Maruti IR

Industrial Relations at Maruti-Suzuki

Ratna Sen

India's largest automobile manu-facturer, Maruti Suzuki India Ltd,has achieved excellence in prod-uct innovation, production sys-tems, customer services and sat-isfaction, and has a hold of overhalf the Indian auto market. It isalso a company which is knownfor making many changes overthe years to face competition andfor using HRM strategies exten-sively. Yet the company does notappear to have been able to de-velop a mature relationship withits employee unions, and has beenrepeatedly facing confrontationwith employee representatives.This could be an indication of in-eptitude on the part of a multina-tional in understanding employeerights and aspirations in the hostcountry, or a deliberate strategyto control unions despite facingsmall periodic losses.

Ratna Sen is Professor (Retd), Indian Institute ofSocial Welfare & Business Management, Kolkata. E-mail;[email protected]

Introduction

MARUTI SUZUKI INDIA LTD[MSIL] has been making many changesover the years to face competition. It isalso known as a company to use HRMstrategies extensively. A climate inter-vention programme was introducedthrough common canteen and commonuniform for managerial staff and work-ers. Other interventions included,change in the nature of supervision toemphasise the supervisor's guidancerole, employee development and train-ing, and creating the image of a caringorganisation through good welfare fa-cilities. The company also had smallgroup activities (SGA) and teams, regu-lar departmental meetings for generat-ing ideas, communication programmesthrough posters, leaflets, departmentalmeetings, and non-bargaining manage-ment union meetings (Sen 2010:444).Absenteeism was apparently reduced atone point of time to just 5 % in the plantas a result of these interventions (Nair& Rao 1990: 2-6). But are these prac-tices incompatible with good industrialrelations? '

Various events would seem to indi-cate that MSIL is unable to handle its

The Indian Journal of Industrial Relations, Vol. 47, No. 2, October 2011 191

Raina Sen

Eng from 2000 right up to 2011,ompany has faced labour

trouble, strikes, work stoppagesand disruptions from time to time.

human resources and unions in the con-text of change management.Startingfrom 2000 right up to 2011, the companyhas faced labour trouble, strikes, workstoppages and disruptions from time totime. A 13-day strike during July 2011,partial work stoppages and disruptionsduring September 2000 to January 2001,resumption of confrontation during Au-gust 2005, and changes in the union, itsname or its character, emergence of an-other union etc leave many questionsunanswered. Or are these strategies partof a pattern of labour relations practicedby, multinationals? It would also be in-teresting to look at the role of the stateduring these interruptions and whetherthe state's intentions have backfired.

The Company

Maruti Udyog Ltd was launched in1981 as a joint venture between the Gov-ernment of India and Suzuki Motors ofJapan to produce a people's car, in amarket which had been dominated byHindustan Motors' Ambassador andFiat's small car. From the late 80s thecompany began a new era as India'slargest car manufacturer and soon be-came the holder of over 80% of the au-tomobile market share. The companywas also upheld as a model employer,paying high wages and using severalJapanese management techniques forintegrating employees into the produc-

tion process. By 1995 it got ISO 1992certification and continued to grab anumber of domestic and foreign awardseach year on productivity, customer sat-isfaction, exports and business excel-lence. In 1996 it got the first prize in thenational competition in Quality Circles(Sen 2010:446).

But with the entry and growth of newpassenger automobiles in India like,Hyundai, Daewoo, Tata Motors, Ford,Fiat, General Motors, Mitsubishi, Hondaand Toyota, from mid-1990s, thecompany's share dwindled to less than50% by 1999-2000. Its response was tolaunch a number of new models fromtime to time. The year 2000-01 was aspecial year for Maruti which had to ab-sorb substantial depreciation for severalnew models introduced at once. Side byside Maruti began several initiatives toimprove its production and shop floorworking through cost cutting, enhancedcustomer services and efficiency. Thishelped it grope back to over 50% sharein a few years and thereafter it has man-aged to retain a share of over 55 % in arapidly growing car market by launch-ing new models regularly and investingin customer satisfaction. The company'ssingle union changed leadership severaltimes during thé many years of thecompany's existence, but continued toremain independent even though it gotsupport and guidance from several of thenational centres (Sen 2010: 446).

The changes introduced, helpedMaruti do exceptionally well on the pro-ductivity front. By the year 2000, pro-duction had increased by 400 per cent.

