MARUTI SUZUKI: MANESAR MANUFACTURING FACILITY

The Manesar Manufacturing Plant was inaugurated in February 2007 and is spread over 600 acres (2.4 km2). Initially it had a production capacity of 100,000 vehicles annually but this was increased to 300,000 vehicles annually in October 2008. The production capacity was further increased by 250,000 vehicles taking total production capacity to 550,000 vehicles annually.

VIOLENCE AT THE MANESAR PLANT
On 18th July 2012, Maruti's Manesar plant was hit by violence as workers at one of its auto factories attacked supervisors and started a fire that killed a company official and injured 100 managers, including two Japanese expatriates. The violent mob also injured 9 policemen. The company's General Manager of Human Resources, Awanish Kumar Dev had both arms and legs broken by his attackers, unable to leave the building that was set ablaze, and was charred to death. The incident is the worst-ever for Suzuki since the company began operations in India in 1983.
Since April 2012, the Manesar union had demanded a five-fold increase in basic salary, a monthly conveyance allowance of 10,000, a laundry allowance of 3,000, a gift with every new car launch, and a house for every worker who wants one or cheaper home loans for those who want to build their own houses. In addition to this compensation and normal weekend/holidays, the union demanded the current 4 paid weeks of vacation be increased to 7 weeks, plus each worker have 40 days allowance of sick and casual leave - for a total of 75 days. Initial reports claimed wage dispute and a union spokesman alleged the incident may be caste-related. These claims were however denied by the company and the police. Maruti said the unrest began, not over wage discussions, but after the workers' union demanded the reinstatement of a worker who had been suspended for beating a supervisor. The workers claim harsh working conditions and extensive hiring of low-paid contract workers which are paid about $126 a month, about half the minimum wage of permanent employees. Maruti employees currently earn allowances in addition to their base wage. Company executives denied harsh conditions and claim they hired entry-level workers on contracts and made them permanent as they gained experience. It was also claimed that bouncers were deployed by the company.
India Today claimed that it’s interviews of witnesses present at the plant confirms the dispute was over the suspended worker. Thereafter, the workers broke up into groups, went on to set the shop floor as well as all offices afire. They searched for management officials and proceeded with a barbaric beating of the officials at the site with iron rods. The police, in its First Information Report (FIR), claimed on 21 July that Manesar violence may be the result of a planned violence by a section of workers and union leaders. The report claimed the worker's action was recorded on close circuit cameras installed within the company premises. The workers took several managers and high ranked management officials hostage. The responsible Special Investigative Team
Maruti Suzuki in its statement on the unrest announced that all work at the Manesar plant has been suspended indefinitely. A Suzuki spokesman said Manesar violence won't affect the auto maker's business plans for India. The shutdown of Manesar plant is leading to a loss of about Rs 75 crore per day. On July 21, 2012, citing safety concerns, the company announced a lockout under The Industrial Disputes Act, 1947 pending results of an inquiry the company has requested of the Haryana government into the causes of the disorder. Under the provisions of The Industrial Disputes Act wages, the report claimed, employees are expected to be paid for the duration of the lockout. On July 26 2012, Maruti announced employees would not be paid for the period of lock-out in accordance with labour laws of India. The company further announced that it will stop using contract workers by March 2013. The report claimed the salary difference between contract workers and permanent workers has been much smaller than initial media reports - the contract worker at Maruti received about 11,500 per month, while a permanent worker received about 12,500 a month at start, which increased in three years to 21,000-22,000 per month. In a separate report, a contractor who was providing contract employees to Maruti claimed the company gave its contract employees the best wage, allowances and benefits package in the region.

POLICE FINDINGS AND ACTIONS
The police arrested 99 people in connection to the case a day after violent clashes broke out between workers and the management at the Maruti plant in Manesar in Haryana. A dozen of more people were also arrested within a week. Prime accused for inciting the violence at Maruti’s Manesar plant that injured 96 managers and left one dead, surrendered to the Gurgaon police on 31st of July 2012.
Former general secretary of Maruti’s disbanded Union Sarabjit Singh surrendered before the Gurgaon police on 31st July, though the Union’s President Ram Mehar Singh is still absconding. So far 102 people have been arrested for their alleged involvement in the arson the Gurgaon police took into custody the organising secretary of Maruti Suzuki Workers’ Union Yogesh Kumar and identified new suspects. The company for its part has started its own independent probe into the incident. The government has also set up a special investigative team to look into the violence and has appointed KTS Tulsi as a special prosecutor for the case. The Haryana police on Wednesday had arrested 10 m0re accused and claimed that the main accused of the sad incident was amongst the 10 arrested union officials.
Once the investigation is over, all those found guilty for the clash between the workers and the management are likely to be suspended.

