Toyota Kirloskar Motor Ltd may or may not be running its plant with contract workers and apprentices, the way the unions are alleging, but it may want to look at what fellow Japanese firm Suzuki did when faced with a similar labour unrest in 2000. Maruti Suzuki simply asked its vendors to lend it their workersalong with these workers, its own engineers and contract workers, Maruti managed to produce the same number of cars and even got the JD Power customer satisfaction award for that year, demonstrating that the full-time workers could, if need be, replaced without too much a problem.
Another Maruti lesson for Toyotas management is that good conduct agreements of the sort it wants workers to sign tend to get abusedunion leaders convince workers this is a ploy to take away their rights. In any case, since the good conduct agreement is just reiterating that workers will follow standing orderseveryday dos and donts that are agreed upon by the management, the unions and the labour commissionerwhy not just get it from the unions instead? In the case of Maruti, when the 2000 strike went on for too long, Prime Minister Atal Bihari Vajpayee suggested to Marutiinformallythat it would be tactical to get the undertaking from the unions instead of individual workers. Maruti did just that, and while other demands were negotiated, this is what really cooled things down.
That said, unions need to keep in mind todays different reality. Given the current slumppassenger car sales grew 1.7% in FY12, contracted 7% in FY13 and another 4.6% in April-February FY14managements are not in a position to give generous pay hikes. PAT margins for Hero MotoCorp fell from 9.46% in March 2013 to 7.66% in December 2013, and from 9.49% to 6.41% for Suzukithey rose from 16.46% to 18% for Bajaj Auto. Also, managements are simply not adding workers at the pace at which production is growing. In the case of Maruti, while production has risen 3.4 times over the last decade, the number of workers has risen just 2.5 times; for Bajaj Auto, production rose 76% between FY08 and FY12, while the number of employees fell a tenth. While Tamil Nadu has announced a policy of declaring automobiles as a public utility to prevent flash strikeshow the Ford agitation pans out will tell us whether the solution is workingthe problem is across industry. As a result, Crisil points out that