strike by some workers.

August –

1) Reported 12.74 per cent fall in sales for August to 91,442 as compare

to the sale of 1,04,791 units in the same month last year

September 7

1) Loss suffered is estimated at about 8,550 units, valued at about Rs 425 crore.

Source: Economic Times

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Confirmed by company’s spokesperson

Production is right now at a stop at ManesarThird production halt in three months at Manesar.The company stopped operations for 10 working days

in JuneThe firm lost Rs 400 crore because of the strike.

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Fall in Shares

Shares fell as much as 2 per cent on the news to close at Rs 1,080 on the Bombay Stock Exchange

SOURCE: TIMES OF INDIA

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According to Chairman R.C. Bhargava

“ Manesar labour problem is essentially a political issue and not a problem which involves any significant demand from the workers”

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Solution

Identified reasons of the conflict.

1. Establishment of separate union for Manesar Plant

2. Code of Conduct- Falling standards of manufacturing.

3. Basic sanitary enhancements demanded by the workforce.

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Trade Union Establishment

Trade union would be established with prior conditions: -

1. Members of the trade union to be nominated with consent of both workers and management.

2. The leader of this union would be appointed by the management.

If not agreed then management would move to plan B.

1. Technology oriented operations reducing demand of man power.

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Code Of Conduct And Sanitary Problems

ADOPT CHANGE PROCESS THEORY

Unfreezing

Change through cognitive restructuring

Refreezing

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Improved hygienic conditions at workplace reduces employee’s dissatisfaction

04/10/2023

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