Maruti Suzuki: Competition From Outside And Resistance From Within Threaten The Dream Of The Indian Car

Tensions have boiled over at the Maruti Suzuki plant in Manesar, a city in the massive Delhi urban sprawl. On July 18, three thousand workers attacked the factory, killed a manager of the personnel office, destroyed machinery, and finally set fire to some of the buildings. Maruti Suzuki decided the following day to close the plant and temporarily halt production. The factory in Manesar, Maruti Suzuki’s most modern plant in India, was opened in partnership with the Indian government but is now wholly owned by the Japanese multinational since the government sold its share and no longer holds a stake in the venture.
The Indian-Japanese name is synonymous with the automobile industry in India. The Maruti Suzuki helped jumpstart the motorization of India, developing and offering affordable vehicles built to a high standard of quality. A vast market and growing middle class contributed to strong sales; the automaker has more than 10 million customers and commands more than 40% of the private automobile market, but success has not come without obstacles.
India’s largest automaker is squaring off against Honda, Toyota, and Ford, who have taken a substantial chunk of its market share in the last year. The determining factor is the slowdown in Maruti Suzuki’s factories at the end of 2011.     Union actions stopped production for 60 days, leaving the automaker behind by 65,000 vehicles. Strikes and controversy have once again brought attention to the company’s questionable labor policies, which have been challenged in the past for being particularly harsh on workers, and leaving no room for negotiation.
Workers without contracts and very low wages, hired in breach of Indian law, touched off the violence on July 18. Paid only about $120 per month, less than half the salary of a regular contract worker, the undocumented workers also have no access to labor union support. Their precarious existence, already on the edge of survival, has been plunged into desperate action by rising fuel and food costs. The towns and villages surrounding the factory have become a tinderbox, ready to explode.
The police are searching the area to find those responsible for the unrest and are patrolling the factory to maintain the peace. Burnt cars, breached gates, and broken windows are the evidence left behind by the violence. Unseen but equally damaging, however, are the unresolved causes of the outburst.