Maruti Udyog Limited

Ankit Anand PGP10071

Ayush Singla PGP10076

Group-1 Manavi Singh PGP10092

R Shireesha PGP10102

Swarnajit Saha PGP10100

Siddharth Kashyap PGP10120

Sandeep Minj PGP10108

MUL

Incorporated in 1981 as joint venture between government on India and Suzuki Motor Corporation(SMC)

Production of Maruti 800 started in 1983

82 % market share in 1997

Employees more than 5500 employees

4500 employees engaged in productivity at Gurgaon plant

Average age of workforce is 36 years

Productivity increased to 70 cars per employee in 1998-99 from 25 in 1998

SMC equity increased to 50% in 1992Installed capacity of 3,20,000 units per year

1000 service centres across the country

 First major industrial dispute in mid 2000

MUL known for its pro-employee labour

practises
Incentive schemed lapsed in 1998-99

SITUATION New incentive scheme genesis of the conflict

ANALYSIS
Hunger strike called by MUEU on September
19, 2000
Management suspended 9 employees

Tool down agitation on September 26,2000

 PROTAGONIST

Abraham Mathew Asim Talukdar

• General Secretary,
MUEU • Head of Human Resources
Department, MUL
• Good relations with
• Management Graduate
Communist Party of
• Worked in few
India , Shiv Sena
multinational companies
• Good relation with
Manohar Joshi, Minister
for Heavy Industries
COMPETITIVE SCENARIO

Major competitors included General Motors, Daewoo, Hyundai, Ford, Mitsubishi and
TELCO

So, far MUL enjoyed monopoly in the small car segments but was facing competition from
Hyundai and TELCO

The built in capacity of the industry was around 1million units whereas the demand was
only of half a million domestically

All the companied were reducing the production and the manpower
 BUSINESS STRATEGY

The strategic outsourcing of

MUL had a policy of “value
components with suppliers Other strengths included
–for- money” and to It had a total of 400 vendors
had provided flexibility and the wide network of service
provide vehicle at the in the country
cost advantage to the centers across the country
lowest possible price
company
INCENTIVE SCHEME

Revised every
four years
Last schema lapsed in
March 1999
New scheme in negotiation since
September 2000
MUEU wanted productivity norms of 1988-
89(25 cars per employee)
MUL offered 1998-99 base year(70 cars per year)

Incentives with revenue instead of production

REASON FOR UNREST

• Effects of competition in automobile industry and this can be attributed as one of the
reason for attack on the workers
• Conflict between the Government and Suzuki may have been the cause of unrest
among employees
• Introduction of SCANLON type incentive scheme. The union demanded reinstatement
of the original incentive scheme which had been in place prior to 1995, according to
which 65% of all savings in labour-cost above the norm set
• Mandatory requirement of signing a ‘good conduct undertaking’
AGITATION AT MUL
Mathew called for strike on September 19, 2000

Management suspended 9 employees

Tool down agitation on September 26, 2000

MUL put notice to sign undertaking of “good conduct” on October 11

MUL freshly employed over 2000 temporary skilled workers

1600 employees signed “Good conduct undertaking” by November

Average production increased to 1311 units from 1205 units earlier

Union could not muster support of local Government

MUEU paid wages to suspended and dismissed workers from union fund
 CONCLUSIONS

lack of collective bargaining and the absence of convincing response from the management.

The workers lacked the work ethics. Unlike the Japanese and Korean workers, Indian workers did not
care about the impact of their agitation on the viability of the company and the attitude of customers

management were more sensitive to labour and labour was equally concerned about the product
market development

A win-win situation would be based on the approach where management ceased to insist on good
conduct undertaking and let the workers go to work gracefully

The union took a long term view of the company’s viability and competitiveness, moderated its
scheme based on a composite criteria of productivity
Thank you