Manesar Case StudyGroup 3

Roll numbers3, 24 – 34

Introduction Introduction to Manesar plant Oraganizational Structure of Manesar Plant Manesar Incident Reasons for the incident Financial Impact Management reaction Government Reaction Why Manesar is important for Maruti

Maruti Suzuki• MARUTI UDYOG LIMITED WAS FORMED IN 1983• GOVT. HAD 18% SHARE IN IT INITIALLY• SINCE 2007 GOVT. HAS NO STAKES IN MARUTI UDYOG• TWO MANUFACTURING FACILITIES: GURGAON AND MANESAR

Manesar Plant……•5.5 lakh cars•600 acres •Diesel Engine unit•3500-4000 workers•1000-1200 temporary • Models rolled out• Swift• Swift Dzire• A Star• SX4

ORGANIZATION STRUCTURE AT MANESAR PLANT

• THE PLANT EMPLOYEES ABOUT 3500-4000 WORKERS.

• THESE EMPLOYEES INCLUDE PERMANENT WORKERS, CONTRACT OR CASUAL WORKERS AND TRAINEES.

• ABOUT 1000-1200 OF THE EMPLOYEES ARE THE PERMANENT EMPLOYEES.

• ABOUT 40% OF THE WORKFORCE INCLUDES THE CONTRACT WORKERS.

The Manesar Incident

At 3:30 pm on Wednesday afternoon, representatives from Maruti Suzuki Workers’ Union and the Maruti management had met to discuss the reinstatement of Jiya Lal, a permanent worker who had been suspended that morning after an altercation with his floor supervisor.

By 7:30 pm the workers’ discontent simmering since a few days back, turned violent.

The violence claimed the life of General Manager (HR) Awanish Kumar Dev and he died of burn injuries.

The incident left about 100 officials and supervisors injured including MSIL’s Japanese staff.

The plant was partially burnt down and thus a lockout happened. The company dismissed 500 workers accused of causing the

violence and re-opened the plant on 21 August.

Reasons behind simmering tension between the management and workers1. THE MISSING INDIA CONNECT SUZUKI’S INCREASING PARTICIPATION IN

CONTROL OF INDIA’S OPERATIONS. JAPANESE VOICE DOMINATING CRUCIAL DECISIONS.

2. YOUNG AND RESTLESS WORKERS TRANSFORMATION OF THE LIVES OF YOUNG

BLUE-COLLAR WORKERS IN HARYANA. RECALIBRATED WORKER EXPECTATIONS AGGRESSIVE POSTURING

Reasons behind simmering tension between the management and workers3. PRESSURES TO IMPROVE

PRODUCTIVITY COSTS AND WAGES HAVE INCREASED ,

FORCED TO HIRE CONTRACT LABORS. SALES ARE VOLATILE AND POOR.

4. RETURN OF THE RED FLAG ACTIVE PARTICIPATION OF TRADE UNIONS.

Financial Impact

In 2011, a series of labor strikes led to a revenue loss of Rs 2500 crore

In 2012, Maruti Suzuki lost the opportunity to manufacture 30,000 cars at a cost of Rs 3500 crore

Maruti’s market share slipped to 37.8% in 2012 from 44.6% in 2010

Huge Backlog on Swift and Dzire, the company’s best selling models were impacted

Management’s response Worker was suspended after he had an altercation with the

supervisor Regarding the reinstatement of the suspended worker,

management stressed on an enquiry before taking any action After the violent act which claimed the life of the HR manager,

the mgmt. dismissed around 500 workers involved in the act Maruti also announced that the employees would not be paid for

the period of lockout as per the Indian Labor Laws Also the mgmt. agreed to an incremental wage increase of Rs

10,500 spanned across 3 years as opposed to a hike of Rs 15-18000

All recruitment would happen through HR dept Contract workers were not to be employed in core areas of

manufacturing

• The plant was made operational on 21st Aug, producing 150 vehicles

• Some productivity measures were undertaken by the mgmt. to maximize productivity

Role of Government

Haryana government formed SIT (Special Investigation Team)

Invoked Industrial Disputes Act(1947) against the “good conduct bond”

Declared the lockout by MSIL as illegal

Why Maruti needs Manesar

MANESAR PLANT ROLLS OUT SWIFT, SX4, A-STAR MODELS

70% OF MARUTI’S 200-ODD VENDORS BASED IN GURGAON-MANESAR BELT

SUPPORTING INFRASTRUCTURE BY MARUTI IN MANESAR IS IMPOSSIBLE TO REPLICATE ELSEWHERE IN A SHORT PERIOD

SHORTAGE OF SKILLED LABOURS IN GUJARAT

Conclusion

People Management Industrial Relationship Work Flexibility Organizational Culture

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