Labour unrest may drive Maruti to Gujarat

Discussion in 'Economy & Infrastructure' started by sandeepdg, Oct 19, 2011.

  1. sandeepdg

    sandeepdg Senior Member Senior Member

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    NEW DELHI: Maruti, which is synonymous with Haryana and Gurgaon, is looking outside the state to set up its operations. The continuing labour unrest at its Manesar and Gurgaon plants appear to have hastened its search, and the company is zeroing in on Gujarat.

    Sources say the Japanese automaker, frustrated over the repeated interruptions in production due to labour problems at Manesar, wants to quickly finalize its expansion plans beyond Haryana, something that's not liked by the state government but is seen as "urgent" by the company's management.

    Already, Maruti car sales have been affected, and more worryingly for the firm, the demand seems to have been hit because of the uncertainty about delivery schedules, making the management of the country's biggest car-maker rather anxious.

    While Suzuki chairman Osamu Suzuki met Gujarat chief minister Narendra Modi on September 8-after the collapse of the first peace agreement and in between the second labour strike-the company's board looks set to approve the proposal to invest Rs 18,000 crore, including Rs 6,000 crore by auto ancillaries, in Gujarat for a plant spread over 1,000 acres and with a capacity of two million units.

    Interestingly, this will be the largest factory site for Suzuki globally, bigger than the combined size of its existing sites at Gurgaon and Manesar. The new facility in Gujarat will mark the beginning of a slow shift out of Haryana-a move that could affect not just the automobile hub in Delhi's neighbourhood but also impact real estate activity in and around Gurgaon. Already, several automakers, ranging from Tata Motors to Ford and Peugeot-Citreon, have started work on setting up facilities in Gujarat, which is emerging as a major auto hub in the country.

    For Haryana, this will be the second blow after Japanese auto major Honda Motorcycles and Scooters India decided to set up plants in Rajasthan and Karnataka following major labour unrest at its Manesar facility. Like HMSI, Maruti Suzuki executives admit in private that the Japanese management is not particularly happy with the Haryana government's handling of the labour problems at its Manesar car plant as well as its engine and parts manufacturing facilities. The production loss to the company due to the three strikes, including the current one which has already lasted 12 days, has been over 60,000 units, resulting in a production loss of a Rs 1,800 crore. In the June quarter, Maruti's total income was estimated at Rs 8,500 crore, while the profit was Rs 550 crore.

    Maruti chairman R C Bhargava refused to comment on the manner in which the Haryana government has handled the crisis, but minced no words while describing the present state of affairs in the belt. He said, "The labour here is militant, and if there is no improvement in the situation, this belt will surely suffer industrially. Not only Japanese investments, but investment plans of other countries and companies will also be hit."

    The fresh labour unrest at Manesar seems to have jolted the company out of, what many insiders describe as, its "comfort zone". "There is clearly a need, an urgency, to look for a new production hub," they said.

    In 2009, Haryana chief minister Bhupinder Singh Hooda had told a public gathering (in the presence of current Maruti MD Shinzo Nakanishi) that he had been assured by Osamu Suzuki that all Maruti's expansion plans would be undertaken "only in Haryana". Maruti's flirtation with Gujarat now also betrays its disillusionment with Haryana. Company executives also say in private that the movement beyond Haryana (especially the NCR region) will also mean that Maruti is insulated from the "Delhi's political influence". Bhargava has already blamed the political interferences for the labour troubles at the company, though he has refrained from naming anyone.

    If the Gujarat proposal goes ahead, the production from the site at Becharji in Mehsana is expected to start by 2015. In the first phase, which will be completed by 2020, a capacity for one million units will be build. The next phase of expansion will follow.

    Labour unrest may drive Maruti to Gujarat - The Times of India
     
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  3. lcatejas

    lcatejas Regular Member

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    I suspect there are other automobile companies are funding the strike which needs to check from maruti's end.. i am 100% sure about it
     
  4. Bangalorean

    Bangalorean Stars and Ambassadors Stars and Ambassadors

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    ^^ Why the conspiracy theory? Strikes and labour unrest is so common throughout the world!! :lol:
     
  5. sandeepdg

    sandeepdg Senior Member Senior Member

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    This is no conspiracy theory. This is a fact.

    Maruti says that the problem is "militant labor" at both the Manesar and Gurgaon plants, and the labor union has political support.

    HMSI plant also shut down and moved to Karnataka and Rajasthan for the same reason: rowdy labor.
     
  6. Bangalorean

    Bangalorean Stars and Ambassadors Stars and Ambassadors

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    Well, 'militant labour' is pretty common, isn't it? Labour problems, strikes, "unionbaazi" - all this is so common in manufacturing industry, especially due to our socialist-era policies!
     
  7. amitkriit

    amitkriit Senior Member Senior Member

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    Japanese think that they can make an Indian work under the conditions set by them. What had happened at the Hero-Honda plant a few years ago was really shameful. Instead of taking an inflexible stance, the management must have tried to solve the impasse, which they never did.

