New Delhi: The country’s largest car maker Maruti Suzuki India Ltd, which had to put up with at least seven supply disruptions last year, has started working with vendors to help them improve their human resource (HR) policies and prevent labour strife.
The company sources 92% of its components locally with most of its vendors located at Gurgaon and Manesar in Haryana, where its plants are located. Both auto component hubs saw strikes and go-slow agitations by workers last year seeking union representation and better wages.
In April, a strike by workers at an Exide Industries Ltd unit at Bawal in Haryana resulted in Hero Honda Motors Ltd delaying dispatches. The company’s April sales fell 0.27% to 362,390 units. In October, a strike at Rico Auto Industries Ltd resulted in Ford Motor Co. shutting down a plant in Ontario, Canada, for a week due to a shortage of drive shafts.
Maruti has traditionally worked with vendors to get them up to speed on parent Suzuki’s lean manufacturing and quality practices. “Last year, when we saw so many industrial relations issues cropping up, we realized this is also an area where we had to hand-hold our vendors,” said S. Maitra, executive director and managing executive officer, supply chain, at Maruti.
Car sales in India rose 25% to 1,526,787 units last year. This rapid and sudden growth resulted in vendors having to ramp up quickly in order to meet demand as companies struggled to meet back orders. “This (human resources) was one area neglected by chief executives during the growth phase when we were more focused on meeting back orders, looking for new markets and so on,” said Surinder Kapur, chairman of the Sona Group, a key Maruti supplier.
As a first step, Maruti asked all chief executives to communicate with workers directly and regularly. Most of the human resources problems cropping up were due to a lack of communication, according to the company.
Maruti also suggested a solution for a persistent source of labour unhappiness. Unsure whether the sudden spurt in growth was permanent, vendors mostly hired temporary staff at the Rs4,200 minimum wage in Haryana and gave them no benefits. Meanwhile, these contract workers were put on jobs that were not temporary in nature.
Discord would break out when new recruits were paid the same as contract workers who’d been doing the same job for several years, according to Maitra.
Maruti asked vendors to put in place a hierarchy among contract workers similar to systems already in place for permanent staff. Vendors were also asked to give increments in a phased manner, given that most have the tendency to merely offer the minimum wage. Vendors have also started communicating with each other so that wage increases can be decided in line with each other.
During the strikes last year, Maruti had, at times, placed its own personnel at vendor factories to make sure supply lines ran smoothly. In some cases, parts for the Swift were airlifted from Suzuki’s factories in China and Japan.
Vendors are also being asked to resolve other potential areas of conflict. For instance, temporary workers are being given uniforms and the same canteen facilities as permanent workers. “On Maruti’s suggestion we are also introducing training programmes for contract workers,” said Nishant Arya, executive director of the JBM Group, which has 30 facilities across the country, and makes axles and exhaust systems for Maruti.
“This year, the plan is to work one-to-one with certain vendors and extend this to our suppliers across the country,” said Maitra, who stresses the point that Maruti can’t afford a repeat of last year. For the time being, the firm has left the tricky issue of unionization to each vendor to tackle separately.