192 The Indian Journal of Industrial Relations, Vol 47, No. 2, October 2011


though employment had increased onlyby about 65 per cent. Since its inception,the wage bill (including incentives andall other benefits and employee-relatedexpenses) has been on an average around2 per cent of the turnover. This, for anengineering industry was an achievementby any standard. The capacity utilisationat MSIL has been more than 100 per centand labour productivity higher than tar-geted by the management. It clearlyshows a very high degree of labour in-tensification in MSIL (Das 2011)

Recent Strike

Trouble began brewing in May 2011in India's largest automaker. On y^ June,workers of MSIL's Manesar plant ap-plied to the Registrar of Trade unions,Haryana, for registration of their union- Maruti Suzuki Employees' Union[MSEU]. They then asked managementto recognize their new union and retaincontract labourers for the two upcomingnew units inside the complex(hresonance.blogspot 2011). Manage-ment predictably refused, saying therewas already a union in Maruti, the MarutiUdyog Kamgar Union (MUKU). This isthe only recognised union, dominated byworkers at the Gurgaon plant. TheManesar plant rolls out about 1,200 -1300 units every day in two shifts. Thefactory produces hatchbacks Swift andA-Star a'nd sedans D'ZiRE and SX4Üust.auto2011)

D. L Sachdev, secretary, AITUC (AllIndia Trade Union Congress), which wasbacking the strike said in the BusinessStandard: "The new union applied for

registration to the registrar of trade unionson Friday. The next day, Maruti's man-agement asked its workers to sign an un-dertaking that they will not be a part ofthe new union. We do not want the man-agement interfering in our matters. Wehave met the labour minister and the labourcommissioner. There is every likelihood,that agitation will increase if demands arenot met." (just-auto 2011). Can any man-agement under Indian law ask for suchan undertaking from its employees? Rightof Association is a fundamental right un-der the Constitution.

Can any management under Indianlaw ask for such an undertakingfrom its empioyees? Right of Asso-ciation is a fundamental right un-der the Constitution.

On 4"' June, Saturday, àt the end ofthe day shift at about 4 p.m., about 2500employees of Manesar plant went on awild-cat (sudden strike without notice tothe company) strike. Sunday was in anycase an off-day. On Monday, 6'" June,management dismissed 11 employees ondisciplinary grounds and threatened toenforce an eight-day wage cut for everyday of production loss caused by thestrike (just-auto 2011). But the strikecontinued. Business Line quotes a workerfrom Manesar "We have just one demandthat our workers at Manesar should notbe forced to affiliate themselves with theGurgaon union. That is a management-backed union and does not know of theproblems at the Manesar plant"(hresonance.blogspot 2011)


Ratna Sen

The company's human resourceshead, SY Siddiqui, said that no one inthe company would be'available for com-ment until June 27 as there was an an-nual maintenance shutdown. However,speaking on condition of anonymity, aMaruti official said that the 11 workerswere sacked on the ground of indiscipline."As the shift ended at 4 o' clock theseworkers, without provocation, instigatedother workers to start the strike; Therewas no warning, no charter of demandor anything. These guys just went onstrike,",he said. However the workershave a different version (money.control2011).

Management Permission to Form aUnion?

Chairman, R C Bhargava told theBusiness Standard that "The strike is il-legal. The workers had not given anynotice to the management. Also, thosewho have applied for registration of anew union, which is separate from thatof the Gurgaon plant, did not receivepennission or were registered" (just.auto2011). Since when do workers in Indiaor under what law, require nianagementpennission to form or register a union?He also hinted at a political conspiracy,saying, "There could be another agenda,a political party wanting a foothold inMaruti. The way it (strike) has happened,without any background, makes me won-der why one month before union elec-tions". Bhargava refused to name anypolitical party (Doval 201 la). The back-ground was clear enough, so theChairman's claim was naïve. The union'sstated view however was quite different

"I don't want to align with any politicalparty in fulfilling our demands," said ShivKumar, 27-year-old General Secretary ofthe 811 -strong union, MSEU at Manesarand a machinist and diploma holder froman Industrial Training Institute. While hemade it clear that he would not backdown, he has no inclination to call forthird-party mediation (Economic Times2011). This is despite the fact thatAITUC has been backing' Maruti em-ployees.

Since when do workers in India orunder what law, require manage-ment permission to form or regis-ter a union?

