ET Article:
Workers strike thrice in five months, How Maruti Suzuki lost connect with them
There isn't a single burning, insurmountable issue because of which workers at Maruti's Manesar plant have struck work thrice in the last five months . Sruthijith KK & Chanchal Pal Chauhan report from Manesar that at its core lie accumulated grievances and resentment, and events are adding fuel to the fire
A day after workers at Maruti Suzuki's Manesar facility went on strike in June, 55-year-old MM Singh, the company's head of manufacturing, was scheduled to address a meeting of the company's functional heads of departments. "Hum apna connect kahaan kho gaya? Kya gadbad hua? (how did we lose the connect with our workers? what went wrong?)," Singh said in his opening remarks, in part question, part introspection.
Maruti Suzuki has enjoyed relatively good relations with its labour force. The last labour strike was in 2000, at its other facility in Gurgaon. The image of the company in the minds of many management personnel seems to have been that of one where the workers were happy. This could have contributed to negative feedback from workers not trickling all the way up as frequently or forcefully as it should have.
Part of the answers to Singh's introspective question might lie in measures he spearheaded at the company a little over a year ago. In early-2010, coming out of the slowdown in car sales in 2008 and 2009, Maruti experienced a spurt in demand. While the company expected demand to rise, it was not prepared for the sudden jump -- a 30% rise year-on-year -- in bookings.
What made the situation worse was that the company had not invested in manufacturing capacity during the slowdown. The longer wait period for Maruti's models meant rivals started cannibalising market share. "Losing market share due to lack of capacity can prove to be the death knell for an auto company," Singh told Forbes India in an interview published in April this year.
Singh and his team put in place a series of measures to produce more. This included more frequent maintenance of machines, reprogramming robots that control the assembly line to squeeze out efficiency, and implementation of a "flexi-line" that could produce multiple models. Production zoomed.
Singh's measures saved Maruti the cost of a new assembly line -- Rs 1,700 crore. Its Manesar plant, with an installed capacity of 250,000 cars a year then, started making 350,000 cars. To ensure worker buy-in, their incentives were aligned to production.
In essence, Maruti stepped on the gas hard, responding to market realities. But life on the shop floor took a turn for the worse. While production at its Gurgaon facility rose by 17%, Manesar was pushed harder, with a 40% jump.
Young And Local Workforce
The highly automated plant at Manesar was inaugurated in February 2007. Later that year, in December, Shinzo Nakanishi became the managing director of the firm, taking over from Jagdish Khattar, a former bureaucrat who helmed the company for more than eight years. Nakanishi, a nephew of Suzuki Motors chairman Osamu Suzuki, had been non-executive chairman since 2002. But for the first time since 1983, the highest-ranking executive officer at Maruti Suzuki was now Japanese.
According to a company spokesman, the Manesar plant draws its employees mostly from Haryana, in particular from regions such as Jheend and Jhajjar. The plant has about 950 regular workers, 400 trainees, 700 contract workers, and 400 apprentices.
A regular worker at Maruti could make up to Rs 25,000 per month in CTC (cost to company) in his first year of employment (after three years of traineeship). About 50% of this is in the form of performance incentives, including an attendance reward that amounts to 18% of CTC and has become a contentious issue in the ongoing strike. Trainees make Rs 13,000-14,000. And a contract worker, depending on his skills, anywhere from the minimum wage (Rs 4,644 in Haryana) to Rs 12,000.
About 60% of Maruti workers are regular employees and the remaining are contract workers. The minimum qualification to be a regular worker at Maruti is class ten and an Industrial Training Institute diploma. The average age of workers at Manesar is under 25, while that at Gurgaon is above 30. Very few workers at Manesar are married or have children, allowing them greater staying power in a strike.
Most workers at Manesar worked their way through three years of traineeship at Maruti and became regularised in 2010, entitling them to privileges trainees and contract workers don't enjoy. It was a little after that the Singh-helmed acceleration of production seems to have resulted in increased friction in labour relations.
The 7.5-Minute Tea Break
The strategic decision to squeeze out maximum possible efficiency from existing plants didn't trickle down smoothly to the shop floor. Striking workers complain about abusive behaviour and even instances of slapping by supervisors, charges the company denies. Workers say the conditions at the Manesar plant were too stringent, while the management can't seem to comprehend the difficulty as the Gurgaon plant has operated under identical conditions for more than 25 years now.
In an eight-hour work shift, workers get a 30-minute lunch break and two 7.5-minute tea breaks, according to the company spokesman. "You have to remove your safety equipment, run 150 metres to grab your tea and snack, and then run to the toilet that is about 400 metres away, and be back in seven minutes," says Shiv Kumar, general secretary of the proposed Maruti Suzuki Employees Union. "If you are a bit late, abuses from the supervisor. In the morning, the place resembles a busy train station, with everyone grabbing tea and running to the toilet."
Kumar is a brooding, well-built 27-year old, with an intense air about him. He strikes a contrast to the affable and lanky Sonu Gujjar, the president of the proposed union, who has become the charismatic and savvy face of the agitation. Kumar says workers can't leave their workstation even for a minute, supervisors sometimes deny permission for an additional toilet break, and steep salary cuts are effected for even a day of absence from work.
The Maruti spokesman says the 7.5-minute break has been designed in a way that allows workers just enough time to have tea, snack and use the restroom. Tea and snacks are laid out at 80 rest areas adjacent to each work station, across the plant. "I'm not saying you will see anyone strolling about during the tea break, but it is designed to be just sufficient," he says.
In the Gurgaon plant, the rushed break never seems to have been a problem. For more than 20 years, workers from Gurgaon used to be sent to Japan in batches of 60 each month to work in Suzuki's plants for six months. More than 2,000 workers from the Gurgaon plant have worked in Japanese factories fabled for the rigors of operations and processes. This practice was discontinued before the Manesar plant went live, as India had managed to build world-class industrial operations by then.
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Another sticky point is the steep cuts in compensation effected for absenteeism. Workers quote different figures -- Rs 1,200-1,500 -- as cuts for a day of leave, authorised or unauthorised. The company spokesman says this impression is due to a misunderstood HR policy designed to encourage 100% attendance. "For an employee whose attendance reward was Rs 2,000 per month, each day of leave in a month reduced attendance reward by Rs 500 (25% of the attendance reward) progressively. At three days of leave in a month, the attendance reward came down to zero," he wrote in an emailed response.
Such cuts were subject to a cap of three leaves in a quarter. This meant if an employee took two days of leave in a month, and didn't take any in the next two, the deducted salary would be refunded at the end of the quarter. The company spokesman admits that the policy and it being part of the performance-linked portion of the compensation was perhaps not adequately explained to shop floor workers
