What Maruti must learn from labour unrest ET Report

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By Abheek Barman

Since its first cars rolled out nearly 30 years ago, Maruti Suzuki has been an extraordinary company. Back then, its Japanese-style working culture, flattish management practices and shared ownership between the government and Japan’s Suzuki made it a formidable competitor to existing carmakers, Hindustan Motors (HM) and Premier Auto (PAL).

Maruti’s first car, the ubiquitous 800, turned the country’s car market on its head. Initially scorned as a toy with wheels that seemed more appropriate on scooters, the 800 became the David that would topple the Goliaths of the car market. Maruti would dominate the car market for over 10 years, leaving companies like HM, PAL, Mahindra & Mahindra, Daewoo Motors, Honda Siel and Ford staring at its tail lights.

Its first serious challenger, Hyundai Motor, entered India in 1996 and turned the competitive heat on Maruti for the first time.

Today, Maruti retains its number one position, but rivals are closing in. Its dominance in small, cheap cars is no longer assured: everyone from GM to Hyundai has cars in that segment. Maruti’s bigger cars are also up against fierce competition. And it is facing the worst labour trouble in its history.

Like most things about Maruti, its workers’ strike, partially called off on Monday, is unique. At Manesar, where the strike is playing out, you won’t see an ocean of red flags but a sea of blue banners. The agitation is organised, but is not run by trade unions like the CPI’s AITUC or the Hind Mazdoor Sabha. Both AITUC and HMS have tried to make inroads among workers, but have been politely turned down. The strikers take advice and strategic tips from unions, but don’t join them.

On Friday, Sonu Gujjar, the leader of the agitation in Manesar, became the first union leader to be called directly by institutional investors for his views. Over 127 institutional investors were hooked to the conference call, organised by brokerage Nirmal Bang.

The issues that Gujjar raised and many more that have emerged from ET’s coverage of the strike, are real and important. Remember, there have been only seven strikes at Maruti over nearly 30 years. But four of those have occurred this year. Before this year’s rash of troubles, the last strike at Maruti had taken place 11 years ago.

In its drive to compete, Maruti ramped up manufacturing in a rush three years ago. It added machines, but also piled pressure on workers to squeeze out more cars: in its old plant at Gurgaon, production rose 17%. In Manesar, it jumped a staggering 40%. To get there, breaks were cut to two tea-and-toilet breaks for seven minutes and 30 seconds, and a 30-minute lunch during one eight-hour shift.

Pay cuts for missing work, say workers, became punitive. Workers also allege shopfloor abuse from supervisors. Today, work practices at Maruti seem to resemble China’s punishing regimes, not Japan’s famed workfloor discipline.

(Economic Times)

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