Various unions operating in the areathreatened to hold similar protests acrossother companies. Many issued notices totheir companies, urging intervention inthe matter or face protests. There areabout 55 auto workers unions in theGurgaon-Manesar area, most affiliated tothe central unions. The companies whoseunions served notices included RicoAuto, Omaxe, Honda Motorcycles andScooters India and Satyam Auto. TheHaryana government, under the provi-sions of Industrial Disputes Act 1947,referred the MSIL dispute to the LabourCourt and subsequently banned thestrike, (hresonance.blogspot 2011)

After several rounds of negotiationsincluding a referral of the matter to theHaryana Chief Minister, the managementappeared to have conceded some of thepoints the striking workers had raised.The company would take back^the dis-

194 The Indian Journal of Industrial Relations, Vol. 47, No. 2, October 2011


missed employees, but would subjectthem to disciplinary action. Instead ofeight days of pay cut for every day's pro-duction loss, the management reportedlyagreed to cut only three days' wages(later reduced to one day). After 13 days,the strike was called off on 16* June nightand the workers returned to work on 1S"".Puja was performed on n"" by the work-ers. Newly formed Maruti Suzuki Em-ployees Union's (MSEU) General Sec-retary Shiv Kumar said: "There is nomention of having the second union in theagreement as the management strictlydoes not have any role to play in settingup a union" (money control, 2011)

Can a government assure a com-pany in advance that it will not reg-ister a union?

The management said it had got theHaryana Chief Minister's assurance thatit will not allow the formation of a newunion, but the workers point out that thisis their right and they are prepared tomove the court if the state governmentrefused them permission. (Business Stan-dard 20* June, 2011). Can a governmentassure a company in advance that it willnot register a union? Production losseswere variously estimated at Rs 420 to Rs700 crores. The CEO of Suzuki MotorCorporation, Osamu Suzuki told a newsconference that the strike that lasted sixworking days at the Manesar factorywas negligible, leading to an output lossof just 16,000 vehicles and that "In amarket where we sell 1.2 million vehiclesa year, 16,000 vehicles was a matter ofinventory adjustment". He added that he

was not surprised at the short-lived labourstrife, repeating Maruti's stance that itwould not recognise a separate labourunion for the Manesar factory, demandedby the striking workers (money.control2011). What was management's stake inthe existing MUKU ? Is there truth inMUKU being a management-backedunion?

Assessments of the causes of thisstrike were almost unanimous acrosslabour forums. Anil Kumar, general sec-retary of AITUC, Gurgaon, said that "thelabour department of Haryana is work-ing together with the manufacturers tostop workers from forming a union."Kumar and his comrades at AITUC pro-vided the muscle power and rallied sup-port from workers in other companies(money.control 2011). D. L Sachdev, gen-eral secretary of AITUC, said, "It is aconstitutional right.... no body can pre-vent the workers from forming a union."

Statistics, however, tell a story of ef-fective prevention. "If one were to iso-late one single factor (contributing to in-dustrial strife), it is the resistance (of em-ployers) to the right to organise," says JJohn, executive director of Centre forEducation and Communication and editorof Labour File, a bimonthly journal onworker issues. "In many cases, there isno demand for even a wage rise; just toform a union" (Das 2011). He felt thatalmost every strike at the numerous fac-tories in the Gurgaon-Manesar region inthe past decade had started with compa-nies refusing to recognise the demand ofworkers to form a union. From the strikeat Maruti in 2000 to the one at Honda


Ratna Sen

Motorcycles and Scooters India (HMSI)in 2005 and the one at Rico Auto in 2009,the one common demand was to form aunion. He backs it with data on unions inHaryana. The number of registered fac-tories in Haryana nearly doubled from5,652 in 1991 to 10,474 in 2010, while thenumber of registered (permanent) work-ers grew from 3.5 lakh in 1993 to morethan 7.7 lakh in 2010 (based on data fromthe State Labour Department). The in-crease in the number of contract workershas been vastly more. In comparison, inthe past two decades, the number of reg-istered trade unions has grown by merely400 to 1,540 (money.control 2011 ). In anycase the problem in Maruti was a recur-rent one, and its roots go back to 2000.

The problem in Maruti was a re-current one, and its roots go backto 2000.

Maruti's Recurrent Problem

In 2000 the enhanced emphasis onproductivity provoked a tool down agi-tation in the Gurgaon plant in Septem-ber. This concerned the revision of pro-duction incentive scheme and the final-ization of the annual production target.The incentive scheme was incorporatedin a bipartite agreement made in 1988,based on the number of cars producedand 65% share in the savings in labourcost (Sen 2010:446). In 1995 the man-agement had unilaterally modified thescheme. This time, the union protestedagainst further modification and startedleaving their plates on the dining table(Venkata Ratnam 2006). The union con-

tention on the incentives was that whilethey would earn more with higher sales,their earnings would reduce if sales fell.The protests began on 9 September whenthe workers started wearing black badgesduring working hours. The union at thattime, the Maruti Udyog Employees Union(MUEU) placed three initial demands: (a)revision of the production incentivescheme in place of the one ended inMarch 1999, (b) implementation of pen-sion package agreed upon in the previ-ous wage settlement on 1 April 1996, and .(c) a new wage settlement for all regu-lar employees in place of the one expiredon 31 March 2000 (Das 2011)