    The reason is also similar to the Hero Honda saga, in both cases the company denied the workers their right to form a labor union. Had a similar thing happened in USA or Japan, top management might have been behind the bar by now. But alas we are living in India where human life is cheap, and the word "DIGNITY" doesn't exist in the dictionary.
     
  8. Yusuf

    Yusuf GUARDIAN Administrator

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    Please come to Bangalore Suzuki.
     
  9. amitkriit

    amitkriit Senior Member Senior Member

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    These laborers must be fired and they must be declared "Unfit for any job". They have been bleeding the corporates with all pay no work. They live in castles, send their wards to foreign schools and universities, get best medical treatment available in the country. These laborers are responsible for 99% of black money in India, they send country's money to tax havens. Let us declare all labor unions illegal, how can voice of an illiterate or semi-literate be more valuable than those MBAs who are running the companies?
     
  10. Param

    Param Senior Member Senior Member

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    . Strike happened at Hyundai too, but it was a bit different.
     
    Last edited: Oct 19, 2011
  11. Bangalorean

    Bangalorean Stars and Ambassadors Stars and Ambassadors

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    Saar, where will you find the land for them in Bangalore? :hmm:
     
  12. Bangalorean

    Bangalorean Stars and Ambassadors Stars and Ambassadors

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    Blunt sarcasm - could be better. :D

    I don't know what the realities of this case are, but it is not always the way you are putting it. Do you remember the 'unionbaazi' and strikes that were carried out by these PSU bank unions when computerization happened in the 90s? :frusty:
     
  13. Yusuf

    Yusuf GUARDIAN Administrator

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    Some from yeddy, some from devegowda.

    But seriously land is available on the outskirts in the industrial areas.
     
  14. Bangalorean

    Bangalorean Stars and Ambassadors Stars and Ambassadors

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    ^^ Beyond Nelamangala, or Hoskote, or Bidadi you mean... :tsk:
     
  15. Yusuf

    Yusuf GUARDIAN Administrator

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    Hoskote, Bidadi or Dobbaspet
     
  16. amitkriit

    amitkriit Senior Member Senior Member

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    I had taken a course in "Marketing Management" while I was in IIT (pursuing my Engineering). The issue of "Computerization in Banks" was one of the case studies we discussed in detail. Here are the excerpts:

    "Employees in the banks were concerned about their livelihood, which is not unusual. Because the computerization was a new thing, the government was unsure."

    This is what the government did: Government declared that the computerization of all processes is going to happen, and then sat down quietly for several years and did nothing. This provided room for discussion on this topic. People became aware of the benefits and drawbacks. Government got a lot of feedback from the employees and people on implementation/execution, so several implementation-related issues were solved in the start itself. Once the apprehensions of the employees were catered to, they became more comfortable, and adopted it without a fuss.

    Here is the conclusion: Government sold the idea of "Computerization of Banking Sector" to the employees. instead of pushing it down their throat. This resulted in better implementation and adoption. This was a master-plan, which delivered. Concerns of workers cannot be ignored in the name of economic development and business. It takes time to change a system.

    There is always an untold story, which is significant, but we manage to ignore.
     
  17. amitkriit

    amitkriit Senior Member Senior Member

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  18. Bangalorean

    Bangalorean Stars and Ambassadors Stars and Ambassadors

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    ^^ I happen to know quite some bit about PSU bank computerization.

    The point I am making is, the PSU thing is an example where the unions played an extremely harmful role. Each issue needs to be looked at in isolation.

    I know an officer who went to sell the idea of computerization to the unions, in a certain branch in Chennai. The unions were loud and hostile, and shouted him down. Later in the evening, this officer was sitting down to a meal in a restaurant nearby, when the union head came to the same hotel, and met him by chance. He greeted the officer, and went into a conversation about how his son is going to the USA to do masters, and how he dreams that his son will work in some giant American bank like Citibank. During the course of the conversation the union guy admitted that computerization is beneficial overall, but he "had a job to do", and had "his own constraints". :tsk:
     
  19. amitkriit

    amitkriit Senior Member Senior Member

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    We are all selfish, that's human nature. But then a company cannot violate the law of the land. Workers have the right to create unions, and companies are not above the law. Hero Honda problem was atarted in the same fashion, the company fired workers after they tried to form a labor union.

    Labor unions exist, because they have been beneficial for the workers who barely manage to earn much to survive. Their rights must be respected. No amount of industrialization will benefit India if only a few are the beneficiaries, which is the case at the moment. I wonder how are those companies being able to declare huge profit, by under-paying and overloading their staff? That's the reality, because there are too many job seekers, and only a few job openings. Employers exploit their position.

    TATA and Reliance have survived these unions, so can these multinationals, they need to be pragmatic in their approach. There is no short-cut to success.
     
  20. Adux

    Adux Senior Member Senior Member

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    Send it all to Gujurat, Its better than being in Kerala.
     
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  21. Adux

    Adux Senior Member Senior Member

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    There need not to be short cut to success, but to have your day's filled up because of some idiot and unions with no rhyme or reason, when you are giving them a fair deal, is something we call un-necessary head ache. TATA is not a good example, see what they had to do for their estate's in Munnar and everywhere else. Less said about these leeches, the better.
     
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