Maruti Suzuki Case Study Essay

CASE STUDY ON
LABOR UNREST AT MARUTI SUZUKI INDIA LIMITED (MANESAR PLANT)

ABSTRACT
This case is about the labor unrest that took place at the Manesar plant of Maruti Suzuki India Limited (MSIL), the Indian subsidiary of the Japanese automobile maker, Suzuki Motor Corporation (SMC). There were a total of 3 strikes in 2011 and a lockout in 2012 at the Manesar plant. The lockout was witnessed after the ruthless murder of the Human Resource General Manager. Due to all this, MSIL incurred a net loss of Rs. 25 billion approximately.
The major reasons of dissatisfaction among the workers were the following:
• For doing the same amount of work, contract workers were being paid just one-third the salaries as compared to permanent workers; and,

It is a labor intensive country where the biggest advantage in terms of doing business is easy availability of cheap labor. But, this is exactly what went against Maruti Suzuki. Worker outburst is not something new to India, but, the scale and intensity of the mayhem at the Manesar plant of MSIL shocked the whole country.
Maruti Suzuki India Ltd has happily served its customers for the last 32 years. It revolutionized the Indian Automobile market in 1983 by launching its cost-effective, comfortable car for the masses Maruti 800. It was the best-selling car in India until 2004 with net sales being approximately over 2.5 million. Later on, it launched several other cars that became hot in the car segment, such as Zen, Alto, WagonR, Swift & Swift Dzire and SX4. Maruti Udyog Limited was founded in the year 1983, and since then it has faced a lot of labor related issues. In 1997, when there was a change of ownership, Maruti came under Government’s control. And soon after that, the conflicts between the Government and Suzuki started. In 2000, Maruti Udyog faced a major Industrial Relations issue and the workers went on an indefinite strike, their major demands being revisions in their wages, pensions and incentives. The cold war between the union and the management continued till 2001, as the management did not give consideration to the demands of the union because of increased competition in the automotive sector and lower profit

Earlier, the gross salary of an entry-level worker in the company was Rs 23,500 per month. According to the new wage structure, the average entry-level salary will increase by Rs 14,800, i.e., it will become Rs 37,800 per month over the next three years. An experienced worker at Gurgaon and Manesar, will now get a salary of Rs 51,800 and Rs 39,800, respectively. This wage pact has benefited around 2,800 workers at Gurgaon and around 700 workers at Manesar. The company has also decided to offer an additional ad hoc payment of Rs 1000 to workers, travel allowance of Rs 1200 every month, interest-free personal loans of up to Rs 20,000 and doubled insurance coverage to Rs 5,500. DA has been made variable so that it will take into account all inflationary