INDIA’S IMAGE POST MARUTI INCIDENT:
Auto industry body Society of Indian Automobile Manufacturers (Siam) Tuesday has indicated that the violent incidents at Maruti's Manesar plant would vitiate the investment climate in India and would damage the overall image of the country as an investment destination. Siam also said that its Executive Committee , which met on July 25 - discussed the developments at Maruti's Manesar plant and felt such an incident gives a bad name to the Indian manufacturing sector. "The recent developments in relation to labour behaviour are creating an atmosphere which is not conducive for development of the industry. Incidents like these are noticed globally by industry as well as investors, thereby vitiating the investment climate and damaging the overall image of the country as an investment destination."
The incident has also brought to the fore the debate over contract labour. The time is now ripe to re-visit the Contract Labour (Regulation & Abolition) Act, 1970 and seek a paradigm shift in our approach to and definition of contract labour in India

IMPACT OF THE INDUSTRIAL VIOLENCE AT MARUTI SUZUKI’S MANESAR PLANT

* India's biggest car company stopped production at the Manesar plant on 18th July 2012 after a manager was killed and scores injured after a mob of workers attacked officials, smashed equipment and set fire to parts of the plant. * Trade unionists accused Maruti of ‘anti-union’ activities at the plant. * The Manesar factory, with a total annual capacity of 550,000 cars - a third of Maruti's output - is likely to stay closed for a substantial period of time, at a cost to the company of around $15 million a day. * More than $570 million was wiped off Maruti's market value on 19th July, when its shares slid to their biggest one - day drop in two years. * Shares of the parent venture Suzuki Motor Corp. fell a total of 5.7% in trading on 20th July to their lowest level in 3½ years. * Over 2,000 employees posted at the violence-hit Manesar plant did not get their salaries in August, 2012. The news of non - payment of salaries has dismayed the workers, who did not participate in the violence. * Workers' unions from Gurgaon, Manesar and Dharuhera set up a 16 – member coordination committee to deal with the issue of the lockout. * Gurgaon Police on 1st August, 2012 arrested all the 10 remaining accused persons who were office - bearers of the labourers' union at the Maruti Manesar plant. Earlier, two other office - bearers were arrested by police and produced in court. So far, police have arrested a total of 114 in the Maruti violence case. * Maruti will not be able to offset some of the lost production with imports or by increasing productivity at its other factory. * Car sales continued to increase moderately in July, but the lockout may hit the market this month. Market leader Maruti Suzuki increased its domestic sales 7% year-on-year in July on the back of strong demand for its Swift and Dzire cars that have now run out of stock due to non-production at the two Manesar plants that make 40% of all Maruti vehicles. Analysts say that a potential indefinite lockout at Maruti's two Manesar plants following massive violence that led to the death of a manager last month will impact the overall car market this month, while benefitting rival carmakers. * Maruti trade unions seek CBI probe. A group of trade unions on Saturday demanded withdrawal of the lockout at Maruti Suzuki’s Manesar plant and a CBI probe into the July 18 violence at the unit that led to the death of a senior executive and left over 100 injured. A coordination committee, including four trade unions and factory leaders, was formed to look into the matter. Maruti’s Gurgaon plant union leader Kuldeep Janghu said there could be a conspiracy behind the Manesar violence. He said an inquiry by the special investigation team was not enough and demanded a Central Bureau of Investigation probe. Workers said they would meet Haryana chief minister Bhupinder Singh Hooda on Tuesday to brief him about the demands of Maruti workers. They alleged that police had targeted innocent workers and most of them were arrested from their homes and not the plant. * ICRA has placed 14 auto component manufacturers which have high business dependence on Maruti Suzuki India on 'rating watch with developing implications'. Icra fears that these companies likely to be affected by the production disruption at the plant. The move follows an ongoing lockout at the Manesar plant declared after violence broke out between the workers and management, disrupting production output of vendors supplying to this plant. * The recent violence at the Maruti Suzuki factory in Manesar can have a long - term and unprecedented impact on job creation and employment in the country, says Indian Staffing Federation (ISF), an apex body of the temporary staffing industry in India. * Auto industry body Society of Indian Automobile Manufacturers (SIAM) said the violent incidents at Maruti's Manesar plant will vitiate the investment climate in India and damage the overall image of the country as an investment destination. The recent developments in relation to labour behaviour are creating an atmosphere which is not conducive for development of the industry. Incidents like these are noticed globally by industry as well as investors, thereby vitiating the investment climate and damaging the overall image of the country as an investment destination. Condemning the July 18 incident at Maruti's plant, Siam said violence of any kind should not be allowed to be used as a means for forcing a decision.

