REPORT ON

THE INCIDENT OF MARUTI SUZUKI AT MANESAR

BY

GROUP NO : 3

Group Members: Ankita Shah Devanshi Panchal Jwelly Bhansali Mohit Majethia Nisarg Sheth

OBJECTIVE
To study and analyze the incident which occurred at Manesar plant of Maruti Suzuki at Haryana, the reasons behind this issue, the effects of the incident on the economy and goodwill of the organization and also the economy of the Haryana government, and the steps taken by both the organization and the government to avoid such incidents.

INDEX
SR NO. 1 2 3 4 5 6 TITILE Introduction to Maruti Suzuki Issues at Manesar Reasons for the Issues Steps taken by Maruti to avoid the situation Steps taken by Haryana Government Effects of the incident on Haryana economy PAGE NO.

INTRODUCTION
Maruti Suzuki India Limited commonly referred to as Maruti, is a subsidiary company of Japanese automaker Suzuki Motor Corporation. Maruti occupies a market share of 44.9% in Indian car market as of March 2011. And was a market leader for over two and a half decades. The company has two manufacturing facilities located at Gurgaon and Manesar, south of New Delhi. It is the first company in India to mass-produce and sell more than a million cars with largest sales and service network in India and is responsible for automobile revolution in India. Company have a capability to produce over a 1.5 million (1,500,000) vehicles annually and offers 15 brands and over 150 products ranging from people's car Maruti 800 to the latest Life Utility Vehicle, Ertiga. The portfolio includes Maruti 800, Alto, Alto K10, A-star, Estilo, WagonR, Ritz, Swift, Swift DZire, SX4, Omni, Eeco, Kizashi, Grand Vitara, Gypsy and Ertiga. The Company employs over 9000 people. But some recent incidents in maruti like the union strikes of 9 months and the recent manesar incident were mind blogging and was a great blow to the image and goodwill of the company.

INCIDENT/ WHAT HAPPENED AT MANESAR

Maruti Suzuki's plant at Manesar in Haryana remained closed on Friday 20th July, as a consequence of the deadly riot on Wednesday 18th July. The incident took place because of disciplinary action against an employee by a supervisor. The management and the workers' union accuse each other of creating the riot that followed the action, in which parts of the plant were set on fire. A senior HR manager Awanish Kumar Dev was burnt to death and 97 people were injured in the violence, 33 are still in hospital. Currently, more than 1,300 policemen are guarding the plant. The plant has a capacity to make 1700 cars a day. The loss from the plant being shut down is Rs. 60 crore a day.

WHAT THE MANAGEMENT SAYS AND WHAT THE WORKERS UNION SAYS:The Workers union had demanded a five-fold increase in basic salary, a monthly conveyance allowance of 10,000, a laundry allowance of 3,000, a gift with every new car launch, and a house for every worker who wants one or cheaper home loans for those who want to build their own houses. In addition to this compensation and normal weekend/holidays, the union demanded the current 4 paid weeks of vacation be increased to 7 weeks, plus each worker have 40 days allowance of sick and casual leave - for a total of 75 days. Initial reports claimed wage dispute and a union spokesman alleged the incident may be casterelated. According to the Maruti Suzuki Workers Union a supervisor had abused and made discriminatory comments to a low-caste worker. These claims were denied by the company and the police. The supervisor alleged was found to belong to a tribal heritage and outside of Hindu caste system; further, the numerous workers involved in violence were not affiliated with caste either. Maruti said the unrest began, not over wage discussions, but after the workers' union demanded the reinstatement of a worker who had been suspended for beating a supervisor.

The workers claim harsh working conditions and extensive hiring of low-paid contract workers which are paid about $126 a month, about half the minimum wage of permanent employees. Maruti employees currently earn allowances in addition to their base wage. Company executives denied harsh conditions and claim they hired entry-level workers on contracts and made them permanent as they gained experience. It was also claimed that bouncers were deployed by the company.

