Auto makers bet big on robots as frequent labour stirs hit output

Auto makers bet big on robots as frequent labour stirs hit output

Frequent labour disputes have taken a toll on production and sales for most major players.

In August-September last year,India’s largest carmaker,Maruti Suzuki,found itself in a particularly tough spot. Around 1.5 lakh customers were awaiting delivery of the Swift and Dzire,two of its most popular products,but the company was hardly able to produce them. A violent clash with workers at its plant in Manesar outside Delhi in July led operations to be shut for a month and 500 workers to be fired,and even after restarting operations by mid-August with a few workers,the initial output was still very low. Maruti,which sells two out of every five cars in India,not only risked losing revenue but market share and future brand loyalty to the hungry competition.

Desperate to get back on track,Maruti then turned to robots. Just a year before in September 2011,it had set up a new fully automated weld line at the Manesar plant,which meant that even if it did not have enough workers to man other key functions like the assembly line,paint shop and quality checks,it could still,however,run the weld line without interruptions. Thus,it decided to make only the car bodies for the Swift and Dzire at Manesar and then send them to its other plant in Gurgaon for the final assembly.

A car production line is typically divided into three sub-lines — a weld line,followed by a paint shop and a final assembly line. “The assembly line typically needs the most number of workers. At our newest line in Manesar,the weld line is 100% automated,while the paint shop has about 70% automated. Customers are demanding better quality products today and higher automation helps in maintaining consistent quality. Wherever there is mass production,automation is cost-effective,” a Maruti official told FE,while requesting anonymity.

Maruti may be the best-known example,but it is hardly alone.


Robots are increasingly emerging as saviours for manufacturers as frequent cases of labour disputes across the country take a toll on production and sales for most major players. While increased automation also helps improve product quality levels in a maturing market,its role as a de-risking measure that will reduce the dependence on workers in labour-intensive industries has now gained larger prominence. Other car makers are going the same way.

At Tata Motors,automation levels at its Pune plant when the Indica was first made in 1998-99 was around 35-40%,but today they are up to 65- 70%. Even at Hyundai’s plant near Chennai,automation at the weld line and also the paint shop is today at 100%,while for the assembly shop its at 10% – Hyundai claims it has the highest level of automation among its peers. T Sarangarajan,vice-president (production) at Hyundai Motors India,said,“Automation is used to augment human effort while improving quality. Our efforts are to harness human intelligence and use automation in areas where the jobs are mundane,repetitive,need high precision which cannot be achieved even with a highly skilled worker or there is a health-related risk. For example,in the body shop,robots are used for high-precision welding. Welding is a difficult task to do. The weight of the welding gun can at times go beyond 10 kg.” He added,“Using robots minimises exposure of the worker to such hazards while ensuring precise welding,which culminates into greater stability for the end product. Robots also help reduce errors in complex handling of multiple parts. In the future,we may introduce automation in material handling activities and increase automation in the assembly shop with the help of robots.”

Incidents of full-blown strikes may have been lower this year,but there has been a sharp rise in worker disputes across many high-profile manufacturing firms in the past few months. The auto sector was the most hit. Apart from the violence at Maruti Suzuki’s Manesar plant last year,disputes of varied intensity have been seen in other players like Honda Motorcycle (Manesar,January 2013),General Motors (Halol,May 2011),Hero MotoCorp (Gurgaon,Mar 2013),Hyundai (Chennai,October 2012),Mahindra (Nashik,March 2013),Suzuki Motorcycle (Gurgaon,May 2013) and more recently at Bajaj Auto’s Chakan plant. The reasons for the disputes have ranged from recognition of a new union and wage hikes to demands for reinstatement of suspended workers.

Industry experts said that though automation proves expensive,as each robot is priced at Rs 2-6 crore,the one-time cost is seen as a safer bet than the impact that a long-drawn strike can have on the financials of a company as workers take it hostage. Puneet Gupta,principal analyst at IHS Automotive,said that after last year’s Maruti incident,companies are now focusing more on permanent manpower who are expected to be more trustworthy. “Companies are going back to the basics as the learnings from labour violence is abound. The attitude of India as a low-cost labour destination needs to change as the average salaries go up. It should instead be seen as a large home market and not a sweat shop,but political interference is also an issue in unionism,” he said.

Some firms have also tried to shift production to different locations when under pressure from labour strikes/disputes in order to protect volumes. Maruti’s plan to set up a 2-million-unit mega facility in Gujarat starting 2015-16 is believed to be a similar bet,while Bajaj has also shifted part of its Pulsar bike production to its Aurangabad plant after workers at its Chakan facility stopped work demanding a pay rise. But these solutions are only temporary in nature,say industry executives and analysts. “Labour issues are one of the barriers to auto growth but if you have to be present in India,you have to somehow account for it. Gone are the times when small labour trouble did not matter in your financial performance. In today’s competitive times,a production stoppage for even a few days shows when the numbers come in at the end of the month. Even if you shift base for a brief period,you cannot avoid these problems,” Gupta from IHS said.