Rage against the Machine at Maruti Suzuki
Gurgaon Workers News – Newsletter 8 (December 2007)
Gurgaon in Haryana is presented as the shining India, a symbol of capitalist success promising a better life for everyone behind the gateway of development. At first glance the office towers and shopping malls reflect this chimera and even the facades of the garment factories look like three star hotels. Behind the facade, behind the factory walls and in the side streets of the industrial areas thousands of workers keep the rat-race going, producing cars and scooters for the middle-classes which end up in the traffic jam on the new highway between Delhi and Gurgaon. Thousands of young middle class people lose time, energy and academic aspirations on night-shifts in call centres, selling loan schemes to working-class people in the US or pre-paid electricity schemes to the poor in the UK. Next door, thousands of rural-migrant labourers uprooted by the agrarian crisis stitch and sew for export, competing with their angry brothers and sisters in Bangladesh or Vietnam. And the rat-race will not stop; at the outskirts of Gurgaon India’s biggest Special Economic Zone is in the making. The following newsletter documents some of the developments in and around this miserable boom region. If you want to get to know more about working and struggling in Gurgaon, if you want more info about or even to contribute to this project, please do so via:
In the December issue you can find:
1) Proletarian Experiences –
Daily life stories and reports from a workers’ perspective
*** “Reports from workers exploited in the net of automobile suppliers”,
Automobile Industry Part Eight –
Some short reports from workers employed at Omax, Lumax, Breaks India and Anu Industries, all suppliers for the local automobile industry in Gurgaon. The reports are results of short chats – with workers we met more or less randomly at various tea stalls in the industrial areas – and a short internet research session. They provide some information about the extended factories of Hero Honda (see newsletter no.4), Honda HMSI (see newsletter no.7) and Maruti Suzuki (see this issue, newsletter no.8).
*** “Three brothers” –
Short discription of the long wage and house working days of three brothers who share a room in Gurgaon.
*** “Made paranoid, kicked out, and crashed…” –
We document three short articles on occupational risks of call centre workers. The first article relates to the increasing ‘safety paranoia’ in Gurgaon. IBM management in Gurgaon sent out an email to its 2,000 employees, which fosters the social psychosis, while middle-class DLF (private developer) residents make propaganda against migrant workers. The second article questions the common picture (and self-portrayal) of the ‘distinct BPO employees’ who do not share the same basic risks of being hired and fired like any other worker. The fact that the call centre workers prompted the sacking by ‘slogan-shouting outside the office’ shows that in this unknown situation they reacted like they think workers would normally react. The third article demonstrates that the attempt of the BPO companies to save money on transport not only extends the working-hours of the employees (longer tours and waiting inside the cabs), but also causes speeding and fatal accidents.
2) Collective Action –
Reports on proletarian struggles in the area
*** “Successful wildcat strike of temp workers at Delphi in Gurgaon” –
Short note on the incident. Many of the workers hired through contractors who went on wildcat strike in January 2007 have since left Delphi. In August 2007 the temp workers – not represented by any union – laid down tools again for few hours. The management first reacted by threatening a lock-out and closure of the plant, then decided to give the workers a significant pay rise.
*** “Welcome to the Machine” –
Summary on re-structuring at Maruti Suzuki, Gurgaon, Automobile Industry Part Nine
The supply chains of Maruti are the main arteries of the local industry, they reach down into the backyards of the slums (see newsletter no.3), controlling their labour intensive work by connecting it with work-shop production, semi-automatized small factories, capital intensive ‘first tier’ factories and the main assembly lines of its plants. Being surrounded by and dependent on a vast network of factories which exhaust a low paid, mobile labour force, peace in the industrial centre is a top priority. Maruti Suzuki more or less managed to suppress unrest in the industrial core, the assembly plants. It managed to do this on one hand by paying comparably high wages to the permanent work-force, by implementing a paternalistic management policy, by using the union and local political class as a mediator or show-fighter and last but not least by unleashing severe repression against workers after the lock-out in 2000. The following overview has the same limitations as many other (lefty) studies on Maruti: a lack of real reflection of the current situation for the young work-force hired through contractors, working in the assembly departments, paint shops and machine halls. Since 2000 Maruti Suzuki sucked in a low paid work-force, e.g. assembling the new ‘sales hit’ SX4, a compact car priced at 690,000 Rupees, while paying the workers 4,500 Rupees per month. Under the pressure of the market Maruti Suzuki decided to let these workers be employed right in the centre of the web, where they now form the majority. A real inquiry would have to be undertaken together with these workers hired through contractors and those of the suppliers, in order to discover the fragility and fractures within the moloch.
3) According to Plan –
General information on the development of the region or on certain company policies
*** “Not yet special enough: Special Economic Zones, Part Five” –
– Your backyard a SEZ? Short note on the inflation of SEZs in Gurgaon
4) About the Project –
Updates on Gurgaon Workers News
Gurgaon Videos –
New Page on the web-site featuring shakey impressions from Gurgaon, amongst others some footage on the police brutality against the Honda workers in July 2005.
*** Glossary –
Updated version of the Glossary: things that you always wanted to know, but could never be bothered to google. Now even in alphabetical order.
1) Proletarian Experiences –
Daily life stories and reports from a workers’ perspective
The following short reports are results of random chats at chai stalls, mainly in the Manesar industrial zone. They have been published and distributed in Hindi in FMS no.229 and no.230. They give some information about the extended factories of Hero Honda (see newsletter no.4), Honda HMSI (see newsletter no.7) and Maruti Suzuki (see this issue, newsletter no.8).
Anu Industries Worker
Anu Industries manufactures electrical and electronic components (for example: coils, actuators, relay assembly starters, flasher relays) for Udyog , Hyundai Motors, Ford, Hero Honda, Honda Scooters, Fiat and others. In Gurgaon Anu Industries opened its plant in 1986, in order to supply Maruti. It later opened another factory in Manesar.
This is a translation from Hindi of an interview with a worker. He uses the word ‘madam’ in English to refer to their female boss.
In the factory situated on Plot 102-103, Sector 18 in Gurgaon all workers are gathered at 8:45 am and at 9:15 pm in order to recite religious prayers for the company. Then the female production manager speaks about the production. A whole load was rejected and returned to the factory so the Madame said: “If you want to continue working here, then work! If not, you can go and no one will force you to stay here. But don’t mess up the raw material!” 15 days were cut from the wage of one worker and after the company prayer he was called in front of all workers and he was verbally abused.
In the factory 400 female and 250 male workers are employed through three different contractors. Out of the 30 permanents most are supervisors, there are only 2 to 4 permanent workers. The women work >from 9 am to 6 pm, some are made to stay one to one and a half hours longer. The men work two shifts from 9 am to 9:30 pm and from 9 pm to 9 am. The over-time payment for the newly hired workers (during the first six months of employment) is 8 Rupees per hour and for the others it is 10 Rupees per hour.
After six months of employment at the company they start to reduce money for ESI. The money for PF is deducted right from the start, but people who leave before being employed for six months do not get any of this money. One worker who left the job after having worked 110 hours was given only 400 Rupies by the contractor who said that the rest is deducted for ESI and PF.
At Anu Industries a lot of soldering work takes place, there is a Hero Honda line, a Honda line a Bajaj line, a soldering line and a rejection line. Having to stand upright during the work, the feet and the hips start to ache. You have to work very fast – at 6 pm they ask about the status of production in order to inform the madame. If you leave without having met the production target or without telling the madam the reason for it, e.g. a faulty machine, you will be marked as absent for this day.
There is no canteen in the factory. There is no space for taking your meals, so we have to eat here and there. During the meal breaks they do not let us leave the factory – if, for any reason, you have no roti with you, you will remain hungry. Yes, the company gives tea.
The worker later tells about his way to work: he has to walk about five kilometres on foot each way. On both journeys he has to cross a four lane highway, the NH8 (see pictures on web-site), which is extremely dangerous particularly at night. For a safer way to cross the highway he would have to make a four kilometres detour each way to and from work.