WHAT THE FIR CLAIMS:The police, in its First Information Report (FIR), claimed on 21 July that Manesar violence may be the result of a planned violence by a section of workers and union leaders. The report claimed the worker's action was recorded on close circuit cameras installed within the company premises. The workers took several managers and high ranked management officials hostage. The responsible Special Investigative Team official claimed, "Some union leaders may be aware of the facts, so they burnt down the main servers and more than 700 computers." The recorded CCTV footage has been used to determine the sequence of events and people involved. Per the FIR, police have arrested 91 people and are searching for 55 additional accused.

http://en.wikipedia.org/wiki/Maruti_Suzuki

REASONS FOR THE ISSUES

There were four reasons behind the Maruti Suzukis Manesar problem: (1) The Missing India connect: Since 2007, two important changes have happened at Maruti. First, Shinzo Nakanishi, the current MD of Maruti Suzuki, took over the reins from Jagdish Khattar. RC Bhargava, who was a director, was made chairman. Second, Maruti and the India market are also becoming increasingly important for Suzuki Motors. Till recently, Maruti contributed more than half of the parent's profits. As Maruti's contribution to Suzuki has increased, the latter's tendency to control India operations has increased. It has an Indian chairman but Bhargava is 78 years old. It does have many senior Indian executives who have been 'lifers' at Maruti. But insiders who will speak on the condition of anonymity say the Japanese voice counts and often tend to dominate crucial decisions. Culturally, Indians and Japanese are far apart. Their sense of discipline, punctuality, employee connect too are very different. Some loss of connect with Indians is expected.

(2) Leaner, Meaner Pressures

The challenges of running manufacturing outfits have surged. Costs and wages have increased and sales are poor and volatile. Doing business is difficult. Doing profitable business is even more difficult. Every company is figuring out ways to bring down costs and improve productivity. Most have contract labour to bring in flexibility and reduce costs. At Maruti's Manesar factory, 40% workers are on contract and their salary could be half of the regular workers. Maruti is among the better pay masters. Amid all this, competitive intensity in the marketplace for Maruti has never been as severe. Being a volume player, the only way for it to survive and flourish is to churn out more and more cars. All this has translated into relentless pressure to improve productivity and margins at all levels. For Maruti, this pressure is particularly high. Not surprisingly, the Manesar plant, that churns out two top-selling models in the Maruti stable - SWIFT & DZIRE - is at the heart of all the strife.

(3) Young & Restless Workers In Haryana, young blue-collar workers have seen dramatic changes around them. Land prices have surged as Gurgaon has become a commercial hub. Overnight, people have become rich and their lives have transformed simply because they made a killing selling their land. Such changes have re-calibrated worker expectation who have seen their sleepy little hamlet transform into a city of high rises and malls in a decade.

They are less tolerant and fairly aggressive in their expectations and how they want to achieve it. Poor wage hikes and raging inflation have queered the pitch further, resulting in an impatient, militant workforce, which believes in aggressive posturing. Sonu Gujjar, the leader of the labour unrest at Maruti plant last year, represents that generation. In his 20s, Gujjar organized a concall with analysts to put forth the workers' point of view and made headlines.

(4) Return of the Red Flag From its peak in the 1980s, trade unions have been on a decline in India. Trade union bodies across the board - from Citu to AITUC - have been seeing a steady decline over the years. It does not help that a large percentage of workers in Indian factories are foot-loose contract workers. Over 90% of the Indians are employed in the unorganized sector where the trade unions have been finding it difficult to make inroads. They have made many efforts to spread their network among white collar workers like BPO employees, but with little success. Expectedly, they are tapping into every possible opportunity they can get to grow their base. Their involvement in Maruti's labour unrest signals that.

The other reasons could also be:

Expecting the civil work force to become regimented robots with very little leeway for 'private moments'. Huge disparity in wages of the permanent workers and the contract workers. No recreation facilities worth the name. Contract workers have no stake in the Plant activities and profits. Very little job security because of the 'hire and fire' policy.

http://articles.economictimes.indiatimes.com/2012-07-22/news/32777541_1_maruti-suzuki-smanesar-maruti-s-manesar-shinzo-nakanishi