REASONS

1. Japanese management:
The first is the fabled Japanese management. Not too long ago it was assumed that the Japanese have all the wisdom in manufacturing and management and if only we could learn from them we would find the answer to our woes. Business schools worldwide teach special courses on ‘Japanese management’ and such offerings are highly subscribed; books on the subject are bestsellers. But descriptions over the last one year of operations at Manesar demonstrate that essentially the Japanese trick to success is not so different from the rest: the principle followed is to get more work out of a worker, while at the same time paying less. Accounts of Manesar tell of workers being forced to steal rest breaks, docking of pay for minor infringements, almost no paid holidays, an army of poorly-paid temps etc. Here is an account of a typical workday at Maruti Manesar:
You catch a bus at 5 a.m. for the factory. Arriving a second late to punch in your card means a pay cut, but you can’t leave the premises once you’ve entered. At 6:30 am, you exercise and supervisors give you feedback on your previous output. Start work at 7 sharp. Everyone does his one task — assembling, welding, fixing — for a minimum of 8 continuous hours. A car rolls off the line every 38 seconds, which means you can’t budge from your position, ever. You get two breathless breaks during the day. At 9 a.m., a 7 – minute break to drink tea or go to the loo, or both. After a while you might, like many of your friends here, end up taking your hot tea and kachori to the bathroom with you. Then a lunchbreak of 30 minutes, in which you walk about a half-kilometre to the canteen, wait in line with everyone, eat and walk back. Returning even a minute late from any break, or leaving the assembly line for any reason even for a minute, means half a day’s pay cut.
Overtime is a compulsion whenever the company needs it and the privilege of paid leave is a fantasy – Rs. 1,500 is deducted for one day’s leave (even when you intimate in advance) from a maximum possible monthly pay of Rs. 16,000 and five days leave for any contingency reduces it to the base salary of Rs. 8,000. Out of a workforce of 2,500, 40% are on contracts, casual or apprentice (but do similar work as permanents) and their take – home is around Rs. 6,000, with the threat of comparable deductions as regular workers looming all the time and no job security. Another worker states, the problem is the immense pressure. They are extracting the work of 5,000 from half that number.

2. Union as intermediary between workers and management:
The basic reason for the ongoing impasse of the last one year and its culmination in the grisly violence this July is the demand of the young Manesar workers to have their own representative union. They did not want the union of the Gurgaon plant - the parent plant where Maruti began its operations in the 1980s - to represent them as they contended it was compromised and had failed to represent workers’ interests. But the management insisted that the Gurgaon union was the true representative of the Manesar workers. Common sense tells us that each one of us should have the right to decide who can represent us, either individually or collectively. The Constitution of India provides the ‘freedom to form association’ as a fundamental right and the Trade Union Act also gives a set of workers the right to form their own union. But the Maruti management (and the Haryana government in collusion with them) systematically denied this basic right to the workers for the past year, rejecting them and frustrating them in every possible way – threats, coercion, force, enticements, etc. Not only this: after a protracted process which continued for months, when the standoff was broken last year, the management in its wisdom decided to buy peace (literally) by dismissing the whole leadership of the agitation while simultaneously giving them hefty compensations. According to media reports two top leaders were paid Rs. 40 lakh each while 28 of them got Rs. 16 lakh per person. Maruti Chairman R. C. Bhargava called this ‘voluntary retirement’ by young workers, most in their 20s, at the time.

What are the consequences of such a myopic outlook? When the crisis occurred on the morning of 18th July, 2012 in the form of an altercation between a worker and a supervisor, there was no structure in place through which a management – worker dispute could be addressed – management had eliminated the whole set of leadership whom the workers trusted, there was no representative organisation which could have served as go-between and this kind of vacuum of leadership, organisation and trust set the stage for the unforgivable violence by the end of the day. Though there was a new union registered and recognised in February this year, management had continued to undercut it in the same manner as before.

