Maruti Begins Hiring Contract Workers Itself - Wall Street Journal (India)

By BY SANTANU CHOUDHURY NEW DELHI--Suzuki Motor Corp.'s Indian unit has begun screening and hiring its own contract workers after a riot at one of its factories last year killed a manager and injured around 100 other people in the worst industrial unrest in recent Indian history. R.C. Bhargava, chairman of Maruti Suzuki India Ltd., India's largest carmaker by sales, told The Wall Street Journal in an interview that it would no longer use outside companies to hire contract laborers, and would screen and hire all applicants itself. Maruti has also started creating its own security units for its factories, located in Manesar and Gurgaon in the northern state of Haryana, Mr. Bhargava said. Prakash Singh/Agence France-Presse/Getty Images An car assembly line at Maruti Suzuki's plant at Manesar. "The employment of people through contractors would end and we would be hiring our own people," he said recently. "In Manesar, that has been completed. In Gurgaon, now it [implementation] is under discussion." Mr. Bhargava said the company decided to hire its own contract workers because "we didn't like the idea of having people whom we hadn't selected and we didn't know what that guy was good for and what kind of a guy he was." Production at Maruti's Manesar plant was suspended for several days in July and much of August after hundreds of workers rioted, setting part of the factory on fire. The plant's human-resources manager was killed in the incident. The unrest sparked a nationwide debate about labor issues and Japanese manufacturing practices. A subsequent investigation led to the arrest of several workers. Maruti ultimately fired around a third of the 1,500 permanent workers at the Manesar plant, where it had also employed nearly 1,800 contract workers prior to the violence. Maruti's car sales plunged 41% in August from a year earlier. The Manesar plant produces the Swift and Dzire diesel cars, two of the company's best-selling vehicles. Maruti plans to start building a third factory in India, in western Gujarat state, in the current quarter, at a cost of around 40 billion rupees ($727 million), Mr. Bhargava said last month. The company hasn't said how many workers it would hire for the new factory. The carmaker plans to continue using contract workers because it wants the ability to more easily adjust its workforce according to sales volumes, Mr. Bhargava said. "We always need a certain percentage of the total workforce to be temporary because there is certain amount of flexibility required. The market demand as you see now fluctuates quite a lot. If you have permanent labor, what would you do? How do you adjust to the market?," he said. Maruti's domestic sales grew 4.4% to more than 1.05 million autos in the fiscal year ended March 31, while exports fell 5.5% to 120,388 units. Car sales in India are forecast to have declined in the previous fiscal year for the first time in a decade due to high ownership costs, rising fuel prices and a slowing economy. Mr. Bhargava said last month that Maruti's local car sales are expected to grow by 5%-7% this fiscal year. In India, contract workers are employed for fixed, relatively short periods of time and are generally paid lower wages than permanent workers, who are difficult to dismiss due to labor laws and are seen as less likely to cause trouble. Maruti has a combined total of around 9,500 workers at its two factories. Mr. Bhargava declined to reveal the numbers of contract and permanent workers, but analysts have said the company generally uses 4,000-4,500 contract workers at a given time. A contract worker for Maruti receives about 11,500 rupees ($209) a month, while a permanent worker initially gets about 12,500 rupees a month, S.Y. Siddiqui, who oversees Maruti's human resources division, said in July. However, permanent workers receive benefits such as health care, and their salary typically rises to 21,000-22,000 rupees a month after three years. A contract worker receives no such benefits and no such salary increase. Mr. Bhargava said in-house hiring of contract workers would raise labor costs marginally and slow the hiring process but would also benefit the workers, who wouldn't be required to pay commissions to labor contractors. "Contractors, you don't know what they are doing. What we pay them per worker and what they give to the worker, nobody knows," he said. "When we hire our own people, then we have a different way of paying them." The Haryana government deployed a large posse of police officers at the Manesar factory after the July violence. Most of them are now gone, Mr. Bhargava said. Maruti's security teams would initially include around 100 people combined, 25 of whom will be armed, the company said last year. Umesh Karne, an auto analyst at Mumbai-based Brics Securities Ltd., said hiring its own contract workers and creating its own security teams were "positive steps" for Maruti because it would have more control and "contract workers will also feel that they are part of the company." via Business - Google News http://news.google.com/news/url?sa=t&fd=R&usg=AFQjCNFep813BAdG3rrx4C4VTFEynuOHaA&url=http://online.wsj.com/article/SB10001424127887323646604578403920583815186.html

Put the internet to work for you. via Personal Recipe 2910127