Maruti Manesar Strike

a. What incident took place at Maruti Manesar plant? 1. A huge mob of 600 workers of 2 factories at Manesar armed with sticks and rods attacked the organization. The incident took place at 6 p.m on Wednesday. 2. The mob attacked any supervisor or manager on that they could lay their hands on and ended up killing a senior Human Resource executive, Awanish Kumar Dev. 3. They injured 100 other employees including two Japanese Nationals. 4. They completely damaged the fire safety building, security office and conference rooms of the factory. At least 100 cars were also damaged. b. Cause of Strike? 1. There was dispute and conflict between the management and workers. In 2011, Maruti witnessed 3 strikes between June and October on the issue of creation of Independent Workers Union. 2. Wage negotiations were also underway but took a lot of time. 3. The workers wanted talks to cover 1500 contractual workers but Management was reluctant. This pissed off the workers also they had perception that workers at Manesar plant were not treated and paid well as compared to that of workers of older Gurgaon factory. c. What added fuel to the violence? 1. A brawl between a worker and a supervisor was the prime cause of conflict between management and union. Jiya Lal, a shop floor worker, abused Ram Kihsore Majhi, a supervisor and pushed him near a pit. 2. Ram then made some casteist remark that inflamed Lal. Ram then informed the management about the incident between him and Jiya Lal which asked the union for a meeting. In later half of the day, Maruti suspended Lal leaving the union member unhappy. 3. As a result of this workers did not allow second shift operations to begin and turned violent while discussions were still underway. d. Cause of police inability to contain violence? 1. Maruti called 50 armed policemen around 3.00 p.m 2. The police men decided not to act till the workers started setting the factory ablaze. 3. Policemen said they were insufficient in terms of nos to stop the strike.

e. Did any agreement happened last year i.e. In October 2011? 1. The company had signed a tri-partite agreement (That is a agreement between workers union, organization and government) with the workers and the state labour commissioner in October to put an end to strikes last year itself. 2. The management agreed to take back the suspension of most the workers and also relaxed the penalty of eight days loss of pay for every single day of strike. 3. Workers were also allowed to form their own independent union but disallowed to affiliate themselves with any bodies such as CITU or AITUC. Other issues like availability of transport from bearby areas were also taken into consideration. 4. Two committees, a Grievance Redressal Committee and a Labour Welfare Committee, were also set up. 5. Nearly 30 employees with serious charges were kept under suspension and later given VRS. f. Importance of Manesar plant for Maruti 1. Manesar is the newest factory of Maruti and is more efficient and highly robotised. 2. It is spread over a large area and has huge stockyard capacity of stocking as many as 30,000 cars. 3. The 2 factories make 5, 50,000 cars a year, around 1,500 cars a day. 4. The factory accounts for around 40% of Marutis overall capacity. 5. Maruti will also come up with new (3rd factory) factory in Manesar by Mid 2013.

g. Affect on production of specific models due to Lockout 1. Four models are manufactured at Manesar they are Swift, Dzire, Sx4 and A Star. 2. Swift and Dzire are highly successful models of Maruti and are the 2nd and 3rd largest selling cars in India. 3. These 2 models still enjoy waiting list today even when there is low Consumer sentiment and the industry is in slow down mode. 4. Unlike other cars, there is negligible discount on the two cars and their contribution to Marutis profits is also significant. h. Have car prices of these models started commanding a premium in grey market?

1. The average waiting period for Swift and Dzire is of 2 months. 2. So far there is negligible premium for the two cars in grey markets except for select variants like diesel and in select pocket country. 3. There is likely to be little impact if Maruti is able to resume operations within two weeks. Otherwise the waiting period will swell and the cars would start commanding premium across the country. There are chances of consumers shifting to brands such as Hyundai, Honda, Toyota and Nissan. i. The path to be adopted by Maruti after the Deadlock? 1. Nearly 97 workers are arrested and most of them are either on the run or hiding. Maruti has made its stance clear that it will not tolerate violence and the guilty need to be punished. 2. Even after the dust settles down, it is unlikely that a full resumption would happen anytime soon. 3. A partial resumption with the help from workers at Gurgaon and new recruitment from ITIs may be the way forward. 4. In the long term, the main culprits are destined to lose their jobs and spend some time behind bars. Maruti would like to diversify fresh recruitment from outside the local population. Political implication of Manesar strike? 1. Haryanas Bhupinder Singh Hooda led government has loss its face due to strike. Maruti has been the flag bearer of Industrialisation in Haryana. It has helped the economy immensely. 2. Already fresh investments from manufacturing sector have reduced in Haryana. 3. Maruti itself chose not to set up new factories in Haryana and moved to Gujarat. Violence at Manesar would only enhance the states growing reputation as an unsafe place for industry. The first casualty could be the third factory at Manesar with an investment of nearly Rs 2,000 crore that may be cancelled though the company is sticking to it so far.

j.

Amount of Loss: - Rs 280 cr till 24/7/2012 Pending Investment: - Rs 1,925 cr. This is for the 3RD unit at Manesar plant. It is expected to be operational by mid2013. Production Capacity at Manesar: - 7, 50,000 cars per annum after the of 3rd factory is functional No of workers at Manesar plant: - 3,000