STEPS TAKEN BY MARUTI TO AVOID SUCH A SITUATION

The main questions that arise after the MANESAR incident is why were the workers repeatedly resorting to movements, why was the company not listening to their valid demands, why did the management not deal with the problem in a more unbiased way????? There are two ways forward. Either The Maruti management can increase the security of their executives and make life hell for workers. Or the other way is to build a relationship of trust with workers and allow them more participation in the running of companies. Workers could own shares and there could be equitable sharing of profits above the salaries fixed for different levels. Company should follow that the difference between the lowest and highest incomes should not be more than ten times. Also Siddiqui, president of national hard network stated that their prime priority remains Welfare and safety of their employees. Company is in continuous contact with Haryana Police to identify the culprits. Company formed a team of 25 members to look after the injured employees. Even the Haryana government formed a special investigation team headed by ACP Ravinder Tomar to investigate the situation and also appointed eminent criminal lawyer KTS Tulsi as special public prosecutor for the trial of the accused in violence.

http://www.rediff.com/business/slide-show/slide-show-1-maruti-to-scale-up-safety-measures-atmanesar-plant/20120803.htm

STEPS TAKEN BY HARYANA GOVERNMENT TO AVOID SUCH THE SITUATION

Manesar incident was a spot on the image of Haryana state government also along with the company. Hence government is striving hard to take steps so as to avoid such incidents in future in any other organization. The steps taken are: The Haryana government is "advising" other industries to maintain "cordial relations" with their workforce in a bid to prevent repeat of violence witnessed at Maruti Suzuki's Manesar plant. Industry owners (in Haryana) are being advised to maintain good relations with their workers by sharing and addressing their genuine concerns or grievances at the earliest. Besides the government also formed a special investigating team under ACP Ravinder Tomar to investigate the incident and identify the culprits. The government also appointed eminent criminal lawyer KTS Tulsi as special public prosecutor for the trial of the accused in violence. The United Progressive Alliance government constituted the Chaturvedi committee to look into the simplification and cohesion of about 43 national labour laws. It is time they should take up a new model of labour laws, one in which a bipartite institutional mechanism between labourers and the management, as partners in industrial progress, becomes the norm. The state should become a facilitator and a friend, rather than an arbiter. Subsidized housing would be offered to industries for workers. In the first phase, 30,000 houses are already being constructed.

With these steps Haryana government wants the maruti plant to reopen as early as possible and want to erase this bad day from the history of Haryana state.

http://www.moneycontrol.com/news/current-affairs/haryana-advises-industry-to-havEgoodrelationworkers_735341.html http://post.jagran.com/maruti-reaches-out-to-other-hr-heads-over-manesar-violence-1343738099

EFFECTS OF THE INCIDENT ON STATE ECONOMY

The Manesar incidents have exposed the real picture of the union labours in India. The differences between the employer and the employee are still evident that disrupts a peaceful atmosphere vital to productivity and profitability of both the organization and the Haryana economy. This incident has adversely affected the Haryanas image in the world market. Incident is not only bad for the investment climate in the State of Haryana but also for the entire country. Recurring labour issues at leading global carmakers operating in India make big news overseas and are seen as an alarming sign by companies when they consider investments in Haryana. Om Prakash Chautala- Main opposition party INLD president said the Maruti Suzuki Manesar plant incident had the potential to affect investments in Haryana and will set a bad example for existing and future investments in Haryana. He criticized the Haryana government for its inability to tackle the situation. Haryana is also facing the problem of Unemployment as the job giving plant is shutdown after the incident for few months. Haryana also feared that maruti Suzuki may shift its plant location to Gujarat which will again adversely affect the economy of Haryana. The incident hit the GDP badly and came to 6.5% which is lowest in last 9 years. The economy has suffered a dent and should work hard to revive to the normal position.

http://voices.halabol.com/2012/07/31/riot-wrongs-economy

CONCLUSION
There is no evidence so far to justify reports that who is actually responsible for the recent violence at the Maruti Suzuki (MSIL) factory at Manesar but the incident clearly shows the animosity between the top management and the union workers. This incident is a spot on the countrys image and thus both the company and country have to take steps to avoid such situations in future. Necessary amendments are to be planned in the labour union laws to inculcate more friendly relations between the managers and the workers. The investigation team suspected that naxalites is also partially responsible for the incident but no major evidence is supporting this thought. Hence may what the reason be, such an incident should not take place again and for this the government and all the industries should work for it.

BIBLIOGRAPHY