Can Maruti Suzuki fix its Manesar problem?

“In my wildest dreams, I had never thought a day would come like this,” RC Bhargava said as the press conference started a few hours ago. Chairman of Maruti Suzuki, he’s been with the company since the time it started out in 1981. He was referring to the violence Maruti witnessed on July 18 at its plant in Manesar.

That evening, post an altercation between a worker and a supervisor over what was reportedly a derogatory remark, 3, 000 workers turned violent. Their fury lasted 30 minutes. They smashed cars, set security cabins ablaze and beat up supervisors and members of the senior management. By the time the violence ended, almost 90 officials were injured, of which 26 of are still in hospital and Avnish Kumar Dev, a senior HR executive is dead.

The sum and substance of the press conference was this.

1. There are no pending issues between the management and the union’s demands at Manesar. In fact, nobody saw it coming, Bhargava said. I’ll come to that later.

2. Maruti is still assessing the extent of actual damage.

3. The Manesar plant has been locked out indefinitely. “We are convinced we cannot risk the lives of our mangers and workers. It is necessary for us and the Haryana Government to investigate the event. What caused it? What was behind it? Until we know this, we cannot correct anything. And so, right now, we are not in a position to re-start the factory,” Bhargava said. He declined to offer any indications when the plant could possibly resume operations.

4. The company’s Gurgaon plant is running at full capacity. But cars like the Swift and Swift Dzire, manufactured at the Manesar plant cannot be built out of Gurgaon. Will the company take a major hit because these are Maruti’s best selling diesel models? Short answer: Yes.

5. Maruti is going to stay put in Manesar. Shifting production to Gujarat, as has been widely speculated, is out of question Bhargava said.

Then there’s the other side to the story. Says Rakhi Sehgal of the New Trade Union Initiative: “All workers have fled the area and have gone underground as there are arrest warrants out for all workers from the A & B shifts. Union officials have gone incommunicado because the police want them as well. Some of us went to civil hospital the next day to find out if any injured workers were admitted there. The hospital denied anybody was brought there. Our search yielded no results either.”

So what’s going on? Maruti says it is clueless. But automobile industry and trade union activists believe eruptions like this don’t happen overnight. A casteist slur or a scuffle on the shop floor between a worker and his supervisor is not enough provocation for 3, 000 workers to go on a riot. Nobody burns down buildings and kills people because one man was abused.

I spoke to a former Maruti Suzuki executive who’s spent more than eight years with the company in various roles. “Only last week there was some discussion between the union and the management. This has been a regular feature over the last few months,” he says. “But you know what surprises me? I have a friend in Tata Motors who got a call last week from three workers at Maruti’s Manesar unit asking for jobs in Pantnagar. Workers calling a senior person for jobs, that doesn’t happen very often,” he added.

In April, 2012, the Maruti Suzuki Workers Union (MSWU), submitted a Charter of Demands to the management, which was not accepted. “For everything, from registration of the union to all the other demands, the management has been dragging its feet,” says Rakhi.

May I suggest you read these pieces for some background to what she has to say?

Haryana: State of discontent

Why they strike, why you should care

Something strange happened at the Manesar plant in November 2011 after these stories appeared. The leaders of the Union, Sonu Gujjar and Shiv Kumar along with 28 other workers, all at the forefront of the agitation, left the company. While Maruti claims these workers ‘opted for voluntary retirement from service (VRS)’, activists claim they were weaned away by carrots like huge premiums over what they would otherwise have gotten had they opted for VRS.

“Then, the management actually thought they had broken the back of the union. But by then the second rung had already begun operating,” says Sehgal. Since November 2011, the union’s top leaders have been Ram Meher and Sarabjeet Singh.

Maruti denies all such claims. In fact, Bhargava started the conference talking about the Manesar strike of 2011. And that the company has gone out of its way to clear all issues. “I want to categorically state that there were no outstanding issues of previous strikes,” he said. He then took each allegation head on.

1. Independent Union? Yes. While the Haryana Government had its reservations, Maruti realized that once the union was registered, a big demand would be settled. “The union got registered and they even sent a box of sweets to Mr. Siddiqi (head of HR),” says Bhargava.

2. On exploitation of contract workers, Bhargava’s point was a settlement was expected by March 2013. “We said the number of contract workers would be drastically reduced and used only for non value added purposes. We had committed to not outsourcing recruitments, but keeping it to our HR department,”

3. Wage negations were on at both Manesar and Gurgaon plant.

His contention is these were the major demands and all of them were being addressed. Why the violence then?

I turned to the CEO of a large automobile firm who did not want to be named. He was circumspect. “I’ve seen many situations in my career. You shout till you can’t shout anymore, fight, and then end it over negotiations. At Maruti, the anger is simmering and the workers seem to have decided they don’t give a damn anymore,” he told me.

On my part, I don’t know yet what exactly is going on. But I find it difficult to believe the management couldn’t possibly have seen this coming. I suspect there is a lot more to what meets the eye and will be watching developments at Manesar closely.

The thoughts and opinions shared here are of the author.