When CPI(M) leader Gurudas Dasgupta went to ask Industry Minister Manohar Joshi to intervene in the labour standoff at Maruti Udyog last week, he refused to do so. Joshi deserves to congratulated for not allowing the issue to become politicised. As he pointed out, the company - which is half-owned by the government - was a board-managed one and managing director Jagdish Khattar was quite capable of handling things. Nor did the minister change his stance when, to politicise matters, Maruti's unions drove down in scores of buses from Delhi's Rajghat to Parliament Street, shouting against ``management indifference''. The pressure on the minister to intervene is certain to get stronger in the surcharged atmosphere following the death of two workers at the Maruti factory earlier this week, and the attempts of the unions to play it up. In the case of the 56-year-old Chander Bhan who had a heart condition, for instance, it is alleged he died since he was forced to stay on in the factory for a week. Maruti's Khattar however pointed out that, it wasn't just Chander Bhan but over 500 workers who wished to stay on at the factory as they feared for their lives at the hands of the agitating trade unions - the late Chander Bhan, ironically, did not join even the original tool-down strike called for by the very same unions who are now trying to make an issue of his death. But before Joshi's colleagues get him to intervene, a few points need to be raised. According to figures given by Maruti's management to the workers, Maruti is one of the highest-paying companies in the auto sector. Compared to an average monthly wage (including incentives) of around Rs 23,000 for Maruti's workers, its competitors such as Hyundai, Telco and Ford all pay anywhere in the region of Rs 9,000 to 12,000. Maruti's workers will argue that they are not to blame for this. But that is just the point. If Maruti is to compete in a market where margins are wafer thin - prices of the best-selling M800 were cut from Rs 1,23,000 in 1995-96 to Rs 1,19,600 in June this year to keep off the competition - it can't afford to have a labour cost of Rs 2,700 per car while Hyundai pays just Rs 1,600. Add to this the fact that companies like Hyundai produce and sell cars where the margins are much higher, while Maruti's producing mainly bargain-basement models - profits on the M800 are believed to be well under Rs 10,000 per car - and you have a situation ripe for disaster. Maruti's profits are down from Rs 550 crore a few years ago to Rs 300 crore last year, and are likely to drop to under a hundred this year with the new expenditure and depreciation that Maruti has had to undertake for its new models. With the workers wanting their total packages to almost double, this under-100 crore profit will be cut to around 50 crore by March 2001, and most certainly a loss the year after. A point often glossed over in the surcharged atmosphere is that while the unions are asking for productivity-linked wages, they're not quite stating the productivity levels they have in mind, nor the fact that in the past their wages have been far higher than the increases they delivered in terms of productivity. In the last decade, for instance, productivity improvements were around 36 per cent while wages rose by a little over 10 times - none of this, of course, mattered when Maruti was a monopolist, and could pass all this on to the consumer. Similarly, while the unions are offering just a 2 per cent productivity hike - they want incentive payments for any additional production beyond this - this is way below the 4 per cent hike Maruti has been getting over the past 4 years anyway. Another issue Joshi would be well-advised to highlight is what other auto firms are doing. Bajaj Auto, according to a recent interview of Rahul Bajaj, produced one million vehicles with 21,000 people eight years ago, is today producing 1.5 million with 17,000 workers, and plans to produce 3 million vehicles with just 12,000 workers in another three to four years. Contrast this with Maruti, where production rose from 1.23 lakh cars in 1990-91 to 4.07 lakh last year, but the number of workers also rose from 3,945 to 5,848 - once again a sign that, thanks to the quasi-public sector nature of Maruti, it hasn't been run along purely professional lines so far. Clearly all of this needs to be changed if Maruti is to remain viable. For this to happen, all issues such as those relating not just to labour, but even technology, marketing and vendor development will have to be decided by Maruti's board alone, instead of by politicians and bureaucrats as has been the case over the past few years. At one level, that's probably why Joshi's decided to let Maruti's management deal with the issue as best they can - according to Khattar, around 1,500 of its 5,848 employees have already joined work. Meanwhile, Maruti, given how much more cost-efficient its competitors are and the increasing levels of inter-firm co-operation in the auto industry, may find it more economical to get the likes of Hyundai and Ford to produce some of its models!Given Maruti's high wage structure, Joshi has been wise to keep away from its union troubles