According to the company web-site Lumax has a 60 per cent market share of automobile lightning systems (head lights, indicators etc.) in India. The company has seven plants in India, two of them are located in Gurgaon, employing 450 and 300 permanent employees. 35 per cent of Lumax is owned by Stanley Electric Limited, a multi-national automobile suplier based in Japan. Lumax basically supplies all automobile manufacturers in India, ranging from Maruti Suzuki (cars) over Hero Honda (motor cycles) and Asholk Leyland (trucks) to John Deere India (agro machinery). So far Lumax only exports 3 per cent of the Indian production. In cooperation with the car manufacturer Tata, Lumax plans to set up a factory in Thailand.
“The factory where I work is situated on plot 46, sector 3 in the Industrial Model Town (IMT) Manesar, near Gurgaon. In the plant 30 permanent workers are employed and 270 workers hired through one contractor. There are various shifts: in the moulding department people work from 6 am to 6:30 pm and from 6:30 pm to 6 am. In the assembling, finishing and maintenance department shift times are from 9 am to 9 pm. The quality department works from 8 am to 9:30 pm. In dispach there is one long shift from 7 am to 11:30 pm or even till midnight. In the filter department the shift times are from 9 am to 9 pm, but on fifteen days per month the shifts are 24 hours, from 9 am to 9 am. For the workers hired through contractors the overtime rate is paid single, they get 12 Rupies extra per hour. Money is cut for PF and ESI, but people who leave the job or who are kicked out only in rare cases get the PF money.
The work load is high – every day six trucks bring finished products to the Honda Scooter factory and one truck and two smaller three-wheelers bring stuff to Maruti Suzuki car factory. Caught in the rhythm of production workers are not allowed to move away from their work station. Lumax has another factory in Manesar sector 5 producing filters for vehicles, engine parts and spark plugs, there are more Lumax factories in Gurgaon sector 18, in Dharuhera (near Gurgaon) and Faridabad.”
Breaks India Worker
Plot 873 – 874, Udyog Vihar Phase 5, Gurgaon. In the factory 30 permanent workers and 175 workers hired through Eris Corporate contractor manufacture disc breaks, drum breaks and boosters for Maruti. The wage of the permanents is about 8,000 to 9,000 Rs, after 1998 noone has been made permanent. The wage of us workers hired through contractor is 2,648 Rs – those 25 workers who were employed since a longer time get 3,248 Rs. The parts come from the main factory in Tamil Nadu (sometimes even by aeroplane) and here they are assembled on four lines. We always have to stand while working. After a while hips and feet start to hurt. Most of the people leave the job after 2, 4 or 6 months. In the Breaks India factory money for PF is deducted from the wages but for those people who leave the job after a few months the form necessary to withdraw money from the fund is not filled in. Per month we make 50 to 80 hours over-time, which is paid at single rate.
Ten minutes before shift starts we gather in the basement of Breaks India and everyone makes five minutes exercise. Then everyday some worker has to read out loud the company quality policy, which is put up at the wall – and the rest of us have to repeat what he said. The supervisor and manager teach about quality. After the workers have been sent to work the bosses have a meeting amongst themselves.
(When a manager read this short report in the FMS newspaper he got angry and said to group of workers: “They talk about everything, but they don’t say that a lot of workers of this company still consume tobacco, despite all warnings”)
Omax is a kind of jumble automobile supplier, manufacturing sheet metal parts, painting and plating parts for two wheelers (for example: steering handles, oil pumps, pedal kick starters, chain cases) and four wheelers (for example: fuel filters, door beams, pistons, transmission shafts, seat assembly). Turnover-wise Omax is amongst the top ten Indian automobile suppliers, it is the biggest sprocket manufacturer in India (2003)
In the Gurgaon area Omax Group (Speedomax, Automax) runs five different plants. Omax started as a supplier for Hero Honda setting up the first Sheet Metal and Tubular Components plant in Dharuhera (industrial town close to Gurgaon) in 1985. Today Omax supplies parts for Maruti Suzuki, Honda HMSI, Hero Honda, Eicher TVS and others, though Hero Honda accounted for 75 per cent of the turn-over (2004). Apart from parts for the main automobile companies Omax also manufactures for the first tier suppliers of the very same companies, for example Delphi, Denso, Bharat Seats, Knorr Bremse. Omax also manufactures parts for European automobile production, for example Piaggio in Italy, Rasmussen in Germany, Tenneco and CNH in Belgium or Supersprox in the Czech Republic. Omax also supplies parts to IKEA in Sweden.
In 2005 Omax bought an US based car supplier as part of the export strategy. ‘s exports have grown in the past few years. The company’s exports had increased from about Rs 3.3 crore in 2003-04 to Rs 15 crore in 2004-05. In 2005 Omax was troubled by some strikes that lasted for a month between June and July, but were resolved a day before the police-protesters clash broke out in Gurgaon over the Honda HMSI issue. The strikes caused Rs 5 crore (Rs 50 million) in production losses.
In the factory situated in sector 3, IMT Manesar in Gurgaon, 200 permanent and 1,000 workers hired through four different contractors are employed. The majority of the permenent workers work in the tool room, manufacturing dies, they work on two 8-hours shifts. The workers hired through contractors work two 12-hours shifts, the over-time is paid at single rate. To have to stand upright during the 12-hours shift is the bloody rule. It is heavy work – we make 20 to 30 kilo body frames for Hero Honda motorcycles. After turning the body-frame (weighting 20 to 30 kilos) for many times you have to do welding work 12 hours constantly, which messes up your stomach. On top of it all the company increases the production target constantly and our working day only ends after having achieved this target – inside the factory getting water or going to the toilet is made difficult and after twelve hours shift they even make you stay longer for one or two hours.
*** Three brothers –
Short description of the long wage and house working days of three brothers who share a room in Gurgaon, published in FMS no.230.
The oldest brother comes back home from the factory at 9:30 pm and after having had a wash he does the washing up of the utensils used in the morning. I come back at 10 or 10:30 pm and after having had a short rest I make rice and lentils, while the oldest brother goes to the market to get veggies for the morning. The second oldest brother gets home at 11 pm. The food is ready around 11:30 pm and at 00:30 am we go to sleep. We share one room. Between the six rooms on the floor we share one latrine and one bathroom and there are many people who have to go to work in the morning and some school children, so we have to get up at six in order to get our turn… you do not get your full sleep, so you dose off later while you are at work and you feel hungry. When I have freshen up a bit I wash the utensils from last night and we make roti and veggies. At 8 am the food is prepared. Having a wash, taking roti and veggies for breakfast. We keep roti and veggies in our boxes which we take with us when we go to work at 8:30. We go to work on foot, which takes 10, 30 and 40 minutes. The oldest brother works in a factory which makes clothes for export, he works 12 hours shifts. The second oldest brother works as a security guard for Group4, he works 14 hours every day, he has no day off during the whole month. After having come back from the village and having been unemployed for a short while I now work for a car supplier, 12 and a half hours per day. When there were only two of us brothers, the rent was 1,300 Rupees, now that I have arrived the land-lord increased it to 1,500 Rupees. There is a meter for electricity, we have to pay 100 to 150 extra per month, for the waste collection we have to pay 50 Rupees… under these conditions, how can a worker maintain a family? We have to send some money home – my mother and father work the land back home in the village, the smallest brother is still in school.
We document three short articles on occupational risks of call centre workers. The first article relates to the increasing ‘safety paranoia’ in Gurgaon. IBM management in Gurgaon sent out an email to 2,000 employees, which fosters the social psychosis. The second article questions the common picture (and self-portray) of the ‘distinct BPO employees’ who do not share the same basic risks of being hired and fired like any other worker. The fact that the call centre workers prompted the sacking by ‘slogan-shouting outside the office’ shows that in this unknown situation they reacted like they think workers would normally react. The third article demonstrates that the attempt of the BPO companies to save money on transport not only extends the working-hours of the employees (longer tours and waiting inside the cabs), but also causes speeding and fatal accidents.
