Four reasons behind Maruti Suzuki's Manesar problems
Malini Goyal, ET Bureau Jul 22, 2012, 06.49AM IST

(Management and Union of…)
The bad old days of militant trade unionism are back. The violence at Maruti Suzuki's Manesar factory, which killed one senior employee and injured close to 100 others, bodes ill for the future of not just Maruti but also the industrial hub of NCR. This is not the first time that Maruti is fighting trouble in Manesar.

Last year, labour unrest resulted in a loss of over Rs 2,500 crore for the company. So, what's causing Maruti such big problems at Manesar? ET Magazine looks at four reasons that could have resulted in the simmering tension between the management and workers at Maruti Suzuki.
The Missing India connect
Since 2007, two important changes have happened at Maruti. One, Shinzo Nakanishi, the current MD of Maruti Suzuki, took over the reins from Jagdish Khattar. RC Bhargava, who was a director, was made chairman. Two, Maruti and the India market are also becoming increasingly important for Suzuki Motors. Till recently, Maruti contributed more than half of the parent's profits.
As Maruti's contribution to Suzuki has increased, the latter's tendency to control India operations has increased. Agreed, it has an Indian chairman but Bhargava is 78 years old. It does have many senior Indian executives who have been 'lifers' at Maruti. But insiders who will speak on the condition of anonymity say the Japanese voice counts and often tends to dominate crucial decisions. Culturally, Indians and Japanese are far apart. Their sense of discipline, punctuality, employee connect too are very different. Some loss of connect with Indians is expected.
Leaner, Meaner Pressures
The challenges of running manufacturing outfits have surged. Costs and wages have increased and sales are poor & volatile. Doing business is difficult. Doing profitable business is even more difficult. Every company is figuring out ways to bring down costs and improve productivity. Most have contract labour to bring in flexibility and reduce costs. At Maruti's Manesar factory, 40% workers are on contract and their salary could be half of the regular workers. Maruti is among the better pay masters.
Amid all this, competitive intensity in the marketplace for Maruti has never been as severe. Being a volume player, the only way for it to survive and flourish is to churn out more and more cars. All this has translated into relentless pressure to improve productivity and margins at all levels. For Maruti, this pressure is particularly high. Not surprisingly, the Manesar plant, that churns out two top-selling models in the Maruti stable — Swift and Dzire — is at the heart of all the strife.
Young & Restless Workers
In Haryana, young blue-collar workers have seen dramatic changes around them.