On 11"- September the MUEU begana relay hunger strike, and intensifiedtheir agitation with go-slow, slogan-shouting, coming to work without uni-forms, a couple of gheraos. From 30""September it started a daily tool-downstrike for two hours. The union de-manded a negotiated settlement on all theissues of concern and threatened totalstrike without such a settlement. Themanagement responded with the demandfor a good conduct undertaking whichled to the crisis of 12"" October (Sen2010:444).

There were differences in interpre-tation on many other issues as well. Forinstance, while the union claimed thataverage monthly salary of 4400 workerswas Rs 9000 approximately, manage-ment claimed that cost to company peremployee was Rs 23,000. The manage-ment also said that inclusive of the newincentive scheme they were willing toincrease the CTC to over Rs 33,000 per



employee. The union compared the num-ber of workers in 1992 when 4000 work-ers were producing 100,000 cars and2000, when 4400 workers were produc-ing over 400,000 cars. The Centre forWorkers' Management estimated that inthe last 5 years Maruti's shop floor pro-ductivity and labour productivity hadimproved by 40% and 25% respectively,and production by 50% (actual 4,07,000compared to rated capacity of 3,50,000).But employment had increased 11% andwages had nearly doubled (VenkataRatnam 2006).

On n ' " October, nearly 4,500 em-ployees of MSIL, boycotted work, cut-ting daily output by 86 per cent as thecompany forbade entry to workers pro-testing the company's demand for anundertaking from them. The MUEU trea-surer and spokesperson, G.K. Walia said,"This morning, the management wantedthe workers to sign an undertaking be-fore letting them into the factory. Sign-ing it would have meant losing our fun-damental rights and so none of our 4,700members have gone into the plant. Wehave not called for a strike". Almost 90% of the workers agitated outside thefactory, demanding that the decision tolink bonus and incentives with produc-tion be reversed. Some of the workerseven decided to go on a fast to death (Sen2010:444). Ultimately it ended in a 26-day sit-in near the office of the UnionHeavy Industry Minister (Das 2011).

Director (Finance) A.R. Halasyamadmitted that production had been ham-pered, but the company continued to op-erate, making just 200 cars (against the

normal production level of 1,500 cars aday) with a skeletal staff for several days.The company, in a statement issued inDelhi, said the workmen had been noti-fied that only those workers could enterthe factory who gave an undertaking inwriting that they would not indulge inany activity which adversely affected theproduction and discipline. It said tha t"workmen who do not give the under-taking would be deemed to be on illegalstrike... the management is not makingany pre-condition for workmen to jointheir duty. In terms of the .contract ofemployment the workmen are duty-bound to adhere to norms of disciplineand give normal output" (Sen 2010:444).

For the management in Maruti, theprimary concern was that productionshould not stop even though the confron-tation with the workers continued into No-vember. Some workers from supplierswere roped in to do the work and alongwith supervisors and managers, Marutigot the plant started within a week's time.There was also indirect pressure fromthe BJP government on the union and theissue came up for discussion in Parlia-ment. The defacto strike became a topicof heated debate. Every move of themanagement was analysed by differentgroups and discussed in various forums.Industry was interested to see how thecountry's largest carmaker coped withthe strike. Unions were keen to see howlong the face-off continued and withwhat outcome. Smaller companies, par-ticularly ancillaries, watched with batedbreath since their own survival waslinked to Maruti and similar manufactur-ers. Senior management not only had to


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cope with the skeleton staff and produc-tion but also engage in heated argumentsfrom several quarters. The MD confessedto doubts on several occasions, since notonly the workers but their family mem-bers were also affected. But he remainedconvinced about the long term interestsof all concerned (Sen 2010:445).

