Brakes on at Manesar

On June 17 this year, the management of India’s largest car manufacturer, the Rs 37,522-crore Maruti Suzuki Ltd, buckled under pressure to buy peace with workers at its Manesar unit in Haryana. They had been on strike for 13 days demanding the recognition of a new but yet-to-be registered union, Maruti Suzuki Employees Union, that was to be different from the Maruti Udyog Kamgar Union at its Gurgaon mother plant. At the end of the 13-day strike, the company reinstated 11 workers who had been earlier sacked for indiscipline. A precedent had been set, something that returned to haunt the management barely 45 days later.

On August 29, as workers at the Manesar manufacturing unit lined up for their 7 a.m. shift, they were told they would be let in only if they signed a ‘good conduct bond’. The management said it had put up with the workers’ indiscipline for too long. The workers claimed that the bond allowed the company to dismiss them for indiscipline without any notice. The same morning, the management announced the sacking of five workers, dismissal of six trainees and suspension of another 10 workers. This triggered the second strike, now on for close to a month. Between August 29 and now, the management has taken disciplinary action against 62 workers—29 dismissed and 33 suspended.

The current fracas at Maruti Suzuki’s Manesar threatens to damage the not-so-robust fabric of industrial relations in the larger industrial belt in Haryana. The belt’s proximity to Delhi, the national capital, lends itself to high visibility and such events only erode India’s attractiveness as a big market and an investment destination. There cannot be a more negative signal than a three-decade-old foreign investor, Suzuki, being made to suffer such a prolonged labour unrest.

But this time round, the management had made up its mind—that it would take a long-term view and not just think about this year’s bottomline, though the Manesar unit accounts for just a fifth of the company’s output of 1.11 million cars. The company has fortified Gate 2, the main entrance to the Manesar plant, with 7-foot-high corrugated tin sheets and heavy security following repeated incidents of alleged sabotage and a ‘go-slow’ tactic.

“We were putting up with the go-slow, thinking things will get better. Up to August 23, it was go-slow. After that, sabotage. Car bodies were found deliberately scratched, wiring harnesses were cut. There were 150 incidents in five days—fixing of wrong components, hoses cut, car keys misplaced, air conditioning coolant not fixed, gas not filled. All this meant no production,” says R C Bhargava, Chairman, Maruti Suzuki Ltd.

Sensing they could have their way given their June experience, workers decided not to resume work unless all those against whom disciplinary action had been taken were reinstated. The management too hardened its stance.

THE LOSS

The first phase of the strike resulted in a loss of production of 12,600 units valued at Rs 550 crore. The Manesar unit, that started production in 2007 and has about 2,500 workers, produces the Swift and A-Star hatchbacks and the SX4 sedan. In the second phase of the strike, though operations are on, the company lost out on production to the tune of some 16,000 units, or about Rs 700 crore. In the last three-and-a-half months, the Maruti Suzuki scrip has lost almost 12 per cent to close at Rs 1,086.55 on Friday, September 23. The company’s market share in the highly competitive car market has also seen a sharp decline. “The June-August numbers show its market share has dipped 200-300 basis points. With festival season in the offing, it will be challenging for the company,” says Yaresh Kothari, an auto analyst at Angel Broking. “Also, rivals are bringing in new products. Chevrolet has launched the diesel Beat, Toyota the diesel version of Etios and Liva. Hyundai plans to launch a new car,” he says. Clearly, the strike is not helping the company.

POLITICS ON SHOP FLOOR

In the Manesar-Gurgaon belt, 300 vendors, employing some 50,000 workers, cater to three big auto companies—Maruti Suzuki, Honda and Hero. For any political party, this is a captive audience. Add to this, the workers in these three big companies.

The Maruti Udyog Kamgar Union at Maruti’s Gurgaon plant, which has some 5,000 workers, is an independent union or one with no political affiliation. But the All India Trade Union Congress (AITUC), which is affiliated to the Communist Party of India and is now seen to be backing the Manesar workers, claims the Gurgaon union is a management co-opted one.