The middle classes in Gurgaon develop an increasing paranoia about safety. Thousands of low paid security guards (often employed for a single household), gated residential areas and the opening of several new police stations are expression of this existential angst. The middle class can feel that the widening gap between slum-dwelling proles and managers in their DLF villas is beginning to cause tensions. Following article published in the Times of India shows that the first victim of the paranoia are the migrant workers:
“The large, densely populated villages of new Gurgaon have emerged as a major security threat. The problem seems to lie in the unhindered migrant influx into Gurgaon. While most of them are looking for employment, there are many others looking to make a fast buck through crime. DLF executive, Anil Anand said: “About 50,000 migrant labourers are living in the villages surrounding DLF. Residents feel migrant labourers need to be identified and even removed. This, however, can be implemented only by the police, as the colonisers cannot exercise their power on gram panchayats”. And picture this: An unauthorised settlement exists between Garden Estate and S block in DLF phase III. A drain flows between S block and the settlement. If a fire breaks out here, fire tenders cannot even make their way through because of the drain. In this case, the houses of Garden Estate and the slums will be gutted with no one to save them. Another DLF resident rues, “There is a huge slum cluster behind our house as well. Why does the administration turn a blind eye towards it? They even overlook problems like electricity theft”. The police however allege that the residents are themselves involved as they employ the family members of these slums without their verification and invite trouble. The residents of DLF will meet the deputy commissioner (DC), Sudhir Rajpal, to chase the issue of removing migrant labourers from the villages surrounding new Gurgaon”. (pictures of DLF and Chakkarpur village on the GurgaonWorkersNews web-site)
The middle class fear spreads from their living areas to the work places. After an IBM employee got car-jacked at gunpoint in front of the IBM office in August 2007, the IBM management sent out an e-mail advising employees to avoid following a regular pattern of coming in and going out of the workplace. They should keep changing their timings, routes, place of parking etc. “Remember there may be miscreants watching your movement/activities,” it says. IBM has over 2,000 employees in Gurgaon. An IBM employee said that most of them were unaware of the car-jack incident. “It’s getting serious. Earlier, we felt the crime rate was low in Gurgaon compared with Noida and Faridabad. That’s no longer the case”.
(TOI, 6th of August 2007)
In return for their law and order service the BPO industry in Gurgaon started to train cops how to answer the phone: “ In a first of its kind private-public partnership initiative, the BPO industry in Millennium City has taken up the task of training policemen who attend calls at the control room and police stations. Training has already begun for around 100 cops. The proposal for such a training module came up at a recent meeting of the Business Process Industry Association of India, where complaints came up against cops mishandling calls, often responding harshly or indecently”.
(Times of India, 14th of October 2007)
“When Jitendra Sharma, a school passout, joined a swank Gurgaon-based BPO in the last week of May, he believed he was on the high road to a stable career in the industry. Barely a month later, Sharma and many of his colleagues who had joined the start-up company are jobless. Last Wednesday, around 40 of them were suddenly asked to ‘stop’ coming to work. After a round of slogan-shouting outside the office of the BPO – Gnome Business Solutions at the Global Business Park on MG Road, Gurgaon – the management issued the sacked workers post-dated cheques by way of a final settlement. “We hadn’t even got our first salary when we were suddenly told there was no work for us. Our dream has been shattered,” Sharma, still in his late teens, said.
For many among the retrenched, this wasn’t the first jolt of their young careers. Said Shyam Tyagi, who was among those sacked, “Many in this group were earlier working with another call centre, Avancore. Last Diwali, it declared a two-day holiday. When we returned to work, the call centre had vanished.’Amitoz Singh, MD of Gnome Business Solutions, said as far as the company was concerned, the sacking was a closed chapter. “All of them were engaged in a unit calling in Canada. Since the project was complete, we asked them to stop coming to work. Now, we have given them their cheques,” Singh said.
Industry leaders say the episode is part of a larger trend. According to Deepak Kapoor of BPO News, an industry-related website, a study done by the organisation shows more than 60% of small BPOs in India – those employing between 20 and 100 people – close down within months of their launch.
(Times News Network, 4th of July 2007)
In the past few years, call centre cabs in the region have been involved in numerous road accidents in which many employees and passers-by have lost their lives. ”Thousands of taxis operate in the region, but why is that only call centre cabs are involved in accidents? We need to find out why do they drive recklessly,” says Deepak Kapoor of BPO News, who was also the spokesman of Call Centre Association of India (CCAI). Sources in the industry say call centres spend about Rupees 3,000 a month as transportation cost on each employee but they don’t wish to increase this expense by hiring more cabs. ”So, at the end of the day, the existing fleet covers more areas and ferries more people which explains their high speed,” said an industry insider. .
(TNN, 8th of July 2007)
Officially more than 2,000 people were killed and about 8,000 injured in accidents on Delhi roads in 2006. In a situation where most workers will perceive car traffic as either a thing of rich car owning people or as part of the industrial world (company cabs, trucks, buses), reactions to road accidents still have more of a distinct element of class hatred than, e.g. in the Western world. We reported about riots after fatal car accidents, which directly targeted the responsible company (see newsletter no.5). A similar situation erupted after three pilgrims got killed by a speeding truck on the 8th of August 2007. The accident happened in Manesar, close to the Industrial Model Town, a huge industrial area. After the accident pilgrims and locals burnt buses, blocked the NH8 highway and clashed with the police, forcing it to open fire and use batons to quell the violence. Though the police arrested the truck driver, the Kanwarias joined by villagers and youth of Manesar, set afire seven vehicles including the car of District Commissioner of Police (Headquarters) Gurgaon, station house officer’s car and two Haryana roadways buses.
2) Collective Action –
Reports on proletarian struggles in the area
*** Successful wildcat strike of temp workers at Delphi in Gurgaon –
Short note on the incident. Many of the workers hired through contractors who wildcat struck in January 2007 have left Delphi since then. In August 2007 the temp workers – not represented by any union – laid down tools again for few hours. The management first reacted by threatening with lock-out and closure of the plant, then decided to give the workers a significant pay rise.
Following just a short up-date, for a longer report see newsletter no. 6. In June 2007 the wages for workers hired through contractors were still only around 2,700 Rs, below the minimum wage of 3,510 Rs. There was a palpable anger amongst the workers. On 3rd of August at 3:30 pm, workers hired through contractors stopped working. At 5:00 pm the managing director held a meeting with A and B shift workers – announcing that they will not tolerate indiscipline, will lock the factory,will shift to Pune… and he started to give promises. On 6th of August 2007, the pay slips were given to the workers hired through contractors, the wages got increased to 3640, plus 800 attendance allowance (for workers who did not take a day off apart from Sundays), plus 200 on 3 months completion, another 300 on 6 month completion and 100 per year further on … for some workers hired through contractors this meant Rupees 5000 as July wages, which is an increase of nearly 90 per cent compared to June.
(FMS no.230 – published before the strike news)
The over-time payment is still at single rate. There had been over-time of more than 200 hours per month out of which 30 to 40 hours were usually embezzled… Since the 20th of July there has been no over-time. Now there are three shifts: instead of two twelve hour shifts there are three eight hour shifts. The 108 harnesses which we used to finish in twelve hours are now compulsory target for the eight hour shift.
At Delphi company there are a lot of seedy deals going on. From all wages ESI and PF money is cut, but we don’t get an ESI card. It was said that the PF number will be given after six months of employment, but even after a year it is not given. If you loose your work coat they will arbitrarily cut 200-300-500 Rupees from your wage – in the factory there are no lockers, so we take the workcoat with us on our way to and from work. If you loose your company-ID they will cut 200-300-500 Rupees… if you loose the string attached to the ID-card they cut 50 Rupees. We are given a faked pay-slip – the contractor gets a print-out from the computer. The over-time is documented only under the condition that we have worked more than 100 or more hours overtime per month, which is paid at single rate (according to the law more than 50 hours over-time in three month are illegal and the payment has to be at double rate).
In the canteen those rotis which are cold-doughy-burnt are given to the workers hired through contractors. The permanent workers enter the canteen kitchen and take the fresh and fine rotis, but we are not allowed to enter.
*** Welcome to the Machine –
Summary on re-structuring at Maruti Suzuki, Automobile Industry Part Nine
We already published several workers’ accounts describing the situation in various factories supplying Maruti Suzuki with parts. In the following we want to summarise the re-structuring process at Maruti Suzuki itself. Maruti Suzuki is Indians biggest automobile company, with a passengers car market share of still around 40 to 45 per cent. Gurgaon’s development has been driven by this industrial giant, which runs three plants on the Gurgaon campus (300 acres) and has opened a fourth plant in nearby Manesar in 2007. The total production capacity of these plants is over 730,000 cars per year. This is compared to a total production of about 1.3 million passenger cars in the whole of India in 2006. Suzuki also runs a motorcycle plant in Gurgaon, employing about 1,000 workers.
