CRISIS AT MARUTI SUZUKIS

MANESAR PLANT
1
TABLE OF CONTENTS
2
S.NO. CONTENTS SLIDE NUMBER
1 OVERVIEW 3
2 PROBLEM 4
3 FALL IN DEMAND 5
4 LOSS IN OUTPUT 6-7
5 WORKERS PERSPECTIVE 8-10
6 MANAGEMENT PERSPECTIVE 11-13
7 ACTIONS TAKEN 14-15
8 FACTS 16-19
9 SOLUTION 20-23
OVERVIEW
3
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
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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.


5
LOSS IN OUTPUT
Estimated loss of more than 90 million dollar.
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

6
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'.

7
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 labourer dares
to reply, he is issued a notice on grounds of disciplinary
action," said Rajender Kumar, a technician
8
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.
One days wage cut of Rs.1500, two days Rs.2200, three days cut of
Rs.7-8000 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.
9
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


10
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.

Source: http://www.ndtv.com/










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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.

12
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.
13
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
14
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.
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Facts
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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
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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.
Fall in Shares
18

Shares fell as much as 2 per cent on the news to close at
Rs 1,080 on the Bombay Stock Exchange


SOURCE: TIMES OF INDIA





According to Chairman R.C. Bhargava
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Manesar labour problem is essentially a political issue
and not a problem which involves any significant
demand from the workers


Solution
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Identified reasons of the conflict.
1. Establishment of separate union for Manesar
Plant
2. Code of Conduct- Falling standards of
manufacturing.
3. Basic sanitary enhancements demanded by the
workforce.

Trade Union Establishment
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Trade union would be established with prior conditions:
-
1. Members of the trade union to be nominated with
consent of both workers and management.
2. The leader of this union would be appointed by the
management.
If not agreed then management would move to plan B.
1. Technology oriented operations reducing demand of
man power.

Code Of Conduct And Sanitary Problems
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ADOPT CHANGE PROCESS THEORY
Unfreezing
Change through cognitive restructuring
Refreezing

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Improved hygienic
conditions at
workplace reduces
employees
dissatisfaction
5/23/2014
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