The top management in Suzuki ruledout any immediate changes in Maruti'sexisting set up. They categorically statedthat Maruti was an Indian company andthere was no necessity to change anythingimmediately. They expressed satisfactionthat the Maruti Board was able to takefaster decisions and act immediately inresponse to various market requirements.All persons involved with Maruti had madegreat efforts to reduce costs and improvecustomer satisfaction. It was because ofthis that the company managed to regis-ter a net loss of just Rs 269 crore in 2000-01 on a total revenue turnover of Rs9219.6 crore (Sen 2010: 445)

By P' November 2000, about 1000workers (also union members) hadsigned the bond. By then about 3400employees (out of a total of 5800) wereworking. But this number includedmostly non-unionised supervisors, ex-ecutives, 40 recalled apprentices, peoplefrom non-production departments andsome casuals (Venkataratnam 2006).Three deaths, one inside the factory, ag-gravated the situation. Employees ofMaruti Udyog Ltd. Joint Ventures issueda 72-hour strike notice to managementon the plea that the agitation in the mainplant was leading to an accumulation ofstocks in the subsidiary plants. The main

six national union centres criticized themanagement. With no signs of the face-off resolving, the strike figured in theLok Sabha. On 28"" November the heavyIndustries Minister, Mr Murli ManoharJoshi's remarks during a calling atten-tion motion that the law would take itscourse in case of disciplinary action.,against some agitating employees ofMaruti upset opposition members. MrJoshi disclosed that the union had beenrequested to agree to disciplinary actionfor alleged misconduct by some employ-ees in accordance with appropriatelabour laws and to accept the scheme ofincentives notified by the management(Sen 2010:445)

Mr Joshi said he had held severalmeetings with the union representativesand management to resolve the disputeand bring about an amicable settlementbetween labour and management. "It isimportant that discipline in the factoryis maintained and profitability of theenterprise is not impaired particularly inthe face of fierce competition that existstoday in the market," he said but addedthat it was also important that rights ofworkers were protected. The manage-ment had meanwhile agreed to drop in-sistence on individual workers furnish-ing a good conduct undertaking, but hadsought certain safeguards to ensure thatharmony would be restored in theorganisation. There was vigorous protestfrom the opposition members overJoshi's remarks (Sen 2010:445). How-ever, the deadlock continued for 90 days.

On 12 December 2000, a final agree-ment was signed at a tri-partite meeting



called by the state government. The man-agement withdrew the 'good conductundertaking' and the workers agreed tothe incentive scheme suggested by themanagement. Though there was a lossto workers compared to their initial de-mands, this was compensated by a big-ger gain in the form of right to organiseand collective bargaining. Their veryright to exist as the Maruti Udyog Em-ployees Union otherwise would havebeen undermined, if the 'good conductundertaking' had been accepted.

The management withdrew the'good conduct undertaking' and theworkers agreed to the incentivescheme suggested by the manage-ment.

After four months of struggle, theunion called off its strike in January2001. According to the union, the man-agement refused to reinstate 39 dismissedemployees (mainly union leaders andactivists) and agreed to take back anotherbatch of striking workers with the con-dition of signing the 'good conduct un-dertaking'. In September 2001, the com-pany announced a VRS package, whichwas opposed by the union. The generalsecretary of the union was sacked in Oc-tober 2001. Cases of illegal retrenchmentof union leaders and activists are stillpending in the labour court. The dis-missed general secretary was re-electedin the next election of the employees'union (Das 2011)

Finally on 9"" January 2001, the strikebroke on the management's terms. The

implications were obvious. Not only didthe union have to accept the new termson production linked incentives and bo-nus, but industry heaved a sigh of reliefand learnt that it would be better in thefuture to stand up to the unions on issuesrelating to productivity and long termsurvival and growth. For the union, theface saver was that no undertaking hadto be given (Sen 2010:445).

Ownership Changes

By 2001-02 the company managedto make a net profit of Rs 55 crore on atotal turnover of Rs 9295.3 crore. In2002, Suzuki paid Rs 400 crore to buy1.2 million newly issued Maruti sharesfor Rs 3,280 per share that would takeits shareholding to 54.2 per cent and di-lute the government's holding to 45.54per cent from the existing 49.7 per cent.In 2003 the company was listed on theBombay and National Stock Exchangesand its IPO. was oversubscribed 11 times.In the second step to disinvestment, theGovernment of India offloaded a 20 percent stake through an initial public of-fering (IPO) of shares to exit the ven-ture entirely by March 2004. The Swiftwas launched in 2007 and the young de-signers of the car got an internationalaward for it. In 2007, the companyoperationalized another plant and dieselengine production centre in Manesar,Haryana. The Indian MD was replacedby a Japanese MD (Sen 2010: 447)

But the 2000-01 confrontation did notdie down or get entirely resolved. In Au-gust, 2005, the Maruti Udyog EmployeesUnion sought an appointment with the