3. The elusive ‘spatial fix’:
The third aspect is the persistent reports that Maruti is likely to move lock, stock and barrel to the investment haven of Narendra Modi’s Gujarat. Most revealing are the comments in the mainstream digital media: click on any news of the labour trouble this past one year and the comments section is full of unsolicited advice that Maruti should move from Haryana to Gujarat. But the moot point is how come suddenly Manesar or Haryana have become unfriendly for Maruti? Wasn’t the ‘hardworking’, ‘docile’, and non-unionised labour of Haryana a big consideration when plants were established in Gurgaon in the 1980s and Manesar five years ago? The geographer David Harvey calls this unceasing quest to relocate production to a favourable place an attempt at ‘spatial fix’.
But Beverly Silver in a large study of the world auto industry from its inception to the 1990s demonstrates that along with the movement of the centre of auto production the location of labour unrest also shifts continuously. The database reveals how the heart of labour unrest in the auto industry moved from North America in the 1930s and ’40s, to Western Europe in the 1960s and ’70s, and to developing countries in Latin America and East Asia in the 1990s. Silver concludes, “Where capital goes, conflict goes”.
There are no quick fixes for Maruti’s woes like moving to Gujarat or undermining the efforts of the workers to form their own unions.

INDUSTRIAL VIOLENCE AND DISPUTES IN RECENT YEARS

The first decade of the 21st century in India witnessed a series of conflicts in renowned transnational companies as well as their ancillaries in India.

1. Bosch
The Mico Bosch Labour Union (MBLU), Jaipur Plant, went on an indefinite strike from November 10, 2008, (Bosche Press Release, 21/1/09), even though a four year wage agreement with the Union was valid till 31.05.09.
After repeated appeals by the management failed to end the strike, management raised a dispute with the Rajasthan Labour Department and claimed that the Union resorted to violent means to prevent movement of vehicles to the plant and scuttled the production process.

2. Rico Auto Industries Ltd
In 2009, several workers from the Indian auto industry went on a strike after a worker at Rico, an Indian maker of gear and brake parts, died during a protest staged by workers against management. The worker was beaten to death by people believed to be associated with Rico’s management.

3. Pricol Ltd.
In September 2009, angry workers killed Roy George, the human resources head of the instrument panel maker, for freezing their salaries. Management and workers had been at loggerheads for the previous two years. Police arrested 50 suspects.

4. Honda Motor Co.
In September 2009, workers tried to prevent trial runs of a new assembly line by threatening company officials with shock absorbers and motorcycle parts. In a separate incident in 2005, company workers clashed with police. Workers reportedly wanted management to bring back suspended workers. Honda Motor Co. said some of the protesters were not company workers.

5. Graziano Trasmissioni India Pvt. Ltd
In September 2008, nearly 200 workers killed Kishore Chaudhary , the chief executive of Graziano Trasmissioni India Pvt. Ltd., a manufacturing unit of Swiss high-tech group OC Oerlikon Corp.

6. Hyundai Motor Co.
The Indian unit of the South Korean automaker had to stop production at its Chennai plant after nearly 150 workers staged a protest to bring back 67 of 87 workers who were sacked by the company in December 2009.
Some attribute these clashes to what may be companies’ insensitivity in dealing with their workers. “I think the industries are rising and are unable to foresee what is happening at the human level” said clinical psychologist Aruna Broota.

But others see a loosely-organized, sometimes thuggish union movement as the chief culprit. “The union functions in an ad hoc manner,” said Ritu Tripathi, assistant professor at the Indian Institute of Management in Bangalore.

