India's top carmaker Maruti Suzuki said it would halt production at two plants on Friday as a bitter labour stand-off between the Japanese-controlled company and its employees escalates. Maruti locked out workers at its Manesar plant in northern India on August 29, accusing them of assembly line sabotage, and on Wednesday employees at the company's engine supplier began a sympathy strike, leading to a parts shortage.
"The Manesar plant and the nearby Gurgaon plant are both being shut on Friday because of the lack of availability of components," said a Maruti spokesman, who asked not to be named in line with company policy. He told AFP on Thursday it was not immediately known when the plants in Haryana state near the Indian capital would reopen, saying Maruti would have to "watch developments."
The South Asian nation is critical to Suzuki's fortunes as it is the Japanese company's biggest overseas market. The dispute comes as Maruti battles to boost its market share, which has shrunk to 45 percent from 55 percent in the past four years with global auto giants aggressively seeking to penetrate India's fast-expanding vehicle market. Maruti, 54.2 percent owned by Suzuki, also said 11 company supervisors travelling to work at the Manesar plant were attacked by locked-out workers on Thursday. "The workers boarded a bus and beat the supervisors with sticks," the Maruti spokesman said.
Tensions have been high for months at the Manesar plant, which employs around 2,000 staff, after Maruti refused to accept a new union in the place of the company's recognised workers' body. Maruti suffered $93 million in lost output in a 13-day strike in June. "Global investors are watching this very closely," Jagannadham Thunuguntla, head of research at New Delhi-based SMC Global Securities, told AFP. "India's low-cost manufacturing growth story is built upon labour stability." Suzuki Powertrain, where the workers began striking on Wednesday, supplies around 300,000 diesel engines a year to Maruti. Workers have also gone on strike at the factory of Suzuki Castings, part of Suzuki Powertrain. The Manesar workers have been locked out until they sign a "good conduct bond" - an assurance that they will not damage production, go slow or otherwise disrupt output. A spokesman for the unrecognised Maruti's workers' union has denied the company's allegations of sabotage.
New contract workers were brought in to help assemble cars at Manesar, but the company has been producing just under half of its normal daily capacity of 1,200 cars. By mid-week, only 116 of the 950-strong permanent workforce at the Manesar plant had signed the good conduct promise, Maruti said. Suzuki chairman Osamu Suzuki said last week the company would not back down in its demands for the workers to sign the pledge, saying "indiscipline is not tolerated not in Japan, not in India."
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