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BW Businessworld

Shaky Truce

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Officials at the Manesar plant of Maruti Suzuki India (MSIL) looked relaxed, albeit tired. It was the morning of 1 October, and the agreement with the unions after a 32-day shutdown had been finally signed at 3 am after 16 hours of gruelling negotiations. The officers were keen to show near-normalcy. But things did not go strictly as per plan.  

The main assembly line with Swift shells was at a standstill. News about the settlement had begun to filter in, and casual workers manning the lines were bunched in small groups, with supervisors trying to fathom the situation.

The newly commissioned weld unit of Plant B was more active. To push up production at the Manesar facility, MSIL had brought forward the launch of this robotised unit by a few weeks. Even as a few young apprentices sat around, wheezing robots were quickly putting car shells together as if they were easy jigsaw puzzles. 

HANDS ON DECK: The robotised unit was commissioned early as the stir hit Maruti Suzuki's Manesar plant (BW Pic By Sanjay Sakaria)

The agreement was signed because the workers tired of the stalemate and the company of mounting losses. But will it bring lasting peace?

"The workers have agreed to the core issue — signing good conduct bonds. That has vindicated the management's stand that it will not brook indiscipline," company spokesman K.D. Singh told BW. In exchange, the company has diluted the action against 62 workers charged with various ‘misconducts'. Of these, 18 apprentices have been reinstated, while 15 terminated workers are now deemed to be ‘suspended' with a chance to departmental inquiries.

The company has also agreed to relax the onerous terms of deduction of production incentive when workers remained absent, said deputy labour commissioner J.P. Mann, who sat in on the negotiations. He also said MSIL will set up a grievance redressal mechanism.

It was not easy tracking down the young leaders of the unregistered Maruti Suzuki Employees Union (MSEU) that had led the agitation. After a two-day chase, Shiv Kumar, general secretary of MSEU, spoke to BW in a small office-cum-dormitory tucked away in the narrow lanes behind the Sitlamata Devi Mandir in Gurgaon.

"We are happy with the agreement. We have been able to get the workers back on the job after a long struggle," Kumar said. "Though not mentioned in the agreement, the company has committed to take back all 44 of our comrades facing suspensions in two months' time."

On the demand for an independent union at Manesar, which had sparked the agitation, Singh was categorical that the company only recognised the Gurgaon plant-based Maruti Udyog Kamgar Union (MUKU). "Multiple unions will breed competitive union politics and harm production," he says.

Build-Up To The Shutdown

"The company admits to disparity in wages," says Rakhi Sehgal, organiser, New Trade Union Initiative (BW Pic By Sanjay Sakaria)

The 950 permanent Manesar workers were nominal members of Gurgaon-based MUKU, but discontent had been simmering since December 2010 on its failure to hold elections. But Kumar says the real issues were production pressure, and the harassment by supervisors. Mann agreed that it was "friction on the shop floor with supervisors that sparked the row". Adds Kumar, "When the ‘pocket union' failed to do anything, workers elected a panel of 11 to set up a new union, at a gate meeting on 3 June."

The next day there was trouble on the assembly lines. Workers alleged that they were made to sign blank forms, and started a sit-down strike. Eleven workers were terminated. The strike continued till 16 June, when, after negotiations, production started and 11 workers were taken back. On 27 July, a skirmish between a supervisor and a worker again became a full-blown agitation and eight leaders were suspended.

Meanwhile, workers' anger grew to pressure cooker levels on being denied the right to form their union. The Gurgaon union held its elections on 16 July, but the Manesar workers boycotted it. Instead, they en masse resigned from the official union on 27 July and filed for registration of MSEU. But the Haryana labour department rejected the registration on various grounds, including signatures not matching.

It was the move to form a new union that sparked the 29-August shutdown, claim the workers. But the company maintains that normal production had become impossible. "Workers' ‘bullying' had ensured that less than 400 cars were being assembled per day. There was sabotage, too, with cars being dented and hose pipes cut. The last straw was when barely 100 per day were passing the quality check," says MSIL's Singh. The company decided to bite the bullet and halted production on 29 August.

