Maruti riot sounds alarm bells for India industryReuters . Manesar, India
Hiding in his office near New Delhi as workers armed with iron bars and car parts rampaged through the factory, Maruti Suzuki supervisor Raj Kumar spent two terrified hours trying to comprehend the warzone his workplace had become.
By the end of the day, one of his colleagues had been burnt to death and dozens wounded, many with broken bones, as a long-running struggle between the shop floor and management exploded at a factory racked by mistrust.
While the police investigate and the carmaker counts its mounting losses, the July 18 clash has rattled corporate India and shone a light on outdated and rigid labour laws in a country where cheap labour drives manufacturing and draws foreign investment. High inflation, a shortage of skilled labour and rising aspirations have emboldened workers’ demands.
‘There was always a strong sense of unease,’ Kumar, 43, told the news agency as he stood outside the locked factory gates more than a week after the riot in the industrial town of Manesar.
‘We are living in fear... The kind of violence these guys showed was unbelievable.’
Other foreign carmakers, such as Hyundai and Honda, have seen labour unrest at their Indian plants in recent years, and industry groups have renewed calls for the government to overhaul laws they say tie their hands.
‘This is definitely sending a wrong message. Investors will be reluctant,’ P Balendran, vice-president at General Motors’ Indian unit, said of the Manesar violence. ‘The need of the hour is flexible labour reforms. In 2012 you cannot afford to have a rule which is applicable ... from 1956.’
India’s labour laws, some dating to the 1920s, make it difficult for large companies to fire permanent workers, forcing companies to hire large numbers of contractors — a bone of contention with many unions.
‘We knew that something of this sort might happen sooner or later,’ said Balendran. ‘It happened to Suzuki today, then tomorrow it could happen to us.’
Maruti’s factory, which made about 1,700 cars a day, including its top-selling Swift hatchback, is now shut, costing tens of millions of dollars, while over 2,500 workers have gone to ground, fearing punishment from Maruti or the police, say residents and unions.
Maruti, already hit by rising costs on a weak rupee and falling sales, has seen its market value fall by $550 million since the riot. Shares in Japanese parent Suzuki Motor Corp, which relied on Maruti for 28 per cent of its net profit in the last fiscal year, fell as much as 10 per cent after the riot, and on Friday closed 3 per cent lower than on July 18.
Maruti says the violence was unprovoked and unexpected. But in a plant with a history of unrest, the union representing those on the production line said management practices made a clash inevitable.
‘The workers have been provoked consciously by the management. Their plan is to provoke them so much that they commit mistakes and can be fired. Management does not want the union to run,’ said a worker at Suzuki Powertrain, a sister factory in the same compound.
‘The management thinks if they can accuse all workers of wrongdoing, they can easily fire everyone and dismantle the union, that’s their politics,’ said the worker, who declined to be named as he feared he would lose his job.
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