“We are with the Manesar unit workers only in an advisory role. They do not understand how a union is formed, the registration process etc,” says D L Sachdeva, Secretary, AITUC.

On June 12, during the first phase of the strike at the Manesar unit, CPI Member of Parliament Gurudas Dasgupta had met Prime Minister Manmohan Singh to seek his intervention. The Prime Minister had then referred him to Haryana Chief Minister Bhupinder Hooda. The AITUC’s interest is apparent. Also, the Articles of Association of the proposed Maruti Suzuki Employees Union for the Manesar unit has provisions that allow outsiders to be office bearers, something the company’s management doesn’t want. “We always tell the worker that if you have a political union, it is going to be against your interest in the longer term. It will lead to strikes and problems,” says Maruti Suzuki’s chairman Bhargava.

“Legally, there is no bar on outside office bearers,” counters Sachdeva.

TVS Motors’s Venu Srinivasan says the union in his company has been affiliated to the Congress’s trade union wing INTUC for 60-70 years now. According to Srinivasan, managements need to have a far greater sense of ownership when the union is internal. “They must wear the hat of both the management and worker,” he says.

Bajaj Auto, on the other hand, has mostly had independent unions in its plants, says Rahul Bajaj. “The management has to be firm, but also fair. Workers cannot be unreasonable. A strike hurts the company, its workforce and the nation at large.”

Till the Maruti strike in 2001, there were no major incidents of labour unrest in the belt. That year, the Maruti management, with Jagdish Khattar at its helm, quashed the strike and broke the union’s back. According to a former top management executive of Maruti, almost 1,500 workers were identified and given handsome voluntary retirement packages. “The company enjoyed a trouble-free environment for 10 years because of the tough call we took then,” he says.

While Maruti was spared, labour problems hit Honda in 2005. CPI’s Dasgupta boycotted Parliament to oppose the lathi charge on Honda workers. Honda had terminated four workers, including Suresh Gaur, who is now the AITUC president of the Gurgaon-Manesar belt. But Hooda intervened and asked Honda to reinstate the four workers. Honda did, but not before asking all its workers to sign a good conduct bond. The work culture in the belt has not been the best ever since.

“What is making matters worse in the case of Maruti Suzuki is the nature of the workforce. Almost 80 per cent of the workers are unmarried and under 25 years. Naturally, they are not very mature and don’t trust anybody,” says a senior state labour ministry official, who is trying to reconcile the differences between the management and the workers.

“The leadership at Manesar is immature,” admits Sachdeva.

THE TRACK FORWARD

At Manesar, registration of a union with a likely political affiliation has become the sticking point. The state labour department has rejected the union’s registration application on “flimsy grounds”, claims Sachdeva of AITUC. Some members mentioned in the application are also members of Maruti’s Gurgaon Union (MUKU). This, the department has said, violates the proposed union’s own constitution. Two, signatures of some members don’t tally with the company’s records.

The good conduct bond is an irritant too, but not a deal-breaker anymore. The first draft of the bond reiterated Clause 25(3) of the Standing Orders that allowed Maruti Suzuki to dismiss workers without any notice. A Standing Order refers to conditions of employment mutually agreeable to the management and workers and certified by the state government. “There have been three drafts so far; the latest says the company may take disciplinary action. We can persuade workers to sign a modified version of a good conduct bond,” says Sachdeva. The management too may be willing to take back some, but not all, workers against whom disciplinary action has been taken. This will be a face-saver for both the sides.

Haryana Labour Minister Shiv Charan Lal Sharma is confident of a solution by Monday. “Workers who are involved in criminal activities or have FIRs slapped against them, cannot be taken back. The management has agreed to take back 18-20 workers,” he said. Of the Left’s influence in industrial relations, Sharma says, “We have told them (the Leftist trade unions) not to interfere. This is different from West Bengal.”