Striking Maruti staff add defects to cars

Disgruntled workers at Maruti’s Manesar (Haryana) plant have found a unique way of disrupting work to drive home their demands — create serious quality defects in cars so that they fail the mandatory VI (vehicle inspection) quality test and are sent to the holdup area within the factory instead of being shipped out to dealers.

In the last few weeks, workers — with average ages of 27-28 years — are known to have done crazy things like cutting wire harnesses from cars fresh off the assembly line, removing or loosening hinges on car doors so that sometimes, entire doors have fallen off during quality checks.

Other such instances of deliberate sabotage include denting a freshly made car so it would need repairs, using parts specific to one model on another model, etc.

One day, last week, only 96 cars rolled out after VI against an average daily production target of over 1,200.

Perhaps realising that this could snowball into a serious product quality issue, Maruti Suzuki India has sealed the factory premises on Monday morning.

This is the third time in as many months that production has been suspended at Manesar, which produces Swift, A-Star and SX4 models.

Maruti insiders say the workers have been indulging in a “go slow” for several weeks now and that production was anyway down, though the management sealed the factory only on Monday.

Meanwhile, production at Maruti’s second facility, in Gurgaon, has also had to be curtailed this month due to a slowdown in overall demand.

A parts supplier, who is a single source tier I vendor for many Maruti models, said production of Alto (F8 and K10 together) was 36,000 units in July but is expected to be just 26,000 units in August. Alto is the largest selling car in India.

Similarly, Ritz is down to 6,900 units (8,000 units) this month, whereas WagonR is down to 9,000 units (15,000 units). Production of other models has also been slashed on demand decline.

“Maruti sells one in two cars in this country. When it cuts production, whether due to labour issues or due to rising inventory, it means half the passenger car industry is down. Last year, the company grew 28-30% but at the current rate of production cuts, our optimistic view is of 5-6% growth. This will certainly hurt our business,” said one parts’ supplier.

Other car makers have also been forced to scale down production.

Tata Motors has resumed Nano production at Sanand “after a temporary suspension for about a fortnight. This was done for maintenance and to rationalise and align inventory,” said a vendor.

Indeed, going by vendors, only about 100 Nano cars a day are being made here against an installed capacity of 800 a day and the company has given them no indication on when production would be raised.

Even production of other Tata cars such as Indica, Vista and Indigo is down.

According to the company’s vendors, the combined production of all these cars is expected to be down in September and October to 11,500 and 13,300 units. It could rise to 15,000 in November before dipping again to 12,000 in December.   

Between them, Maruti and Tata account for a lion’s share of the passenger car market and production cuts at their plants impacts the entire supply chain.

According to analysts, capacity utilisation of car makers in general is expected to decline 6% in the next two years even as many among them add capacities.

For one, Credit Suisse Equity Research’s Jatin Chawla and Akshay Saxena see a 30% capacity expansion in the next two years.