End of an era: Maruti Suzuki drives out of Gurgaon9 min read . Updated: 25 Dec 2018, 08:47 PM IST
Change is in the air for Maruti Suzuki's first car plant in Gurgaon that gave birth to the people's carand millennium city
New Delhi: In the second half of 2018, Maruti Suzuki India Ltd began thinking of life beyond Gurugram. It had become far too cumbersome to continue manufacturing cars in the middle of a city which had turned into a bustling megapolis in the blink of an eye. This marks the end of an era—Maruti’s spell in Gurgaon, which dates back to the early 1980s, is an ode to India’s economic transformation.
India of the early 1980s was a strange place. It was a time when the central government thought it knew how best to manufacture passenger cars; when defective fuel pumps in Maruti 800’s early fleet became a matter of parliamentary debate; and when India’s nascent forays into the realm of global automotive competence had to first bypass the pesky problem of dust (Maruti found its home in the southern edge of Delhi by keeping the air pressure inside the shop floor artificially higher than outside at all times).
For a long time, the existence of Maruti in 2018 was far from a certainty. That could be said about Gurgaon too, which began as a dusty, barren backyard of Delhi and got its initial boost by playing host to a spunky Indo-Japanese joint venture company which grew into one of the world’s largest small carmakers. With the birth of the millennium city and the ‘people’s car’ so entwined, it’s hardly surprising that the Gurgaon-based Maruti plant evokes much nostalgia. What Jamshedpur is to Tata Steel Ltd, Gurgaon is to Maruti.
Reminiscing about the good old days at a recent company event, Maruti Suzuki chairman R.C. Bhargava said when Osamu Suzuki (of Suzuki Motor Co.) first came to visit the under-construction campus, he was quite taken aback to see it being overrun with monkeys. “He asked me how we would make cars here if the monkeys continue to be around?" said Bhargava.
“I told Mr. Suzuki that Maruti is another name for Lord Hanuman and assured him that once manufacturing started, they will all leave the place. As predicted, the monkeys vanished once the plant was commissioned," he added.
That oft-repeated, possibly apocryphal story is a good yardstick for the myth and magic realism that has come to be associated with Maruti’s rise. However, the reality of modern-day, congested Gurgaon doesn’t leave much room for magic.
“When Maruti started making cars, there was no National Highway (NH) 8 and Gurgaon was a village. Today, if you take the NH 8 on a normal day, it is perennially chocked with traffic due to the truck movement that takes place between the plants of Maruti and its suppliers," said a person who has been associated with the carmaker since its inception, requesting not to be named. When residents in the vicinity began to repeatedly lodge complaints with the civic body, the writing on the wall was clear.
The existing factory in Gurgaon will probably still be used for manufacturing engines and testing vehicles. But new cars will no longer roll out of the campus.
Auto industry’s ground zero
Over the past 35 years, Maruti Suzuki has not only evolved into one of the most valued companies (in terms of market capitalization) but has also become the undisputed leader of the passenger vehicle industry. The Delhi-based company also pioneered the formation of the first major automobile manufacturing hub in Gurgaon back in 1983.
Gurgaon, now a bustling IT hub, owes its initial burst of development solely to the economic boom ushered in by the success of Maruti Suzuki as a vehicle manufacturer.
Today, Maruti Suzuki manufactures 7.5 lakh cars in a year at the Gurgaon plant. In 2006, the company commissioned its second plant in Manesar (30km away from the Gurgaon plant) with a production capacity in the same range. Now, Maruti Suzuki’s third plant in Gujarat contributes around 2.5 lakh vehicles per annum and soon, another assembly line of roughly 2.5 lakh units will be added. Suzuki wants to add one more line to increase the capacity of the plant to 7.5 lakh units by 2020 and by 2025, the Gujarat plant may deliver around 15 lakh vehicles.
In the past three and half decades, the company has transformed the lives of thousands of dealers and component suppliers, creating many new-age crorepatis in its wake.
Deepak Jain of Lumax Industries Ltd, one of the first tier-one suppliers to start off with Maruti Udyog (now Maruti Suzuki India Ltd), said the company has been instrumental in shaping the entire automobile industry in India. “It never functioned as just a public sector unit. It was the first time a company had a vendor development team and it was a unique way to start off. Their engineers would come to test our materials and manufacturing standard. They did a lot of hand-holding. Today, it is normal, but in those days, this was unheard off," added Jain.
Not that there weren’t any initial hiccups. According to Ajay Kumar Jain, chairman, PPAP Industries Ltd, when Maruti wanted to start, they displayed all the components in a room at the Gurgaon plant and people could choose to supply them with whatever they wanted. Furthermore, Maruti would chase up suppliers to set up shop for them.
Maintaining quality was a huge ask in a nascent industry. But the carmaker insisted on bringing quality manufacturing to the Indian market and piloted the signing of over 40 joint ventures between Japan and India in order to set up an automotive component ecosystem.