The supply chains of Maruti are the main arteries of the local industry, they reach down into the backyards of the slums (see newsletter no.3), controlling this labour intensive work by connecting it with work-shop production, semi-automatized small factories, capital intensive ‘first tier’ factories and the main assembly lines of its plants. The fact that the Maruti Suzuki power plant supplies electricity for the main suppliers is another example for the company’s function as the ‘generalising’, ‘controlling’, ‘developing’ capitalist centre of this vast industrial landscape. Maruti Suzuki’s strong ties with suppliers from Japan and the planned infrastructural projects for the export drive (main cargo train lines and highways to the ports etc.) will intensify the interrelation between local industry, the international division of labour and the global market.
Being surrounded by and dependent on a vast net of factories which exhaust a low paid, mobile labour force, it is first priority that there is peace in the industrial centre. Maruti Suzuki more or less managed to suppress unrest in the industrial core, the assembly plants. It managed to do that by paying comparably high wages to the permanent work-force, by implementing a paternalistic management policy, by using the union and local political class as a mediator or show-fighter and last but not least by unleashing severe repression against workers after the lock-out in 2000.
The following overview has the same limitations as many other (lefty) studies on Maruti: the current situation of the young work-force hired through contractors, working in the assembly departments, paint shops, machine halls is not reflected, there is a lack of first-hand reports. Since 2000 Maruti Suzuki sucked in a low paid work-force, which e.g. assembles the new ‘sales hit’ SX4, a compact car priced at 690,000 Rupees, while being paid 4,500 Rupees per month. Under the pressure of the market Maruti Suzuki decided to let these workers be employed right in the centre of the web, where they now form the majority. A real inquiry would have to be undertaken together with these workers hired through contractors and those of the suppliers, in order to discover the fragility and fractures within the moloch.
*** 1. Chronology of the re-structuring
*** 2. Maruti and the unions
*** 3. The strike / lock out in 2000 and the subsequent repression and Voluntary Retirement Scheme
*** 4. Marutis work-force policy
*** 5. Maruti’s supply chain policy
*** 6. Short overview to Indian car industry
Opening of the plant as a prestigious political project by the state: The often quoted ‘peoples’ car’ is only a necessary by-product of major industrialisation project started in early 1980s, by linking up with a major Japanese company (at the time the most booming industrial country).
Joint-Venture with Suzuki since 1982 (Suzuki 26 held per cent shares). During the initial years Maruti only employed about 900 permanent workers. Nearly all parts are imported from Japan, only assembling work takes place. The assembly involves fitting low-technology and value components like tires, batteries, electric wiring, wheel rims, seats and glass into the imported cars. Until the 1990s Suzuki refused to set up a gearbox manufacturing plant in India, these crucial parts had to be imported. With the opening of the factory the company sets up a company-friendly union affiliated to INTUC.
1985 to 1987
1985: Total work-force 2,800, cars produced 48,000
1986: Total work-force 3,500: cars produced 82,000 ;
1987: Total work-force 3,000: cars produced 94,000 inc. export of 500 cars to Hungary (1987); Between 1984/85 and 1986/87 productivity increases from 13.7 cars per employee per year to 28.26. In 1984/1985 indigenization (share of locally produced parts of a car) is estimated to be at 23% with the weld and paint shop in operation and an increasing local content – including locally sourced parts like tuber parts, bolts and nuts, springs and plain washers. Maruti Suzuki is one of the few companies which sets up a housing estate for its permanent skilled workers.
Total work-force 3,600, cars produced 105,000. Incentive scheme started, 250 Rs bonus per worker per month (this amount would increase to 6,000 Rs in 2000)
1989 to 1991
1989: Total work-force 3,700, cars produced 117,000;
1990: Total work-force 3,900: cars produced 120,000;
1991: Total work-force 3,900: cars produced 121,000.
At the end of the 80s Maruti-Suzuki’s production facilities comprise a press shop, weld shop, paint shop, a machine shop, engine assembly and testing, vehicle assembly and a testing line centre.
Large investments in new production facilities on the Gurgaon campus (new weld-shop, paint-shop etc.). This extension project was undertaken in cooperation with a Tata company (Tata is a main car manufacturer itself).
Total work-force 4,000, cars produced 128,000. The state reduced its own shares to less than 50 per cent, Suzuki becomes the largest share-holder. Maruti has an 80 per cent market-share in passenger cars which Maruti manages to hold till 1998. At the same time Maruti tries to re-structure supply-chain (halved the number of official suppliers from 800 to 400 in period 1992 to 1997). Maruti stops to make people permanent or hire them on permanent bases, but till 1997 no workers hired through contractors are in the plant.
Total work-force 4,100, cars produced 158,000. Maruti has produced a total of 1 million cars. Achieved 90 per cent of localization. Maruti captive power plant starts running.
Total work-force 4,800, cars produced 208,000.
Total work-force 5,000, cars produced 277,000. Since 1985 an increase of employment of 5.8 percent and of cars produced 19.3 percent. The second plant is opened. Two days strike over incentive scheme (productivity bonus) and union representation.
Maruti produces 340,000 cars per year and employs 900 apprentices (low paid production workers) which account for 15 percent of workforce. Total labour costs 1.4 percent of total expenditures. Total production since start: 2 million.
Setting up suppliers park in cooperation with Haryana government, granting tax exemption, infrastructural aid etc.. Start of recruitment of workers through contractors.
The work-force is now 5,800 employees. Market-share of Maruti (passenger cars sold in India) 83 per cent. Major competitors are Hyundai, Tata, Ford and FIAT. Third plant opened, capacity increased to 350,000. Between 1998 and 2000 Maruti Suzuki reduces the number of official suppliers from 400 to 370.
Struggle over incentive scheme started in October. Management plan in 1992 estimated that 4,000 workers are necessary to produce 100,000 cars per year. Between 1992 and 2000 the production has increased by 400 per cent while the work-force only increased by 65 per cent. Only 3.1 per cent of all Maruti cars sold were exported.
Total work-force 5,800. 500 apprentices, who worked soley in production, got sacked. First Voluntary Retirement Scheme (VRS): Maruti forces 1,050 permanent workers to leave the company. Market share of Maruti 57.6 per cent.
Total work-force 4,600. Production volume per Employee at 77 cars per year (1995: 43, 2001: 61). Suzuki in India needs 24 work-hours to produce a car while the SMC plant in Japan only needs two thirds of the time. Suzuki gets majority of shares, government share down to 10 by 2006, the rest is sold to a major life insurance company.
Maruti has produced four million cars. work-hours per vehicle went down from 26.11 in April 2002 to 20.35 in March 2003. of Maruti-Suzuki’s 4590 permanent employees in 2003, 1900 employees have received training in Suzuki’s facilities in Japan.
Two strikes had an impact on the production at Maruti: In April the week-long truckers’ strike hit its production by 30 per cent at its Gurgaon facility. Production was hit again during August and September due to the strike at DCM Engineering, Maruti’s main supplier of cylinder blocks for engines.
The company issues the second VRS scheme: 900 workers and 300 executives take the leaving package. In February Maruti production was disrupted by strike at engine cylinder bloc supplier. In March 2,999 workers were unionised by MUKU, a company set-up union. Introduction of new incentive scheme as part of a ten years wage agreement which links bonus not to productivity increase (cars per worker), but to cars sold, quality and attendance. The old union is de-recognised by management.
The government holds 45.8 and Suzuki 54.2 per cent of the shares. The permanent work-force has been reduced to 2,100 production workers and 1,700 supervisors and staff. Total production: 540,400 cars. According to the companies’ annual report in 2004 and 2005 not a single day of work is lost due to strikes or disputes. The number of workers hired through contractors increases sharply. Some 10 to 15 per cent of former permanents now work as workers hired through contractors, they get a third of the old wage. There are only 15 women working in the plant.