Workers were kept out and told to sign ‘good conduct' bonds. Expectedly, the workers refused and the factory shutdown rolled on through September. The jury is still out whether it was a lockout or a strike.

Initially, the company was reluctant to negotiate. But on 16 September, workers from three independent Suzuki units — Suzuki Powertrain Company, Suzuki Motorcycle and the Suzuki casting plant — also struck work for two days. This paralysed the production of Fiat diesel engines and gear transmissions, and car assembly at most Suzuki facilities ground to a halt.

"We have got workers back on the job," says Shiv Kumar, general secretary, Maruti Suzuki Employees Union (BW Pic By Tribhuwan Sharma)

Talks were resumed, but almost acting on cue, the Haryana police arrested five union leaders from the negotiating table at the HUDA Club House in Gurgaon on 18 September. They were released two days later and the talks continued. But by then the state government's pressure on the union had demoralised the workers, and the company built on the advantage to push through the good-conduct bonds.

Multi-pronged Challenges
Of course, MSIL was under pressure too. P.K. Roy, general manager of operations, says the August-September shutdown cost the company a loss of production of 22,000 passenger vehicles worth Rs 660 crore. The earlier 16-day strike had shaved off another 12,600 worth Rs 380 crore. Given transportation and other losses, the three-month agitation will mean a top-line loss of over Rs 1,200 crore. This, on top of the general recessionary climate (see ‘A Sharp Fall').

India is one of the most important markets for Suzuki Motor Company. Of Suzuki's global consolidated turnover of $31.3 billion in calendar 2010, MSIL revenues were $8 billion or 26 per cent. The company contributed as much as 50 per cent or $270 million to Suzuki's $543 million net profit. In volume, too, MSIL's 1.27 million units formed close to half of Suzuki's worldwide sales of 2.6 million units in 2010.

MSIL has also lost market share in India — from 55.5 per cent in 2000 to 45 per cent in FY2011, and to 40 per cent till August this fiscal of the total sales of 977,201 cars. So, MSIL was keen to end the stir before the festive season. The mid-August launch of the ramped up Swift had evoked heavy demand with bookings touching 108,000 units. Production at the Manesar plant is crucial to meet the orders.

Maruti Suzuki views the upsurge as an attempt by left wing political parties to establish themselves in Haryana's industrial belt. Speaking to media persons soon after the August shutdown, company chairman R.C. Bhargava had said: "There are no real issues involved, except a somewhat political issue of a political party wanting its trade union to get established."

One of MSIL's main objections to the Manesar union was a clause in its constitution that allowed 25 per cent of the office-bearers to be ‘outsiders'. This would let in political parties, the company felt. But even when the Manesar union expunged the clause, the company's stance did not change. Ironically, it was the intervention of central trade unions such as Hind Mazdoor Sabha that helped resolve the shutdown.

So why is the demand for a second union at Manesar untenable? Amitava Ghosh, vice-president of TeamLease, says the management is not liable to recognise or negotiate with the new Manesar union when there is already an existing recognised union in the company.

But Rakhi Sehgal of New Trade Union Initiative (NTUI), which supported the strike, says: "The industrial environment in the two plants (Gurgaon and Manesar) is vastly different. The company itself admits to wage disparity. The certified standing orders too are different." Adds Sudershan Rao Sarde, director of International Metalworkers' Federation: "Suzuki's five plants in Japan have separate unions and negotiate as a confederation. Why should not the same principle be accepted here?"

This is not MSIL's first such challenge. In 2000, it took a hard line on similar ‘good-conduct' bonds and the Gurgaon factory remained paralysed for three months. Recalls Mathew Abraham, who led the 2000 agitation: "Despite three former Prime Ministers and 200 members of Parliament signing their support, and despite a resolution calling for a negotiated settlement in Parliament, the company did not relent."

At the Manesar plant, after the 1 October settlement, the gates opened but none of the 1,200 contract workers were taken back. As we go to press, the workers have gone for a sit-down strike on the issue. This could prove to be a flashpoint. Is history repeating itself?

With inputs from Dibyajyoti Chatterjee


(This story was published in Businessworld Issue Dated 17-10-2011)