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Prime Minister, Dr Manmohan Singh,seeking his intervention to resolve severalissues with Suzuki management. TheMemorandum was signed by MUEU'sgeneral secretary Mathew Abraham,along with a covering letter from AITUCgeneral secretary and Communist Partyof India's Lok Sabha member GurudasDasgupta. The AITUC, which had re-cently claimed a conquest by bringingHonda Motorcycle & Scooter India'sworkers' union into its fold, was seekinga hold in MSIL as well (Sen 2010: 447)

Dasgupta's covering letter said, "the(Suzuki) management has summarily dis-missed 24 actiyists of the union withoutholding any enquiry^ another 36 with ex-parte enquiry, and 32 for not signing im-proper and illegal undertakings imposed bythe management. Twenty-six were charge-sheeted but were "compelled" to take VRS,while hundreds of other employees werealso forced to take VRS. Dasgupta alsosaid that the Suzuki management enjoyedthe support of the previous National Demo-cratic Alliance government at the Centreand the former Chautala Government in thestate. But after a change of governmentboth at the Centre and state, the workersand their families were hoping for justiceto be done to them. It was alleged that thevoluntary retirement scheme was not ex-actly voluntary. The memorandum also al-leged that Maruti Udyog had gradually re-placed over 2000 permanent employeeswith contract workers, following the Oc-tober 2000 management-labour dispute(Sen 2010:446)

A Maruti spokesperson said thecoinpany's union had long since been de-

recognised and therefore was not a rep-resentative of the workers. "This is agroup formed by ex-employees of thecompany and those who had taken theVRS," said the company spokesperson.A new union, registered as Maruti UdyogKamgar Union (MUKU) had replacedthe MUEU. However, a delegation con-sisting of Dasgupta,, Abraham, AITUCnational secretary DL Sachdev and a fewother Maruti Udyog Employees' Unionmembers met the Prime Minister on Au-gust 3. The Prime Minister had report-edly promised to intervene in the matterin the next two to three weeks, accord-ing to Sachdev. But government sourcessaid that the Prime Minister had voicedapprehension in taking up the issue, asthe echo of the labour trouble at Honda'sManesar facility had barely died down.Obviously, the government's hands weretied down by the compulsions of liber-alization (Sen 2010:448)

A new union, registered as MarutiUdyog Kamgar Union (MUKU)had replaced the MUEU.

MSIL's total sales during 2007-08[April-March] were 764,842, including53,024 export units.

Conclusion

While Maruti's confrontation withits workers over the issue of productionand remuneration changes was triggeredby the competition created by globaliza-tion, the manner in which it dealt withthe problem indicated very close resem-blance with Honda's handling of its union



in 2005. Or possibly, Maruti's experiencewas sought to be replicated by Honda.Maruti's strategy was characterized by:

- Close links with the industry-friendlystate government, and getting thestate to help management by askingit not to register the new union.

- Undermining a resistant union(MUEU) by dismissing its office bear-ers and activists, de-recognition of theunion and establishment of a pliableand friendly union (MUKU), even ifnot a management sponsored union.Many union members had signed thegood conduct bond in 2000.

- Ability to read the Centralgovernment's favourable stance, re-gardless of the political affiliation(neither NDA nor UPA governmentsintervened on behalf of the workers,despite the PM's meeting).

- Introducing changes in the employ-ment structure (from permanent tocontract) and using the large laboursupply to maintain a tight control overemployees. The Manesair plant has

. about 700 contract workers (28 percent of the total), many of whom getabsorbed later, but the salary differ-ential with regular employees is anissue that rankles most of them. Only2485 workers in the Gurgaon plantwere eligible to vote which could in-dicate that the remaining 2000 werecontract employees.

- Using discharge, dismissal, VRS, etcto get rid of workers who do not fallinto the company's line and therebychanging the character of the union.

- Convenient use of the law, ignoringprovisions on unionization but adher-ing to provisions on discipline.

- Not accepting the right of workersto have their own association and dic-tating to them on the union to whichthey should belong.

- Trying to obtain individual undertak-ings from workers on conduct withinthe factory.

Maruti-Suzuki illustrates the ap-I parent contradictions within the

concept of HRM.

Maruti-Suzuki illustrates the apparentcontradictions within the concept of HRM.On the one hand the company practicesprofessional management systems andaims at employee satisfaction in terms ofwages, working conditions, workplaceenvironment and work design. But on theother it has what can be described as ano-nonsense attitude towards the union ifnot a confrontational position. Its decisionto de-recognise the MUE Union was inkeeping with this stand. In any case theunion is looked upon as an obstruction tomanagement of work and productive flex-ibility. The new union, MSEU, formed atManesar plant in 2011, is totally ob-structed. Management refuses to recog-nize it in any way. Having got a pliableunion, MUKU at Gurgaon, it wanted toimpose this union on its Manesar plant.But Indian law does not say anything abouthaving a single union, either in a plant orin a company.

