Case Study

Labour Unrest at Manesar Plant of Maruti Suzuki in 2012:

Abhishek Mishra
Institute of Management Studies
Mahatma Gandhi Kashi Vidyapith
Varanasi, U.P.
 Objectives
• Know the occurances at Maruti Udyog Limited Manesar
plant which took place in December 2011 and in July-
September 2012
• Understand the background of industrial relations at Maruti
Udyog since its inception.
• Take into cognizance the business dealings and the changes
which took place in the management of Maruti Udyog
Limited.
• Comprehend the social milieu of the Manesar area, its
people, their aspirations and the triggers for criminal acts
which took place in 2012.
• Understand the Japanese philosophy of industrial relations
and management and in that background as to how the local
populace identified themselves with their employer.

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 A Brief About • Maruti Suzuki India Ltd (renamed in 2007) was incorporated on February 24
1981 with the name Maruti Udyog Ltd. The company was formed as a
Maruti Udyog Limited government company with Suzuki as a minor partner to make a people's car
for middle class India.
• In October 2 1982 the company signed the license and joint venture agreement
with Suzuki Motor Corporation Japan.
• Four plants three located at Palam Gurgaon Road Gurgaon Haryana and one
located at Manesar Industrial Town Gurgaon Haryana.
• Presently it accounts for over 50 per cent of the domestic car market in India.
• The Japanese car major held 56.21% stake in Maruti Suzuki as on 31 December
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2017.
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A Peep into the History

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The Year 2011-12: Labour Unrest ADD A FOOTER
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 Why it All Started?
The Workers:
• The plant workers wanted to register a new union-the Maruti Suzuki Employees Union ( MSEU)- and had already applied for
registration, something the management did not want.
• Worker's Demand (Charter of Demands):
-A five-fold increase in basic salary
-A monthly allowance for conveyance of 10,000
-A laundry allowance of 3,000
-A gift with every new car launch, and a house for every worker who wants one or more cheaper home loans for those who
want to build their own houses.
-In addition to this compensation and normal weekend, the union demanded the current four paid weeks of vacation be
increased to 7 weeks.
-Removal of 7.5-Minute Tea Break
• Workers' aspirations soared beyond a decent wage. People in villages off the NH-8 highway in Gurgaon became rich
overnight by selling their agricultural land to builders. This drove the aspiration level of the workers. They wanted a quick
rise in wages, which caused a mismatch between the workers' aspirations and the management's responses.

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 The Workforce Diversity
• There were around 3500 to 4000 workers employed in the factory but their status differed significantly.
• Permanent workers at Manesar compared their wages to the wages of workers at nearby HONDA and voiced
anger about the fact that they earned only half as much. The production capacity of maruti was increasing but
their salaries weren't.
• At Maruti Suzuki, like elsewhere in India, there are several types of employment contract:
-Permanent staff, corresponding for the most part to skilled employees.
-Apprentices, who are taken on for a period of three years (on wages less than permanent staff) and who, at the
end of these three years, “hopefully” become permanent.
-Trainees, who have alternating contracts (with wages even lower than those of the apprentices) during their
studies, without any guarantee of a job.
-Temporary workers, who are employed in the factory via another company and who do either specific tasks
(canteen, cleaning, transport) or all the least skilled jobs in production.

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 Why it All Started?
The Management
• Management was of the opinion that a new union will bring a third party-political party.
• Management argued that workers are not putting up any clear and reasonable demand.
• There was a lack of discipline among workers.
• Management wanted workers to accept and sign the "GOOD CONDUCT BOND.“

The Government
• The Government passed the strike as illegal.
• Deployment of police personnel.

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 The Context
The strike didn’t suddenly appear from nowhere either. On the contrary, the automobile industry in India has seen a succession of strikes since 2009, as the
following list shows.
• Mahindra (Nashik, Maharashtra), May 2009 and March 2010;
• Sunbeam Auto (Gurgaon, Haryana), May 2009;
• Bosch Chassis (Pune, Maharashtra), July 2009;
• Honda Motorcycle (Manesar, Haryana), August 2009;
• Rico Auto (Gurgaon, Haryana), August 2009, accompanied by a one-day strike of the whole of the car industry in Gurgaon;
• Pricol (Coimbatore, Tamil Nadu), September 2009;
• Volvo (Hoskote, Karnataka), August 2010;
• MRF Tyres (Chennai, Tamil Nadu), October 2010 and June 2011;
• General Motors (Halol, Gujarat), March 2011;
• Bosch (Bangalore, Karnataka), September 2011;
• Dunlop (Hooghly, Bengal), October 2011;
• Caparo (Sriperumbudur, Tamil Nadu), December 2011;
• Dunlop (Ambattur, Tamil Nadu), February 2012;
• Hyundai (Chennai, Tamil Nadu) April and December 2011-January 2012; etc.
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 Summing up the issues
 Total mismatch of work culture:
 Misplaced HR strategies
 Mishandling of IR
 Exploitation of workers
 Poor wages
 Hostile working conditions
 Unfair and unethical labour practices
 More workload
 Discriminatory Labour practices
 Inter union rivalry
 Outside leadership
 Passive role of State Government
 Failure of collective bargaining

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Impact on company situations
1. Operations stopped for a month.
2. Loss estimated to be over Rs. 1,500 crore.
3. Fear of insecurity to the employees and their families.
4. Maruti Udyog changed his recruitment policy.
5. Goodwill ....... it is major loss of company.

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Thank You!