Government holds only 18.5 per cent in Maruti. Only 1,300 permanent production workers are left. There are now 3,700 workers hired through contractors in the plant. The plant in Gurgaon produces 2,000 vehicles per day. It was 1,300 to 1,400 before the VRS. In May 2006 there is trouble in the machine shop, a one-day wildcat strike, but welding department does not join in. The ‘leaders’ get sacked. The conflict was about work clothes and safety shoes.
In the third Quarter 2005/2006:
Income Gross: 322079.00 lakh Rs
Consumption of Raw Material: 239331.00 lakh Rs
Staff Cost: 5839.00 lakh Rs
Net Profit: 33901.00 lakh Rs
In 2006 Maruti Suzuki exported fewer than 50,000 cars worldwide (see chapter on supply-chain).
Opening of the assembly plant in Manesar, initial production capacity of 100,000 per year, with the goal to scale up production to about 300,000 cars by 2010. In the same compound Suzuki inaugurates Suzuki Powertrain India Limited (SPIL), a diesel engine and transmission plant. SPIL is not primarily set up for the Indian market but for exports to SMC’s worldwide operations. This facility will also have an initial capacity to manufacture 100,000 diesel engines a year to be scaled up to 300,000 engines by 2010.
According to former Maruti workers only trainees and workers hired through contractors work in the production departments. Maruti has recently hired 130 women, out of which a third work on the shop-floor. In the new plant 700 trainees are employed. They get 6,500 Rupees in the first year, 8,000 second. Only staff has permanent contracts and there are so far only 25 workers from contractors. Currently the plant assembles 650 cars per day. According to a maintenance worker: 80 per cent of the machines are from Japan.
Magneti Marelli, Suzuki and Maruti formed a joint-venture in 2007. In 2008 they want to open a factory for electronic control units (ECUs) for diesel engines. The industrial facilities of the joint venture will be located at Manesar in the industrial district of Gurgaon. It will be part of the Suppliers’ Park spread over 100 acres being set up by Maruti Suzuki at its campus in Manesar. As part of the objectives, the production of the plant is expected to reach 500,000 units per year.
At Maruti Suzuki, being one of the biggest companies in the area, the question of who runs the union became a major issue. The first union at Maruti was set up by the managing director himself in the early 1980s. Shortly after that the lower management ranks, who felt they were not being recognised in their position as power holders by the union, set up a competing union, trying to include parts of the workers’ discontent. Another fraction was the leading political party of Haryana, which, also tried to get their foot in the door by setting up a union in Maruti Suzuki. In the mid-1990s attempts of setting up an independent ‘workers’ union’ were made. This union got entangled in a ‘minor conflict’ over an incentive scheme at the end of the 1990s. The management made use of the conflict and enforced a lock-out. After the defeat of the union mobilisation the workers’ confidence was crushed and the management succeeded with enforcing a major job cutting ‘Voluntary Retirement Scheme’. It de-recognized the ‘independent union’ and set up an new ‘company union’. But the major change took place within the composition of the work-force: nowadays the majority of production workers are hired through contractors and therefore not represented by any union anyway. Following a more detailed summary of union policies at Maruti:
The managing director who was in charge in the early 1980s was from a public sector undertaking, and he recruited some of the union leaders of that company. The first union was formed by these leaders with an affiliation to Indian National Trade Union Congress (INTUC). (Union member-ship forms were handed out together with the work contract). This was followed by a split between union leaders and upper-management on one side and smaller managers on other. Smaller management felt that union leaders ignored them. They made some workers into union leaders and set up the Hind Mazdoor Sangh (HMS).
Some members of the INTUC and bulk of the HMS unions had to prove that they could ‘lead workers’ discontent': Gate meetings were held; members of Parliament were approached who extended support to the union members. Another group of employees tried to set-up a ‘workers’ union’, they applied to the Registrar of Trade Unions for registering their union. An appeal was also made to the High Court. As a consequence of all this, workers observed a two-day strike in 1986 that was led by a handful of leaders. The management acted tough, suspending a number of activists. Finally, workers accepted having a ‘company union’. The management also persuaded the unions to change their constitution by incorporating fresh clauses which prohibited outsiders as union leaders, no political affiliation, resort to go slow, gherao (a method of struggle: encircling the building of the questioned power) or other negative practices along with clauses of union’s cooperation with the management to develop a positive work culture and improve productivity.
In 1990, the then Janata government in Haryana did its best to prop up an outside union in the factory with a political affiliation to the Lok Mazdoor Sangh (LMS). About 20 per cent of the workers did lend credence to this union. The company did not recognize the union. However, some of the active members of this union gave their charter of demands that included, among others, 20 per cent bonus (during that year no bonus had been paid at that point) and production bonus at a higher rate. The management adopted a policy of not entering into any dialogue with them. The LMS leaders resorted to tactics of a dharna outside the factory premises boycott of canteen and even assault on a number of managers. The company went to court against the dharna. The High Court decided in favour of the company. Despite this, the dharna at the gate was not lifted, as the state government kept on instigating the agitators. The Labour Commissioner had to intervene. Finally, the state government and the leaders of LMS relented, because the company management went public with the statement that it was ready to shift the factory site from Haryana, which would have resulted in heavy loss of revenue to the government. In 1994, a seemingly management critical wing wins the union election.
The conflict about the incentive scheme dragged on, the management tried different tactis, e.g. a major wage increase in 1997, in order to re-structure the incentives. Behind the scene a major attack was prepared, the conflict about the incentives should served as a decoy. In 2000 the union got entangled in a three-months long strike. The basic issue given to the workers was the disagreement on the incentive scheme which had been continuing since 1995-96. The management took a tough stand and kept up production with the help of casual workers since almost 20 per cent of the regular workers were against the strike. These workers were given protection of all sorts. The strike ended in a defeat and resulted in the management being ready for a major attack on the permanent workers. Their numbers had been reduced from 5,800 in 2000 to less than 2,000 in 2006.
Given its importance for the subsequent re-structuring we give an over-view on the strike/lock-out at the end of 2000. Similar to the Honda HMSI repression in 2005 (see newsletter no.7), this strike entered the consciousness of the local working class as a major defeat. The struggle started in 2000 over incentive wage scheme, demands included that all workers hired through contractors should be made permanent and that no work should be out-sourced to other companies outside the plant.
The incentive scheme
The incentive scheme began in the company in 1988 with an amount of Rs. 250 per month to the workers. This amount had increased on an average to about Rs. 6,000 per month by 2000. It was mostly based on production volumes. The management was of the opinion that introduction of new plants with updated technology had resulted in increase in production volumes per worker as well as the fact that the ensuing competition had made it difficult for them to sell their product. Their contention, therefore, was that the incentive should be linked to sales and profitability.
Till 1995 the wages were determined by the old company contract from 1986, saying that 65 per cent of all savings in labour costs are to be distributed amongst workers as incentive bonus. The norm was set at 41.5 cars per worker per year. In 1995 the management withdrew this scheme. The union did not protest and the workers said that the union at the time actually helped the management to increase productivity. In 1988 the ratio was 38 cars per worker per year, in 1999 it was 107 cars per worker per year. In the late 90s the management wants to base the incentives of the workers on numbers of sold (not produced) cars and on the attendance of the worker. The negotiation talks were called off in September 2000.
“During the course of the agitation in 2000, Maruti went public to say that each worker currently cost them about Rs. 22,000 per month. Acceding to the incentive demands would now cost them between Rs. 38,000 to 40,000 (at productivity improvements of 2 per cent to 6 per cent; Source: Business Standard 5/10/2000) while the Maruti management was offering a little less than Rs. 34,000 (Source Statesman 18/10/2000).
A look at the annual reports of the company give a slightly different picture. In 1999-2000 for example the total number of employees, including management staff, was 5,848, while the employee remuneration and benefits totalled Rs. 187.3 crores. This works out to an average of only Rs.26,690 per employee per month. Since this includes both management and workers, it is not likely that the average for workers alone will turn out to be as much as Rs. 20,000.
According to an estimate prepared by the Centre for Workers Management, total management staff salaries in 1999-2000 is nearly twice total workers salaries. According to the figures they calculate, in 1999-2000 the company spent an average of Rs. 13,750 per direct worker per annum in 1999-2000, including all benefits such as incentive wages”. In 1999-2000 the total salaries (including management) amount to about 2 per cent of turnover.
