Top management at Maruti Suzuki India was to meet the Haryana government on Monday to discuss the future of the newly formed workers’ union of the violence hit Manesar plant.
A senior Maruti official told the Economic Times of India the need and validity of the new union, formed after the workers’ strike last year, would also be discussed in the meeting.
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“There is no doubt about the involvement of the union members in orchestrating the attack on the management officials on Wednesday evening, and it’s important to give a thought about the union’s validity,” said the official.
The management will submit the entire correspondence they had with the workers’ union since its inception. “The decision to de-recognise the union will be taken only after getting concurrence of the Haryana labour department. It is up to the state government to take the final call,” said the official.
ETI noted an indefinite lockout was declared at the plant on Saturday.
It added that, after resolving last year’s union strike, the Maruti management had conceded to the demand of forming the new workers’ union that received the approval of the state labour department last March. Earlier, company management had been criticised by the labour department for violating the agreement it had signed with the workers’ union about the formation of two committees, labour welfare and grievance redressal, at the Manesar plant.
Senior management officials claimed the office bearers of the new union, Maruti Suzuki Workers’ Union, were inexperienced and did not know the art of negotiation. “The new union members were brash and an impatient lot. But we had never imagined that they could plan such a brutal attack on the management officials and set offices on fire,” said a senior management official.
A Bloomberg report said Maruti chairman RC Bhargava announced the lockout at the weekend and ruled out an early resumption of the factory, which accounts for about 40% of the company’s manufacturing capacity. The stoppage, the fourth at the plant in a year, means Maruti may fail to meet growing demand for diesel cars and risk alienating customers.
“There’s big demand for diesel vehicles and most of Maruti’s diesel models are made here,” the news agency quoted Umesh Karne, an analyst at BRICS Securities in Mumbai, as saying. “This may also change customer perception as this is happening regularly and customers may avoid [ordering] and waiting for Maruti cars.”
At the Manesar factory, where Maruti assembles its top-selling Swift and Dzire models, policemen extended their cordon of the site as they investigated the violence. The charred security booth at the entrance gate was covered in tarpaulins with entry limited to police, guards and firemen. No signs of cleanup operations were visible at midday Monday.
The factory produces about 1,600 vehicles worth US$12.5m a day, according to Ashvin Shetty, an analyst at Ambit Capital in Mumbai.
Bhargava didn’t give an estimate as to how long the stoppage will last.
“We cannot risk any further damage,” he said. “That’s the reason why it’s necessary for us to do a complete investigation into the events that happened and identify the factors that caused the events to happen, what were the causes, what was behind all this, why did it happen?”
The automaker won’t import cars to make up for the loss of production at Manesar, Bhargava said.
Maruti has no plans to relocate the plant out of Manesar in northern Haryana state, Bhargava said. A factory at Gurgaon, about 19 km (12 miles) northeast of Manesar, is operating at full capacity, he said.
Suzuki is sending about 10 Japan-based employees to support recovery work, Tokyo-based spokesman Ei Mochizuki told Bloomberg on Monday.
“This is bad news for Maruti as it may take as little as five days or as long as 50 days to identify the rogue elements in the workers who did this,” said Mahantesh Sabarad, an analyst at Fortune Equity Brokers India in Mumbai. “It also shows the trust deficit between the management and the workers. This lockout comes at a very efficient factory that produces some of Maruti’s most popular models.”
Narendra Modi, chief minister of India’s Gujarat state, currently visiting Japan, will meet Suzuki officials at Hamamatsu on 25 July, Bloomberg said. Modi’s visit has fueled speculation that he would convince Maruti to consider a bigger plant than the 250,000-unit facility it has announced in the state, the Press Trust of India reported at the weekend.
Shinzo Nakanishi, managing director of Maruti, said on 21 July Suzuki is expanding in Gujarat, not shifting production there.
Gujarat’s minister of state for industries Saurabh Patel said media reports that Maruti may shift parts of its Manesar plant to the state was “far from truth and a figment of imagination”. Maruti’s decision to invest in Gujarat was made long ago, he said in a statement on the government’s website.