To what extent is this strategy suc-cessful? Success has been achieved in

The Indian Journal of Industrial Relations, Vol. 47. No. 2, October 2011 201

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terms of market share, quality, launch ofnew models, profitability. But have theseremoved ER. problems? In a highly com-petitive market, where many Indian com-panies have not had any IR problems for15 to 20 years, MSIL appears to have arecurrence of these periodically resultingin production loss, and more importantly,in image loss. Or, is that a calculated riskMSIL is prepared to take? As the CEOsaid in a blaze manner, a mere few thou-sand production units lost is negligible fora company selling over a million units an-nually. But can it ensure that these riskswill remain contained over time and notblow into large proportions? There is alsothe possibility that the state governmentmay not remain as compliant. Can a mul-tinational not look upon a union in India asa partner in its quest for higher productiv-ity and competitive edge, like several In-dian companies?

Can a multinational not look upona union in India as a partner in itsquest for higher productivity andcompetitive edge, like several In-dian companies?

In fact, as expected, trouble beganbrewing again with union elections on16"' July. The MSEU decided to boycottthe elections and its members did notparticipate in the elections. The unioninformed both Maruti management andthe Haryana Labour Commissioner aboutthis. Management was equally adamant,with Chairman, Bhargava having de-clared that elections would be held 'forboth plants' and those who win will 'rep-resent workers of both Gurgaon and

Manesar'. Management was also quitecategorical about not having talks withthe Manesar leaders.

Over 900 workers from thecompany's Manesar unit abstained fromthe voting process. Shiv Kumar, generalsecretary said, "Three members from theManesar plant had been nominated by themanagement for posts in Maruti UdyogKamgar Union (MUKU). The existingunion does not represent our interests. Wedid not participate in the elections today."There are around 2500 workers at theManesar plant, 900 of whom have rightsto vote in the union elections. A companyspokesperson, however, clarified the man-agement was not involved in the electionprocess. "The elections are an internalrriatter of the union. The office bearershave been nominated by members ofMUKU themselves. We facilitated theprocess by providing administrativesupport"(Dpval 2011b).

In late August, 2011, MSIL sus-pended two workers at its Manesar plantfor instigating indiscipline on the shopfloor, taking the total number of sus-pended workers to six. This suspensioncame on the heels of suspension of fourworkers in late July for manhandlingsupervisors. Those suspended were partof the rebel body. Officials within thecompany indicated that indisciplinewould not be tolerated and Maruti Suzukimanagement will take stem action againstanyone it perceived as a trouble maker.Predictably, the company followed it upwith a directive for employees to sign agood conduct bond before joining workon 29"" August. Only 20-25 workers


Industrial Relations at Maruti-Suiuki

signed the bond promising not to do any-thing to hamper production(Roychowdhury & Do val 2011). On 3 P'a few more signed the bond and theMSEU proposed dialogue to the manage-ment, as well as withdrawal of the bond.But management remained adamant andbrought in supervisors and engineers fromthe Gurgaon plant, as well as several con-tract workers to resume production of theSwift. This may snowball into anotherstrike, if not today, then perhaps next year.

State Government Role

The fragility of the peace agreementbrokered between the rebel workers atManesar and the management at MSIL,by the Haryana government in June, hasalready been exposed. The Suzuki Mo-tors Corporation Chairman, Mr.O.Suzukihad disclosed to a high-level Haryanadelegation led by Chief Minister OmPrakash Chautala at the Hamamatsu unitof the Corporation in Japan that produc-tion capacity of its Maruti plant inGurgaon in Haryana would be expandedfrom the existing 4.5 lakh units to 6 lakhunits. He had also thanked Mr. Chautalafor all the support extended to Maruti inGurgaon. Mr Suzuki also said that sev-eral Japanese companies were likely toinvest in Haryana because of its progres-sive industrial policy (Sen 2010:445).

The role of the government appearsto be:

• To attract foreign investments in alarge way, by assuring employers thatunions would be taken care of

• Intervening at the behest of employ-ers whenever industrial peace ap-

pears to be in jeopardy.

• Interpreting the law to suit the pur-pose of employers.

• Using the law and order and otherstate machinery to tame unions.

No doubt this policy has made Haryana(Gurgaon, Manesar etc) the largest auto-hub of the country. But it has also turnedthe area into a hotbed of labour agitation,from 2000 to the current year. It shouldalso try to analysé why a trade union likethe All India Trade Union Congress(AITUC), has managed to make inroadsinto an area where it had an insignificantpresence a decade ago. Many of the unionsin the area are affiliated to central unions.The policy may backfire in the near futuresince many of the large auto makers arereported to be scouting around for loca-tions in other states (notably Tamil Naduand Gujarat) for expansion.