A new incentive scheme named, Profit, Performance and Reward Scheme (PPRS) has been introduced since 2003. The incentives are linked to the increase over last years sales, profitability, productivity, quality and attendance”. (source: PUDR report – see below)
Time line of struggle
9th of September 2000 to 30th of September 2000:
The struggle officially starts with workers wearing black badges, as a sign of protest. Workers go on hunger strike at the factory gate, nine employees are suspended. The initial labour dispute widens when Maruti-Suzuki’s 900-odd contract workers initiate a sudden strike. While Maruti-Suzuki’s company union dissociates itself from this group’s demands (demanding better working atmosphere and wage benefits) the conflict over the incentive scheme remains unresolved.
3rd of October 2000:
Two hours of downing-tools strike in each of the three shifts. Downing-tools strikes continue for eight days. During strike and later on lock-out production was kept up by strike breakers (engineers, workers from suppliers, trainees, casuals etc.), who stayed in the factory, sometimes for several days.
11th of October 2000:
Management declares a new incentive scheme which is not acceptable for workers
12th of October 2000:
Hundreds of policemen block the National Highway and the factory. Maruti management issues ‘Good Conduct Undertaking’ (no go-slow strike, no other actions which harm production etc.) and demands workers have to sign if they want to enter the factory. Workers refuse to sign and management declares the strike illegal. No wages for those who refused to sign (from 12th of October 2000 to 8th of January 2001). Start of a nearly three-month lockout. During this time contract workers and apprentices were made to work 12 hour shifts, and new apprentices were hurriedly drafted from training institutes.
16th of October 2000 to 3rd of January 2001:
Management increased pressure on people to sign the Good Conduct Undertaking, during the course of dispute about 600 out of 4,800 signed. Mid-October two employees died in mysterious circumstances. Workers accused management and their goons of killing them. On 24th of October Workers marched to Heavy Industry Minister, demanding his intervention, more demonstrations in Delhi and in front of the company HQ followed. During the protest three union leaders were bought off and resumed work. On 3rd of November the government announced the sale of its stake in Maruti, a cunning move given that at this point all workers were locked out. By end of December 2000, 92 workers were dismissed. On 13th of December a sit-in in front of Heavy Industry Minister’s office started, which continued for the next twenty-six days.
The protest ended with a tri-partite meeting (Ministery of Industry, management, union) signing agreement on 3rd of January 2001: management withdraws the Good Conduct Undertaking. Other sources put it differently: the union signed a ‘collective’ Good Conduct Undertaking, assuring that workers will not raise any new demands). In ‘return’ the workers representatives agreed on the incentive scheme suggested by the management.
The Repression and Voluntary Retirement Scheme after the defeat of the strike
After the defeat of the mobilisation and after the return to shop-floor reality, the main attack of the company against the permanent work-force started. The workers had seen much slogan shouting, speeches of politicians and union leaders and symbolic actions in Delhi city centre. They had seen that all this did not have much impact on the company. Now they were left alone, they had to put up with a four-month wage loss, they faced the full blow of the management’s re-structuring offensive. By various measures the management tried to pressure them into accepting the Voluntary Retirement Scheme. The work-load was increased, often arbitrary targets were set. Workers who did not manage or want to achieve the targets got warning letters. After the strike 500 apprentices got sacked (out of 1,300 apprentices who worked as full workers in production). The remaining workers had to achieve the same work-load as before their sacking.
Harassment started. Department managers and supervisors got individual targets defining how many workers of their area should accept the VRS. Orders were issued that workers can visit the toilet only during official breaks (2 x 7 min, 1 x 30 min). Office workers who were active during the strike were sent to work at assembly line. Workers were video taped while working at the assembly line and had to undergo humiliating ‘teaching lessons’ afterwards. Individual workers were set idle by their supervisor, they had to sit on a chair in a corner for half of the shift. Then they were told off by a manager for sitting idle. The norms in the company for attendance were made very strict (half-day leave for coming one minute late with a resultant reduction in the incentive amount) at the same time company buses were cancelled. People were visited by managers at their home, put under pressure to accept the early retirement.
A worker who worked as a permanent at the time and who told us some of these stories was still full of emotional stress and rage six years later. He also told us that some workers in the plant committed suicide during this period. The management enforced the VRS in October 2001, pushed 1,050 workers to take the package (a total of 65 crore Rs., up to 100,000 Rupees per worker). In December 2003 the second VRS got implemented, the company got rid of another 1,251 workers.
From the beginning of production in the 1980s Maruti Suzuki imported some management styles which seemed new to many of the workers. All workers’ categories got the same uniform, staff (supervisors etc.) and workers ate in the same canteen. Workers had to sweep the area where they worked, unlike in many other factories, where special ‘cleaners’ are employed. Maruti Suzuki started quality circles were staff and workers set together and talked about production problems. Workers were sent on a trip to Japan for training sessions (travels abroad are normally completely out of reach for the vast majority of workers in India), they were put up with workers’ families there.
Maruti workers receive their Maruti salaries during the training period as well as allowances from Suzuki. They live in a factory dorm with Japanese co-workers during their training and some stay with local families. For Suzuki, it is cheaper to pay allowances to these Maruti workers than to employ Japanese temporary workers. At the same time, it makes it easier for Maruti to upgrade technologies.
For many workers this new ‘management style’ seemed more ‘equal’ or ‘egalitarian’, at least at the beginning. Maruti Suzuki paid the highest wages for industrial manual work, a permanent worker could earn more than five, six, seven times the wage as his colleague in a smaller factory.
Soon the ‘repressive’ side of the paternalistic medal started to show, particularly during the end of the 90s and after the repression in 2000. Since then Maruti Suzuki mainly hires workers through contractors, they wear different uniforms, they are excluded from most of the former benefits. In 2006 there were about twenty different contractor hiring people for work at Maruti, out of which seven employed people directly in the assembly department, in addition to that contractors are in the spare parts division, the machine shop. Officially Maruti has a license for employing only 1,000 contract workers, and only for canteen work, truck loading etc., not in main production departments. Some of the contractors are former Maruti Suzuki employees. Maruti Suzuki gives contracts for single departments, they then get the offers from the contractor and take the cheapest. The contractor presents a list of 200, 300, 400 workers, but Maruti Suzuki would not check on their history. If people turn out to cause trouble, they can be fired immediately. Compared to the wage of the permanent workers (between 25, 000 and 35,000 Rupees, including incentives etc.), the contract workers get 4,500 to 5,500.
In 1987 Maruti employed 1,500 trainees. So far a big share of the trainees were made permanent after a year. After 1987 they introduced a test which meant that more or less all trainees get fired. The management keeps the addresses of the trainees and hires them later via contractors. During the strike in 2001 they called a lot of former trainees. In 1988, Maruti stopped recruiting diploma holders in engineering for supervisory positions; since then, supervisory positions have all been filled by promoted workers. In 1996 there were about 900 apprentices, accounting for about 15% of the total workforce. These apprentices work as normal production workers, but get only very low wages. Their number was increased up to 2000, then they were replaced by workers hired through contractors. During the last five, six years 2,200 of 4,200 permanent workers have been dismissed, today (June 2006) there are about 1,300 permanents and 3,700 contract workers employed on the shop-floor (most of them have ITI qualification).
Today Maruti Suzuki has a vast net of suppliers in the area, a lot of work got outsourced and at the same time the suppliers were tied closer to the main assembly plant, both spacially and organisationally. Given the major re-structuring of the supply chain it is difficult to say, how many workers are ‘actually’ (not ‘formally’) working at Maruti, manufacturing Maruti cars. Work which had been done by permanent workers of Maruti is now done, e.g. by workers of Bharat Seats, a factory which is located on the Maruti premises. The major production increases of Maruti might be partly due to this ‘formal’ work-force reduction by outsourcing.
