About the Manesar Facility

The 600 acre Manesar facility located around 25 kms south of Gurgaon facility was inaugurated in February 2007. The Manesar facility houses two fully integrated plants with a capacity of 5.5 lakh units annually. The third assembly line is in advanced stage of completion and is expected to be completed in the year 2013.

Both manufacturing facilities are highly automated with advanced robotics, contemporary paint, weld and machining infrastructure. While the different models can be assembled on same lines, inter plant flexibility helps to increase productivity. On a single line diverse car models can be made conveniently. Automatic tool changers, centralized weld control systems and advance numerical control machines help for quick change over between models.

Standards and Practices

The Japanese work place basics such as Kaizen, cleanliness (5S), on the spot root-cause analysis (3G) and strict adherence to systems (3K) are the backbone of the Company's culture. These are regularly reinforced through training sessions and visual displays.

The Problem: Manesar Plant Violence and attack on management

Despite the well coordinated hierarchal management at the plant, a rather untoward incident occurred in July 2012. On 18th July 2012, auto factory workers in Maruti's Manesar plant attacked supervisors and started a fire that killed a company official and injured 100 managers, including two Japanese expatriates.

According to press reports, the attack was allegedly influenced by:i. A caste slur (later discredited) by a supervisor against a workerii. Failed negotiations about employee regularization

Background of the Uproar:

The area is highly dominated by political powers which keep on adding to the sensitivity of the issues where labourers and management are facing a deadlock. Hence, the workers demand to establish an independent union Maruti Suzuki Employees Union (MSEU) in the company. Currently, the company has one recognized union – Maruti Udyog Kamgar Union which is dominated by workers at the Gurgaon plant. There is a constant effort to form more groups based on regional or religious bases which the admin deems dangerous and hence does never agree for.

Sequence of the violence (As per the company press release)The workers’ union was demanding reinstatement of a worker who had been suspended for beating

up a supervisor. While negotiations were on with the senior management, the first act of violence by the mob was to forcibly shut the main gate and prevent managers from leaving the premises after working hours.Thereafter, armed with iron rods and door beams of cars, the mob spread out in groups in the factory area and targeted supervisors, managers and executives. In simultaneous attacks in different parts of the factory, the mob beat the managers on their head, legs and back, rendering many of their victims bleeding and unconscious. They also ransacked offices, broke glass panes and wantonly damaged property. Finally, they set the offices on fire.After being terrorized, abused and attacked in this manner by the mob, recovery for the injured will not be easy. We will ensure they continue to receive quality medical attention, and are extending whatever support is possible to the families as well.

Experts’ Take:

“First, they are working in an extremely competitive environment and in such an environment, profit-making becomes a daunting task,” said Mahantesh Sabarad, senior vice-president (equity and research) at Fortune Equity Brokers (India) Ltd. “All kind of costs have gone up. From time to time, these companies raise prices of vehicles to churn out better profits.”

Maruti’s problems are deeper, he said, and added, “There are some internal policy-related hurdles such as import cost and royalty payments, which have gone up due to yen appreciation (in the case of Maruti specifically) and has affected their profitability.”

The wage bill of most car companies is kept in control by the large number of temporary workers, Sabarad said.

The salaries of Maruti’s permanent and temporary workers, which haven’t been revised since 2009, need to be seen in the context of rising inflation.

From the horses’ mouth: How the employee and employer word their perspectives, can be summed up as follows

Timeline:

18 July Senior management members injured as workers resort to violence at Maruti Suzuki’s Manesar plant

19 July Maruti issues press release stating primary details and sequence of eventsThe company stopped operations for 10 working days in June

21 July Maruti Suzuki declares lock out at Manesar Plant

16 Aug Maruti Suzuki to Lift the Lock-out at Manesar plant With Safety & Security of Employees Assured

31st Aug Reported 12.74 per cent fall in sales for August to 91,442 as compare to the sale of 1,04,791 units in the same month last year

7 Sept 1) Loss suffered is estimated at about 8,550 units, valued at about Rs 425 crore.