Case Study ofViolence at Maruti-Suzuki

-July 2012

PREPARED BY:PANDITA SHEWANI

PATEL PRATIK D.

INDEX

• Maruti-Suzuki as an organizationHistoryMaruti’s Manesar plantMaruti’s Gurgaon plantIR in Maruti

• How violence erupts at Manesar Plant?• What happened till now?

• What caused the IR problem?• What is avoidable?• Diagnosis• Effect on Investment

In HaryanaIn India

• Could it be conspiracy?• Could it be political affiliation?• Conclusion

MARUTI-SUZUKI• Maruti Suzuki India Limited, commonly referred to as

Maruti, is a subsidiary company of Japanese automaker Suzuki Motor Corporation.

• This Automobile company was founded in 1981.

• 18.28% of the company was owned by the Indian government, and 54.2% by Suzuki of Japan.

• It has a market share of 44.9% of the Indian passenger car market.

•It offers complete range of cars from entry level, to hatchback and sedans, 'C' segment, Multi Purpose vehicle and Sports Utility vehicle.

•Its manufacturing facilities are located at two facilities Gurgaon and Manesar south of Delhi.

•Exports > 50,000 Units/annum•Selling > 730,000 Units/annum

•Gurgaon has capacity of 900,000 units/annum.

•Manesar has capacity of550,000 Units/annum[vehicle assembly plant]100,000 Units/annum [Diesel Engine plant]

Maruti 800AltoWagonREstiloA-starRitzSwift

Swift DzireSX4OmniEecoGypsyGrand VitaraKizashiErtiga.

Maruti Suzuki offers 15 models

• Production Distribution :

Manesar

Swift

Swift Dzire

A-star

SX4

Import (CBU)

Grand Vitara

Kizashi

Gurgaon

All other Cars

INDUSTRIAL RELATION• Industrial relations is a multidisciplinary field that

studies the employment relationship.• It is called as employment relations because of the

importance of non-industrial employment relationships.

• 1997Change in ownershipconflict between the United Front Government and Suzuki

• 2000Employees went on an indefinite strikeDemanding revisions to their wages, incentives and pensions.

IR continue..• Employees used slowdown in October 2000, to press a

revision to their incentive-linked pay.• The standoff between the union and the management

continued through 2001.• The management refused union demands citing increased

competition and lower margins.

• 2011 In September and October 2011 production at Manesar

was severely affected by due to labour unrest Later union leaders resigned after accepting hefty dues.

• April 2012The Manesar union had demanded a five-fold increase in basic salary A monthly conveyance allowance of 10,000 A laundry allowance of 3,000 Gift with every new car launch A house for every worker who wants one Cheaper home loans

In addition to this four paid weeks of vacation be increased to 7

weeks 40 days allowance of sick and casual leave

Manesar violence July 2012

• 18 July 2012Maruti's Manesar plant was hit by violenceThe incident is the worst-ever for Suzuki since the

company began operations in India in 1983. Workers attacked supervisors and started a fire that

killed a company official and injured 100 managersThe violent mob also injured nine policemen.The company's General Manager of Human Resources

had both arms and legs broken by his attackers, and was charred to death.

LOCKOUT AT MANESAR PLANT

Plant was evacuated & sealed

How it happened? 7am : Employees of shift-A turn in for work

11am : An employee, Jiya lal, gets scolded by his supervisor, Ramprakash Majhi

11:45am : Jiya lal is suspended from work

12pm : Local union members protest the suspension, demand that Lal get reinstated

1:30pm : Higher Management officials called in; negotiations begin

3pm: Shift-A gets over, but the workers refuse to leave the premises, shift-B employees start coming

in

5:30pm : General shift, for administration employees, gets over. Police are called in

6:00 pm : Police reach, but shift-A workers refuse to exit the premises

6:30 pm : Talks fail and violence erupts on the first floor of the admin building, which is right next to

gate no. 2

7:00pm : Violence Spreads to different departments. Workers, armed with rods and raw

automobile parts, come out & beat managers.

7:30pm : The HR wing catches fire. Fire brigade rushes 22 fire engines to the spot. More than 20

ambulances came.

8:00pm : Rioters allegedly block the entrance and attack the fire vehicles and disrupt rescue

operations.

8:30pm : More than 2500 policeman, including riot control units, take charge.

9:30pm : Police clear entire plant, start rounding up suspects. Over 20 arrests made.

10:30pm : Maruti plant evacuated and sealed

What happened till now?UPDATES• On 23/07/2012• violent incident which took place at it Manesar plant on

18th July 2012 in Haryana which claimed the life of one of the employees.

• “Manesar plant will not be opened until the investigation are over”.

• This results in an indefinite lockout at the Manesar facility of Maruti Suzuki India.