When production started at Maruti most of the parts were imported from Japan. Then Suzuki’s main suppliers opened factories in the Gurgaon area, in about a dozen of them Maruti Suzuki holds a major part of the shares (for example Denso, Asahi Glass, Koyo Steering). The percentage of car parts which were manufactured locally increased steadily. In 1996/97 about 70 percent of parts come from local suppliers, steel coils still came from Japan or South Korea in 2002. According to a permanent worker Maruti Suzuki holds little storage of certain press items, bumpers, seats. The assembly line would come to a halt if the supply would cease for two to three hours. But given the proximity of the suppliers, this rarely happens.
Parallel to the re-structuring within the work-force (kicking out permanent workers, hiring through contractors), Maruti Suzuki started to re-structure the supply chain. In 1998 Maruti still had about 800 official first tier suppliers, by 2000 this number was reduced to 400, in 2003 their number was further reduced to 300. In 2000 of Maruti’s 404 suppliers, 58 firms depend on Maruti for more than 90% (in many cases 100%) of their sales. The majority of Maruti’s first-tier suppliers are concentrated in the north of India, 248 of them in Gurgaon and its neighbouring cities in Haryana. Maruti Suzuki has many ways to control the main suppliers, partly through their mentioned dependence, partly through actually share-holding, and partly through the mere fact that the suppliers depend on electricity delivered by Maruti Suzuki. The company owned power plant generates 30 percent of Gurgaon’s industrial energy (2000). The company itself uses 50 percent of the energy, the rest is sold to other companies, e.g. the companies’ main suppliers. Their electricity bill is deducted from Maruti Suzukis payment for supplied parts.
With the re-structuring the responsibility for storage, quality, just-in-time and dozens of daily work accidents was passed on down the supply chain. According to a permanent worker one square foot of storage space within Maruti Suzuki costs the company 25,000 Rs per year. Maruti Suzuki tried to outsource these costs to the suppliers by demanding that the main suppliers should set up their own storage facilities within in a 10 km radius of the plant. But Maruti Suzuki has a bigger problem with the supply chain than just storage space. In total, parts and manufactured cars spend too much time circulating in the transport chain. Many parts still come from Japan, they have to be brought from the ports to Delhi, the same counts for cars which are meant for export. During 1992-97 the at-factory stock was 20 days and transit 12 days. During that period a fourth of Marutis stock was in transit, on the road or at the factories of the supplier. In 1997 the at-factory stock at Maruti was 13 days while 9 days was in transit. Maruti Suzuki managed to speed up the transport considerably during the end of 90s. Nevertheless the costs for transport alone accounted for 4.1 percent of the total sales revenue; this is compared to 2.0 percent for labour costs (1997). The total value of inventory as a percentage of sales revenue fell from 20 per cent in 1992 to 10 percent in 1997 inventory stock fell from 57 days of stock to 30 days in 1997 (in comparison Toyota in Japan in 1991 hold only one day stock). Given the infrastructure (roads, railways), Maruti Suzuki has still problems running a smooth just-in-time production. The problem intensifies with Maruti Suzuki’s pressure to increase the export of cars.
According to a Hindustan Times article, 24th of June 2007,Maruti expects to sell 250,000 cars globally by 2009, which would mean an increase of about 200,000 within the next two years.
“Maruti can take 12 weeks to transport a car from Gurgaon to shipyards on India’s western coast, says Mr.Khattar (Maruti President). [Although the average will be more like nine to ten days]. In Japan, cars are transported from factory to port in eight days. The journey from Gurgaon begins on trucks that haul the vehicles to a railway yard. A cargo train that can carry about 120 cars arrives every three or four days. The train carries the cars 1,140 kilometres to another yard about 150 kilometres north of Mumbai. The cars are again loaded onto trucks and driven to a port. There, Maruti workers touch up any paint damage. The cars wait for ships. In India, it takes workers 84 hours to unload and load cargo from an average ship. That compares with an average of 12 hours in Singapore and 10 hours in Hong Kong, according to statistics from 2005, the latest available from the Indian government and port officials in Hong Kong and Singapore. “It’s torture exporting from here,” Khattar says. By 2010, railroad tracks will run from the ports directly to Maruti’s second plant in Manesar, 25 kilometers away from the Gurgaon factory, he says.”
There are plenty of studies on the Indian automobile sector available on the net, therefore just some glimpses. The car industry, it’s exports and the local car market in India are still minor compared the car production in the US, Europe or Japan. In 2000 only 7 out of 1,000 people in India owned a car, this is compared to 500 in Western Europe.
But together with China, India is the only hope for a crisis ridden global car industry, meaning, a crisis of a capitalist cycle. Their hope is that the current expansion of about 15 to 20 per cent annually continues during the coming years. The year ending on 31st of March 2007, Indian passenger car sales climbed 21 percent to 1.38 million. The export numbers are still less than 200,000 cars in 2007.
Nearly all major car makers now have manufacturing facilities in India, mainly Hyundai, Toyota, but also GM, Ford, VW, Renault. Apart from growing local market the hope is that India can become a global manufacturing hub, e.g. Renault wants to start producing it’s ‘global cheap car’ Logan in India and export it from there (adding to the production in Romania and China).
General Motors India plans to sell 200,000 vehicles by 2010, almost triple the 70,000 cars it predicts it will sell in 2007. Toyota is also aiming for 10 percent of the Indian market by 2010, up from 3.7 percent in the year ended on 31st of March 2007. Hyundai is investing $1.5 billion in a second plant at its site near Chennai to almost double its manufacturing in India to 600,000 vehicles from 340,000 in 2007.
The current boom meets certain shortages, e.g. of tyres and also of skilled workers. Domestic truck manufacturing companies like Tata Motors, Ashok Leyland and Eicher Motors have deals running with exporters in China for sourcing components including tyres. The country’s largest automobile manufacturer, Tata Motors, has signed a contract for importing 4-5 lakh tyres per annum with three Chinese companies, including Shandong Jinyu Tyre Company and Pearl River Tyre.
“We are in a way being forced to import radials which are not being produced here. The tyre industry has not added sufficient capacities and will have to deal with the threat of imports now,” said a Tata Motors official.
We want to finish this text with a nice quote from the Maruti President made during an interview with ‘Moneycontrol’ on the 19th of July 2007, emphasising the current power that (highly skilled) automobile workers have in the Gurgaon area:
“Q: Where is the talent crunch happening – is it on the shop floor level, is it at the managing level?
A: (Managing Director, Maruti Udyog, Jagdish Khattar, President, Automotive Sector)
But very interestingly in the last few months, I got surprised in Gurgaon, in our network, even people on the shop floor have started resigning and joining other companies, which one could never think of doing earlier. They have started getting options. So, I think this is a first signal and not a very good signal”.
(Automobile Workers and Industry in Globalising India, March 2004, by: Asia Monitor Centre, Centre for Education and Communication)
(Peoples Union for Democratic Rights, July 2001: “Hard Drive – Working Conditions and Workers Struggle at Maruti”)
(TCE Consulting Engineers Limited)
(Strategic Organisational Response of an Indo-Japanese Joint-Venture to India’s Economic Liberalization, Ashok 2005)
(Effects of poor transportation on lean production and industrial clustering, Gulyani, 2001)
(Globalization and Jobs in the Automotive Industry, MIT, 1998)
(Maruti: Draft Red Herring Prospectus)
(FROM A PUBLIC SECTOR ENTERPRISE TO A JAPANESE OWNED
SUBSIDIARY: Florian BECKER-RITTERSPACH, 2006)
3) According to Plan –
General information on the development of the region or on certain company policies
*** “Not yet special enough: Special Economic Zones, Part Five” –
– Your backyard a SEZ? Short note on the inflation of SEZs in Gurgaon
“Gurgaon is on the verge of becoming a separate SEZ country with the district all set to get 52 SEZs, the highest in any district in the country. Nearly 34% of Gurgaon’s agricultural land will be covered by these SEZs. Official records show that out of the approved SEZs in Haryana state, 24 are situated in Gurgaon, and of another 28 which have got in principle approval, 18 are in Gurgaon. Out of another 21 SEZs seeking approval, 10 are in Gurgaon. Significantly, only five SEZs are in the category of multi products/services while 36 belong to IT/ITES. There will also be four bio-tech SEZs and three SEZs in the categories of textile, apparel and jewellery. A few of the larger SEZs include the HSIIDC-Reliance joint ventures SEZ to be developed on 25,000 acres; DLF Universal spread over 20,000 acres; and Emmar MGF covering 10,000 acres. A majority of the SEZs will cover less than 500 acres and the smallest one will be developed on only 25 acres”.
