Reports of firm moving out of Manesar are complete fiction, says Chairman R.C. Bhargava
Maruti Suzuki India Ltd has announced an indefinite lockout at their plant at Manesar in Haryana, after a general manager was killed and several others were injured in a violent confrontation between workers and the management on Thursday.
The company ruled out importing cars to meet the domestic demand and reiterated its commitment to its Manesar facility in the backdrop of persistent rumours that Maruti would shut down the facility once its plant in Gujarat was complete.
“Reports of Maruti moving out of Manesar are complete fiction,” said Chairman, R.C. Bhargava at a press conference. “We cannot further risk the lives, safety and health of our managers, supervisors and workers … for this reason we are not in a position to resume production until an investigation is complete.”
Mr. Bhargava declined to provide a time frame for the investigation or provide estimates for the monetary losses caused by the lockdown, but said the company would try to shift production to its plant at Gurgaon.
The Manesar facility has an annual capacity of about 5,50,000 cars and accounts for about a third of Maruti’s total production. The facility produces almost all of its diesel cars and all versions of the best selling Maruti Swift, Swift Dzire, SX4 sedan and A Star hatchback. Last year, analysts estimated that labour troubles at the facility had cost the company about $500 million in lost production.
“It is too early to arrive at a definite figure, but if the lockdown continues for a longer period without any alternative plan, the loss could be high,” said Abdul Majid, a partner at Price Waterhouse. “If they manage to shift production to another plant, the losses could come down significantly.”
Mr. Bhargava described Thursday’s incident as an “absolutely unforeseen event.” “No outstanding issues from previous strikes were left unresolved,” he said and dismissed suggestions that prolonged wage settlement negotiations could have contributed to unrest at the plant.
While the police have arrested 91 workers in connection with Thursday’s incident, nearly 3,000 workers have gone underground fearing arrest, making it impossible to corroborate the claims of Maruti’s management. A statement by the union accused the management of instigating the violence. Labour activists in touch with workers say relations between workers and the management have been under strain for some time.