• Maruti Suzuki India is that it will reduce the number of contract workers at its plants and will start hiring them directly through its own HR department for better workforce and smooth operations

• On 25/07/2012

• Maruti Suzuki India is considering to follow a zero-tolerance policy with the workers who were involved in violence.

• Maruti Suzuki may lay-off as many as 600 workers from the Manesar plant which is a big move.

• Maruti Suzuki is considering options to strengthen its security system by deploying CISF or Central Industrial Security Force.

• Halt of production because of lockout at the plant is causing further shortages in the supply of popular cars Maruti Swift and Maruti Swift Dzire

• On 26/07/2012

• “We do not have any stock of Swift and DZire at our factory. About 10,000 cars of both the models are on transit and that is the inventory at present”

• Maruti Suzuki has about 55,000 bookings for Swift and 65,000 for Swift Dzire.

• After the production starts at the Manesar plant, it will take about 4 to 5 months form that time to clear the backlog of the bookings. Interestingly, about 80% of these bookings are for diesel cars.

• On 31/07/2012

• The main culprits behind the violent incident which took place on 19th July are yet not arrested and Maruti Suzuki plans to keep the operations suspended until the safety of thee employees is ensured.

• Haryana Govt. has constituted a special investigation team (SIT) to probe the case. This SIT is headed by Assistant Commissioner of Police Ravinder Tomar. Police has arrested about 100 workers in connection with this incident.

• Maruti Suzuki has reported a 23 percent fall in their quarterly profits to Rs. 4.24 billion down from the previous Rs. 5.49 billion in the same period in year 2011.

• On 7/08/2012

• As per some new updates and media reports in last one week (from 1 August to 6th August 2012), Maruti Suzuki plant remains locked out. Maruti Suzuki is facing losses of the tune of Rs. 70 crore per day because of the same.

• Also as per a media report by Economic Times, Maruti Suzuki is using services of astrologer Deivajna K N Somayaji to look into any Vastu related problems associated with the Manesar plant to keep the negative energies out of the workplace.

• 16th August 2012

• Maruti Suzuki may partially resume production at the Manesar plant in the  week starting 20th August 2012.

• 21st August 2012:

• Maruti Suzuki India finally started partial operations at Manesar plant under tight security arrangements.

• Over 500 Police-men and security personnel are deployed in and around the plant to ensure the security and peaceful start of operations.

• Only 300 workers will join for a single shift starting today which will roll out 150 cars per day which is about one-tenth of the total capacity of the plant which is capable of producing 1500+ cars when running at full capacity.

Rs 3183crDecline in market due to failing confidence of investor

550000No. of vehicle produced at plant every year

Vital Stats

Reasons For IR Problemsat MARUTI

• Breakdown of communication.

• 50% of workers at Maruti were contract labours..

• Wages of contract labours..

• Labours without medical and insurance benefits.

• Process of subordinating workers.

• Short timing for lunch break.

Avoidable Steps

• Recruitment process should be done from different regions.

• Promise about the increment in the income should have been fulfilled.

• Coercive power.

• Regular inspections should be done in the department.

• A Stitch in Time Saves Nine.

Adverse Affect On Investment

•India incorporation on Friday condemned the violence perpetrated allegedly by Maruti Suzuki workers in the car maker's Manesar plant and said the incident could negatively impact the investment climate in the country.

•The automotive component manufacturer association said the incident will have a negative impact on the growth prospects of the industry.

•Arvind kapur, President, said,

•“While the entire Indian economy is passing through turbulent times, the automotive industry has been a hope for industrial growth and job creation in the country,“

•"There should be a conducive business environment, which is mutually beneficial for the growth and development of both the employers and the employees.

•According to chairman Malvinder Singh: The incident may impact the investment climate in the short run due to following reasons.

The Manesar plant manufactures 1200 cars per day. Violence of september and october 2011 affect the

production adversely.Many union leaders resigned in 2011.

Therefore from the above statements we can conclude that the violence at Manesar Plant would adversely affect the investment in India.

Resolving the conflict

• Appropriate HR systems• Regular Inspections• Providing medical and insurance benefits• Providing training to the workers• Grievance handling programs• Proper Communication• Create positive environment for the

employees

Conspiracy

• (Minister for industry and commerce) Randeep Singh Surjewala claimed :-

– “It seems to be a conspiracy to disrupt the industrial peace not only in maruti but across industrial sector in the state”

» Source :- Economic times.

• The report claimed the workers action was recorded on Closed Circuit Cameras (CCTV) installed within the company

• The CCTV footage has been used to determine the sequence of events and people involved

• The responsible special investigation team official claimed some union leaders may be aware of the facts so they burned down the servers and more than 700 computers.

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