Labor Unrest at Maruti Suzuki India Limited
| Case Code: HROB160 Case Length: 17 Pages Period: 2011-2012 Pub Date: 2013 Teaching Note: Available |
Price: Rs.500 Organization: Maruti Suzuki India Limited Industry: Automotive Countries: India Themes: Industrial Relations, Collective Bargaining, Ethics |
Abstract Case Intro 1 Case Intro 2 Excerpts
Introduction
"We will identify what has gone wrong. We will start on a clean slate. If a tsunami happens, what can we do? To my mind, this is of a similar nature," said RC Bhargava, Chairman, Maruti Suzuki India Limited (MSIL), addressing the media in July 2012 after the management announced an indefinite lockout at its Manesar plant, which had witnessed unprecedented violence. The violence, which left MSIL's General Manager (HR) dead and nearly 100 managers and executives injured, broke out after the management and the workers failed to negotiate a settlement on a particular issue.
Labor unrest had been fomenting at the Manesar plant since June 2011. The workers wanted to set up a new union to fight for better working conditions and for making contract workers permanent. This the management opposed. After a series of strikes, the management allegedly bought off the union leaders by providing them with attractive severance packages. In the subsequent months, the workers grew even more frustrated when they saw that the union that they had created at great personal cost did not make any headway with the management. On July 18, 2012, a section of the workers went on the rampage, attacking the managers and destroying company property.
After announcing the indefinite lockout, the MSIL management was hard pressed to decide upon its next course of action. Keeping the plant locked up till the investigations were over was a costly option considering that the Manesar plant had a per annum capacity of around 550,000 cars and contributed to nearly a third of MSIL's overall output. From April 2012 to June 2012, it had contributed 40 percent of MSIL's unit sales. The plant manufactured most of MSIL's diesel cars and all models of the best-selling Swift and Swift Dzire. The Swift and DZire models jointly clocked monthly sales of around 32,000-35,000 units and contributed to more than 35 per cent of Maruti Suzuki's unit sales in the Indian market. The company also mulled shifting manufacturing to its second plant at Gurgaon (Haryana). According to Umesh Karne, an analyst with BRICS Securities Ltd., "Maruti can't afford to keep the plant closed… Customers may not be willing to wait." The question before the management of MSIL was whether it should take a more reconciliatory approach toward the union and workers by accommodating some of their demands such as making contract workers permanent...
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