(Times of India, 29th of August 2007)
DLF will spend Rs 2,500 crore to develop two IT SEZs in Gurgaon. It has already attracted clients such as Genpact and Accenture. DLF also plans to develop another IT SEZ in Silokhera in Gurgaon, with an investment of Rs 1,500 crore. The project spread over 37 acres; will be operational in two to two-and-a-half years. Out of 7.5 million sq feet, about 2.5 million sq feet have been developed and the price is 65 to 75 rupees a square foot a month.
(Moneycontrol, 21st of September 2007)
The first IT special economic zone (IT SEZ) in north India is set to be operational by this month-end with IT and ITeS majors are gearing up to open their offices at Cyber SEZ in the DLF Cyber City in Gurgaon.
(Times of India, 15th of October 2007)
4) About the Project –
Updates on Gurgaon Workers News
Gurgaon Video –
New Page on the web-site featuring shakey impressions from Gurgaon, amongst others some footage on the police brutality against the Honda workers in July 2005, a Punjabi MC clip shot two years later, some impressions of the death trap National Highway 8…
*** Glossary –
Updated version of the Glossary: things that you always wanted to know, but could never be bothered to google. Now even in alphabetical order.
Lakh (see Crore)
Wages and Prices
Workers hired through contractors
The All India Trade Union Congress (AITUC) is the oldest trade union federation in India and one of the five largest. It was founded in 1919 and until 1945, when unions became organised on party lines, it was the central trade union organisation in India. Since then it has been affiliated with the Communist Party of India.
Business Process Outsourcing: for example of call centre work, market research, sales.
Centre of Indian Trade Unions, a national central trade union federation in India. Politically attached to CPI(M), Communist Party of India (Marxist). Founded in 1970, membership of 2.8 million.
Workers hired by the company for a limited period of time.
Workers hired for a specific performance, paid for the performance.
1 Crore = 10,000,000
1 Lakh = 100,000
DA (Dearness Allowance):
An inflation compensation. Each three to six months the state government checks the general price development and accordingly pays an allowance on top of wages.
Deputy Commissioner, Head of the District Administration.
ESI (Employee’s State Insurance):
Introduced in 1948, meant to secure employee in case of illness, long-term sickness, industrial accidents and to provide medical facilities (ESI Hospitals) to insured people. Officially the law is applicable to factories employing 10 or more people. Employers have to contribute 4.75 percent of the wage paid to the worker, the employee 1.75 percent of their wage. Officially casual workers or workers hired through contractors who work in the factory (even if it is for construction, maintenance or cleaning work on the premises) are entitled to ESI, as well. Self-employment is often used to undermine ESI payment.
1 US-Dollar = 43 Rs (March 2007)
1 Euro = 57 Rs (March 2007)
Haryana State Industrial and Infrastructure Development Corporation
Industrial training, e.g. as electrician or mechanic. Two years of (technical school), one year of apprentice-ship in a company. During the two years at school the young workers receive no money, but they have to pay school fees. A lot of the bigger companies ask for ITI qualification.
Lay off in the Indian context means that workers have to mark attendance, but they actually do not work and receive only half of the wage.
Official minimum wage in Haryana in June 2007 is 3,510 Rs per month for an unskilled worker, based on an 8 hour day and 4 days off per month. But hardly any workers get this wage.
A locally elected village administrative body in charge of village-level issues.
PF (Employee’s Provident Fund):
Introduced in 1952, meant to provide a pension to workers. Officially applicable to all companies employing more than 20 people. Official retirement age is 58 years. Given that most of the casual workers belong to the regular workforce of a factory, they are entitled to the Provident Fund, as well. So are workers employed by contractors. If workers receive neither PF nor ESI they also do not show up in the official documents, meaning that officially they do not exist.
Officially the so called ‘governmental fair price shops’ are shops were ‘officially poor’ people can buy basic items (wheat, rice, kerosene etc.) for fixed and allegedly lower prices. In order to be able to buy in the shops you need a ration card. The ration card is also necessary as a proof of residency, but in order to obtain the ration card you have to proof your residency. Catch 22. Local politics use the ration depots and cards as a power tool which reaches far into the working class communities. Depot holders’ jobs are normally in the hands of local political leaders. In return they receive this privileged position, which often enable them to make money on the side.
Superintendent of Police, Head of the District Police.
In India staff includes managers, supervisors, security personnel and white-collar workers.
In general trainees work as normal production workers, they might have a six month up to two-year contract. Depending on the company they are promised permanent employment after passing the trainee period. Their wages are often only slightly higher than those of workers hired through contractors.
VRS (Voluntary Retirement Scheme):
Often a rather involuntary scheme to get rid of permanent workers. Particularly the VRS at Maruti in Gurgaon made this clear, when 35 year olds were sent in early retirement.
Wages and Prices:
When we hear that a cleaner in a call centre in Gurgaon, an industrial worker in Faridabad or a rikshaw-driver in Delhi earns 2,000 Rs for a 70 hour week, which is about the average normal worker’s wage, we have to bear in mind that they often came from West Bengal, Bihar or other remote place in order to get this job. In order to put 2,000 Rs into a daily context here are some prices of goods and services:
– Monthly rent for a plastic-tarpaulin hut shared by two people in Gurgaon: 800 Rs
– Monthly rent for a small room in Gurgaon (without kitchen), toilet and bathroom shared by five families: 1,300 Rs
– Monthly rent for a small room in a new building in central Gurgaon, single toilet and bathroom: 4,500 Rs to 8,000 Rs
– Half a kilo red lentils on the local market: 25 Rs
– Kilo rice on local market: 14 Rs
– 1 Kilo Onions and 1 Kilo carrots on local market: 25 to 30 Rs
– McChicken: 40 Rs
– Bus ticket to nearest bigger bus stop in South Delhi: 14 Rs
– Daily Newspaper: 3 Rs
– One hour internet in a cafe: 20 Rs
– Bottle (0,7l) of beer at Haryana Wine and Beer shop: 50 to 70 Rs
– Cigarettes (10), cheapest local brand: 25 Rs
– Cinema (new) ticket Saturday night: 160 Rs
– single entry for swimming pool: 100 Rs
– Starbucks Coffee (Latte Medium) in Shopping Mall: 59 Rs
– Faulty shirt on Faridabad local market: 40 Rs
– Single gas cooker plus new 2 litre gas cylinder: 720 Rs
– Re-fill gas (2 litres – once every month and a half): 100Rs
– Second-hand bicycle: 600 to 1,000 Rs
– Two simple steel pots: 250 Rs
– One litre Diesel: 30 Rs
– Driving license in Haryana: 2,000 to 2,500 Rs
– Start package pre-paid mobile phone (without the phone) 300 Rs
– Phone call to other mobile phones: 1 Rs
– Minimum dowry poor workers have to pay
for the marriage of their daughter: 30,000 Rs (80,000 Rs more likely)
– One month mobile phone flat rate: 1,500 Rs
– Compaq Laptop: 50,000 Rs
– Flight Delhi to London: 28,000 Rs
– cheapest Hero Honda motor-bike (150 cc): around 40,000 Rs
– Ford Fiesta: 587,000 Rs
– four hours on Gurgaon golf course: 800 Rs (info from golf course worker earning 2,400 Rs monthly)
– Two-Bedroom Apartment in Gurgaon: 10,000,000 to 50,000,000 Rs
Workers hired through contractors
Similar to temporary workers, meaning that they work (often for long periods) in one company but are officially employed by a contractor from whom they also receive their wages. Are supposed to be made permanent after 240 days of continuous employment in the company, according to the law. A lot of companies only have a licence for employing workers in auxiliary departments, such as canteen or cleaning. Companies usually find ways to get around these legal restrictions, e.g., workers services are terminated on the 239th day to avoid workers reaching eligibility criteria to become permanent. In many industries contract workers account for 60 to 80 per cent of the work force, their wage is 1/4 to 1/6 of the permanents’ wage.