The policy may backfire in the nearfuture since many of the large automakers are reported to be scoutingaround for locations in other states(notably Tamil Nadu and Gujarat)for expansion.

The Registrar of Trade Unions canask for clarifications or more informa-tion from applying unions, in case all in-formation required has not been suppliedor for change in the name of a union (ifone already exists with the same name).But to assure the management that it willrefuse registration is not within the pow-ers of the Registrar. This however, isby no means the only instance in India.It has happened also in West Bengal,


Ratna Sen

when the Kanoria Jute Mills' union wasrefused registratioii in the early 90s.

In early August, Shiv Kumar hadsaid. "The verification process for ourown union is underway, and is likely tobe completed in the coming week. Weare expecting to get the registration num-ber for our own union soon". But theHaryana government rejected the plea ofMSEU for registration, turning down theapplication. The labour department ap-parently made this rejection on .twogrounds (auto.oneindia 2011):

• The government said the applicationwas rejected as the workers fromManesar were part of the MarutiUdyog Kamgar Union (MUKU).

• The government considered howthose supporting the proposedMSEU had gone on strike on June 4soon after they had applied for thesecond union.

It may be recalled that the MSILmanagement had announced at the be-ginning of the June strike that the gov-ernment had assured it of not registeringthe new union. In August, MSIL chair-man R.C Bhargava bluntly said: "The ap-plication for forming a second union inthe company has been turned down bythe government. The situation is fluid, butwe are working closely with the employ-ees to resolve the issue." Meanwhile,those favouring the formation of a sepa-rate union and its due registration saidthat they would continue their demand foran independent union.

The issue of contract labour is alsoballooning. The tendency to hire morecontract workers has been on the rise,raising their share to almost 60 per centof the total auto industry workforce inthe area. Can the problem be ignored?

There is considerable despondencyamong unions of course. According to aLabour File investigator, while Indianlabour has a tradition of fighting backwhen there is a need, in the current phase,the combined force of capital, governmentmachinery and ruling class are comingheavily against labour while the effective-ness of existing labour laws become use-less for all practical purposes. The work-ers' struggles in the past few years showhow difficult it is for workers to asserttheir democratic rights (Das 2011)

References

Business Standard, (2011), "A TemporaryTruce", http://www.businessstandard.co.in/india/news/a-temporarv-truce/439668/.(lO'" June)

Das, K.S.L. (2011): "Foreign Management & In-dian Workers' Struggle", Labour File, http://www. labourfile.org/PrintDocument.aspx?ID=712. accessed 15/7/11'

Doval, Pankaj (2011a), Car Co's Chief Hints atPolitical Conspiracy, TNN, http://articles.timesofindia.indiatimes.com/2011-06-07/india-business/29628780 1manesar-plant-scooter-india-sx4. (accessedJun7, 2011)

Doval, Pankaj (201 lb), "Maruti Heads for Brawlwith Workers Again, Times of India, Kolkata(11'" July): 15

Forbes India (2011), "Haryana: The State of Dis-content http://www.moneycontrol.com/news/features, (Jul 02) (accessed 6/7/2011)



Haryana Government Refuses Maruti's Second Maruti Suzuki Strike: How India Inc's New AgeUnion, http://auto.oneindia.in/news/2011/ Unions Are Pushing for Reforms (2011),08/ (Visited on 15/7/11 ) http://economictimes.indiatimes.com/fea-

tures/corporate-dossier/maruti-suzuki-Marut. Suzuk. Hits Industrial Relations Dispute strike-how-india-incs-new-aee-unions-are-

(2011), http://www.iust-auto.com/news/ pushing-for-reforms/ar t ic leshow/maruti-suzuki-hits-industrial-relations- 9403904.cms. accessed 20/8/11, .dispute idl 11716.aspx. (ó"June)(accessed6/7/11 ) Nair, M.R.R. & Rao, T.V. (1990), Excellence

. . . „ , . „ . , ^ through Human Resource Development,Maruti Suzuki Strike: Can we count on them? y^^^ McGraw-Hill, New Delhi

(2011) http://hresonance.blogspot.com/201 l/.06/maruti-suzuki-strike-can-we- Roychowdhury,T. & Doval, P.(2011), "Labourcount (June 12, 2011) (accessed 15/7/11) Woes Stop Maruti's Manesar Output",

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