Birth of a city
In the late-1990s, due to the success of Maruti’s Gurgaon plant, the Haryana Urban Development Authority (HUDA) and DLF Ltd, one of the country’s largest commercial real estate developers, started developing Gurgaon as an IT hub, beginning with call centres. Subsequently, big IT firms like Tata Consultancy Services Ltd, Infosys Ltd, and Wipro Ltd began setting up their own office.
Around the same time, the Union government started constructing the NH 8, which became the heart of Gurgaon. Today, most of India’s blue-chip companies have their offices in Gurgaon and it’s also known as the aviation hub of India—as companies like InterGlobe Aviation Ltd which owns IndiGo, SpiceJet Ltd and Tata SIA Airlines Ltd, which operates Vistara Airlines, are headquartered there.
Maruti’s Gurgaon hub is technically not the first automobile manufacturing hub in India. Uttarpara in West Bengal, where Hindustan Motors Ltd rolled out its iconic Ambassador cars starting 1948, gets that distinction. Maruti’s Gurgaon story becomes special because of the professionalism and finesse in operations that was introduced in India for the first time.
“Maruti has developed the entire economy of Gurgaon, said Nirmal Minda, chairman and managing director, UNO Minda, one of Maruti’s biggest component suppliers. “Forty years back, it was just a single road…not even a national highway. Also, look at the vendor base around the facility. It was all developed by the company and now, most of them are Maruti’s tier-one suppliers," he said. Apart from the potential of a fast-growing new market, when global auto giants Ford Motor Co., Hyundai Motor Co., and Honda Motor Corp. decided to invest in India, Maruti’s success in Gurgaon was an important factor.
Avik Chattopadhyay, founder of a brand consulting firm Expereal, started his career with Maruti Udyog in 1991 in the marketing planning department. According to Chattopadhyay, the professionalism on display at the Gurgaon plant then had not been seen in India. He reminisces that once he saw a person working in the assembly line light up a cigarette at the fag-end of the seven-minute break that was given to the workers. As soon as the siren was heard signalling the end of recess, he quickly stubbed it and went inside.
“Krishan Kumar who passed away last year was the engineering director. Every day, sitting in the engineering hall till around 8 to 8.30pm, Dr Kumar used to personally respond to letters sent by customers. This was a practice which was beyond us in those days," he added.
Maruti Suzuki has now asked for a much bigger plot in a relatively less inhabited corner of the Gurgaon district.
“A sentimental person will feel attached to the site since our journey started here," said Bhargava. “It is a matter of great pride that we have contributed immensely to the prosperity and growth of the people and the place. Though for the citizens, the problems faced are quite significant since it’s not easy to live around such a big manufacturing plant," he added.
In the developed world, many successful townships or cities have risen around the manufacturing capacities of automobile companies. Wolfsburg in North Germany owes its development as one of the major cities of Germany to the existence of Volkswagen, while Detroit in the US became a household name because of General Motors—the largest vehicle manufacturer in the country.
According to Jain of Lumax Industries, when his company partnered with Stanley Electric Corp. of Japan in the 1980s, the executive who came to evaluate the site could not believe that a Suzuki plant could be located in a village. “A few years ago, an executive from the same company was astonished at how a factory producing 7.5 lakh cars per annum could be located in the middle of a densely populated residential area," added Jain.
Around the world, automobile companies like Renault SA and Toyota Motor Corp. have developed their respective museums that document the evolution of the company and its products through different stages of history.
Autostadt was created in the 1990s by Volkswagen AG, just beside its factory in Wolfsburg in order to document the different stages in the history of the company.
According to Avik Chattopadhyay, something similar must be done with Maruti’s Gurgaon plant since the site is an important milestone in the story of modern India’s manufacturing capability. Half the plant can be used for vehicle testing and engine assembly line and the rest can be converted into a museum, he said. “One should not run away from history and Maruti’s story is worth documenting from an Indian perspective. It is an excellent example of how Indians can also be good at manufacturing vehicles if given a chance," said Chattopadhyay.
Maruti’s Gurgaon plant has managed to stand the test of time—what started with the capacity of just 50,000 cars per annum has increased to 7.5 lakh vehicles in 35 years. It is also a testament to the economic growth India has witnessed since the liberalization of 1991, as vehicle production and demand is sometimes the most accurate reflection of the health of an economy. India was nowhere on the global automotive landscape when Maruti started assembling pre-manufactured kits under the watch of a few good men in the early 1980s. The country’s domestic automobile industry is now the fourth largest in the world.
When former prime minister of India Indira Gandhi first set foot inside the Maruti’s Gurgaon plant to hand over the keys of the initial batch of Maruti 800s, she is reported to have said: “This small car has a very long story."
As Maruti scouts for a new home at a time when India is well on course to bag the tag of “small car manufacturer of the world", that story is all set to get longer and more interesting.