CRISIS AT MARUTI SUZUKIS MANESAR PLANT

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 cars

Manufacturing facilities are located at two facilities Gurgaon and Manesar

It offers 14 brands and over 150 variants ranging from peoples car Maruti
800 to the stylish hatchback Ritz

The Problem

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

Loss In Output

Estimated loss of more than 90 million $ 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

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'.

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 laborer dares to reply, he is issued

a notice on grounds of disciplinary action," said Rajender Kumar, a

technician

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 km from the working station

The tea was without tea leaves or sugar in the 7 minute break The company doctor give heavy doses of instant medicines even on minor complaint so that disruption of work could be prevented

Cont.

One days wage cut of Rs.1500, two days Rs.2200, three days cut of Rs.78000 is implemented, so that almost the total months wage is cut

One second late into punching-card entry is a days 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

Workers Demand

Workers 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

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.

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

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.

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 before

Another 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

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 Suzukis way of life.

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

Confirmed by companys spokesperson

Production is right now at a stop at Manesar Third production halt in three months at Manesar.

The company stopped operations for 10 working days in June

The firm lost Rs 400 crore because of the strike.

According to Chairman R.C. Bhargava

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

Solution
1. 2. 3.

Identified reasons of the conflict:Establishment of separate union for Manesar Plant Code of Conduct- Falling standards of manufacturing Basic sanitary enhancements demanded by the workforce

Trade Union Establishment

1.

Trade union would be established with prior conditions: Members of the trade union to be nominated with consent of both workers and management

2. 1.

The leader of this union would be appointed by the management If not agreed then management would move to plan B Technology oriented operations reducing demand of man power

Code Of Conduct And Sanitary Problems

ADOPT CHANGE PROCESS THEORY

Unfreezing

Change through cognitive restructuring

Refreezing