Behind the huge production expansion; Maruti Suzuki

A riot at Manesar plant of Maruti Suzuki India happened on 18th July, and it killed two workers and wounded hundreds. It’s said that it was a trigger that Indian managers used discriminatory remarks to workers belonging to the lower level of the caste system. Resistants went on a rampage and set fire to a part of the plant. The plant was closed. It’s unclear when it’ll be able to resume an operation.


Passenger cars of Maruti Suzuki accounted for more than 50% in India market until 2009. But other auto makers aimed at raising their presences in India market, so the competitive race has come to be fierce. In 2010, the share of passenger cars of Maruti Suzuki became below 50%.


However, Suzuki announced that it planned to pull up its production figures from a million to 1.25 millions in 2010. It raised the figure to 1.5 million in 2011. And June in 2012, it unveiled that it would build a new plant in Gujarat and the total production figure would be 2 million in a few years. Hence Maruti Suzuki has sought a rapid production expansion due to preserve the share in India.


Meanwhile, strikes have happened frequently recently. The plant was forced to suspend its operation for two weeks on June last year thanks to strike. The labor agency in Haryana state prosecuted Maruti Suzuki on the labor problem because it had not carried out an agreement content which it dealt with workers last October to make up a complaint saving committee and a labor benefit committee.


40% of workforce in Maruti Suzuki is said to be temporary workers. Their wages seem to be less than 300 thousands a year. Their complaints have swollen.


On the other hand, Suzuki in Japan stands in tough position. Suzuki intended to bring up Sagara Plant in Shizuoka Prefecture to be the biggest plant in Japan. After 3/11 disaster, it had to change the plan because Sagara is only 20 km from Hamaoka Nuclear Power Plant. If a big earthquake and tsunami attacked the Nuclear Plant, the Sagara Suzuki Plant could not run its operation anymore. And prolonged yen appreciation made Suzuki increase dependence on overseas operations. Therefore Suzuki was eager to keep the top share position in India.


Prosperity doesn’t continue on any fields. The loss of the suspended Manesar Plant is likely to reach 1.1 billion yen a day. Suzuki, which has the strength on low price small cars, is facing a turning point on its management.