What Maruti must learn by Abheek Berman


India’s car hubs are seething with worker unrest, and we need to listen carefully

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, including Hindustan Motors (HM) and Premier Auto (PAL).

Maruti’s first car, the ubiquitious 800, turned India’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, Daewoo, Honda and Ford staring at its tail lights. Its first serious challenger, Hyundai, 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’s 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 organized, 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, organized by a brokerage called 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 earlier.

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 work floor discipline.

Once a model employer, Maruti has succumbed to rapacious fixes rampant in the Gurgaon-Manesar-Dharuhera car-and-component making belt. One of these is the habit of hiring contract workers. These are not contract workers as you and I know it, but contract workers as they used to be on plantations during the colonial era.

The job of hiring these people is given to contractors, who bring a certain number of hands to the company. The company pays the contractor some money for each person, the thekedar takes a cut and passes the rest to the workers. These folks get no medical benefits, insurance, savings or disability cover. They can be sacked in an instant with no notice or severance benefits.

The average Haryana car-or-component company employs about 80% of its workers on contracts like these. Maruti is a little better: about 40% of its workers are on contract.

A regular worker at Maruti gets paid Rs 25,000 a month, after three years of serving as a trainee for half that much. A contract worker can get paid anything between Rs 4,644, Haryana’s minimum wage, and Rs 12,000, if the thekedar is kind.

Yet, both regular and contract workers do the same amount of work. Parity among the two is one of the major demands of the protestors.

If you ask the managements of companies in this manufacturing belt, they’ll try to fob you off by saying that India’s labour laws, under which it is hard to fire regular workers, is the reason why they get contracted labourers. It might have begun that way, but today, most companies employ more than 30 regular workers, the threshold where these laws kick in, so the reason to hire contract workers is rather more ruthless: they’re cheap and come with no strings attached.

The strike at Maruti tells us important things. First, it is possible, under competitive pressure to push workers only so hard. Beyond a point, shop floor practices get abusive and workers will push back. Second, it’s not possible to deny benefits enjoyed by some workers to others, especially when they do the same work.

Three, what’s cheap and convenient in the short term – like hiring contract workers – doesn’t work over longer periods. For a complex, multi-stage manufacturing operation, you need people with skills. Every time you churn workers, you’ll lose some skills and will need to train new people. With a constantly churning work force, no company let alone Maruti, can maintain quality.

Finally, there’s a good capitalist reason to build up a stable, professional workforce: today’s workers are tomorrow’s consumers. Maruti, which pitches some of its cars to first-time buyers, needs to understand that.

(Author is well known journalist)

Sourced from his blog http://blogs.economictimes.indiatimes.com/folk-theorem/)

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