MAJOR REASONS FOR INDUSTRIAL DISPUTES

1. Wages and allowances: Rise in the cost of living forces the workers to demand more wages to meet the rising cost of living index and to increase their standards of living. This brings them into conflict with their employers who are never willing to pay more wages to workers.
In 2002, 21.4% of disputes were caused by demand of higher wages and allowances. This percentage was 20.4% during 2003 and during 2004 increased up to 26.2%. In 2005, wages and allowances accounted for 21.8% of disputes.
Example of industrial violence resulting due to poor wages and allowance policies: Strike at Volvo’s plant near Bangalore demanding higher wages (September 2011)

2. Personnel and retrenchment: Sometime industrial disputes arise because of personnel problems like dismissal, retrenchment, layoff, transfer, and promotion etc. During the year 2002, disputes caused by personnel were 14.1% while those caused by retrenchment and layoffs were 2.2% and 0.4% respectively. In 2003, a similar trend could be seen, wherein 11.2% of the disputes were caused by personnel, while 2.4% and 0.6% of disputes were caused by retrenchment and layoffs. In year 2005, only 9.6% of the disputes were caused by personnel, and only 0.4% was caused by retrenchment.
Example of industrial violence resulting due to personnel and retrenchment problems: Tata Kirloskar workers striking for reinstatement of colleagues (March 2006).

3. Working conditions and Growth Prospects: The working conditions in Indian industries are not hygienic. There is not ample provision of water, heating, lighting, safety etc. On the other hand, working hours are also greater. The demand of palatable working conditions and shorter hours of work led to labour disputes. Also if there are no growth prospects in the industry, it might result in frustration and agitation among employees.
Example of industrial violence resulting due to poor working conditions and growth prospects: Air India pilots striking against the move to provide Boeing-787 Dreamliner training to pilots of Indian Airlines (May 2012).

LABOUR LAWS IN INDIA
Trade Union Act 1926:
Trade Union means any combination, whether temporary or permanent, formed primarily for the purpose of regulating the relations between workmen and employers or between workmen and workmen, or between employers and employers, or for imposing restrictive conditions on the conduct of any trade or business. Thus, technically, there can be ‘union’ of employers also, though, almost universally, the term ‘trade union’ is associated with union of workmen or employees. It includes federation of two or more trade unions and facilitates unionisation both in the organised and the unorganised sectors. It also provides Immunity to the trade unions against certain forms of civil and criminal action. Any seven or more members of a Trade Union can apply for registration, by subscribing their names to rules of trade Union and complying with provisions of the Act for registration of trade union.
Other important provisions are as follows: 1. Trade Union is a body corporate – Registered Trade Union shall be a body corporate by the name under which it is registered. It will have perpetual succession and a common seal. It can acquire both movable and immovable property in its own name and contract in its own name [Section 13]. 2. Fund for political purposes - Trade Union can constitute separate fund for political purposes.

Minimum Wages Act 1948:
Legislative protection for workers to receive a minimum wage, can be considered as the hall mark of any progressive nation. It is one of the fundamental premises of decent work. In India, the Minimum Wages Act, 1948 provides for fixation and enforcement of minimum wages in respect of scheduled employments.
The Act also requires the appropriate government (both at Centre and States) to fix minimum rates of wages in respect of employments specified in the schedule and also review and revise the same at intervals not exceeding five years.
There is large scale variation of minimum wages both within the country and internationally owing to differences in prices of essential commodities, paying capacity, productivity, local conditions, items of the commodity basket, differences in exchange rates etc.
In view of this it is not possible to compare the minimum wages in the country with International Standards.
The minimum wage in 2011 minimum was fixed at Rs. 115.

Contract labour (Regulation & Abolition) Act, 1970:
The main objective was to abolish the system of contract labour wherever possible and practicable, regulate the working conditions of the contract labour so as to place it at par with labour employed directly, and ensure timely payment of wages and provision of essential amenities. It extends to the whole of India. It applies to: 1. Every establishment in which twenty or more workmen are employed or were employed on any day of the preceding twelve months as contract labour. 2. Every contractor who employees or who employed on any day of the preceding twelve months twenty or more workmen.

Other important features are: 1. It shall not apply to establishments in which work only of an intermittent or casual nature is performed. 2. If a question arises whether work performed in an establishment is of an intermittent or casual nature, the appropriate Government shall take action.

Loop holes in the laws: 1. The right to register a trade union does not mean that the employer must recognise the union, no legal compulsion for employers, even in the organised sector, to enter into collective bargaining. 2. The minimum wage in 2011 was as low as Rs. 115. 3. The Contract Labour Law was actually established to reduce use of contract labour and regulate their working conditions.

Required amendments: 1. The Government plans to modify the labour laws in the 2012-17 Five Year Plan. 2. Contractual labour should be provided same wages and benefits. 3. Define a National Minimum wage for all contractual labour.