India's Maruti looks to rebuild as strike ends

The latest in a series of strikes at India's top car maker Maruti Suzuki came to an end on Friday, at a cost of $400 million in lost production and major damage to the group's reputation. Maruti, which is majority-owned by Japan's Suzuki Motor Corp, said the 13-day strike at its Manesar plant was called off after an agreement between workers, the company and the Haryana state government. Operations at the north India car plant will resume on Saturday, a spokesman told AFP. Maruti makes nearly half the cars sold in India but in recent months has seen a sharp fall in production due to the strikes, hitting its market share -- to the advantage of rivals such as Toyota. The latest strike came after a series of clashes between workers and management at Manesar since June, costing Maruti a total of at least 19.50 billion rupees ($400 million) in lost output. The unrest followed management refusals to recognise a new union as well as claims of sabotage on the production line and the assault of supervisors. Earlier this month, Maruti was forced to call in police to evict 1,500 workers who had taken over the factory. Manesar, which employs 2,000 workers, normally produces up to 1,200 of Maruti's top-selling Swift and A-Star hatchbacks and SX4 sedans daily. Fast-growing India is critical to the Japanese firm's fortunes and is its biggest foreign market. "Our first aim is to normalise production quickly as we need to meet customer orders," the Maruti spokesman said, adding that there was a backlog of more than 100,000 Swift cars. But analysts said the firm could still face an uphill task to regain market share. Mahantesh Sabarad, an analyst with Mumbai's Fortune Equity Brokers, said: "Even while production needs to be kept alive, Maruti needs to ensure that labour problems do not re-occur." Maruti plans to stave off future industrial action by creating a "grievance redressal committee" including representatives from the management and work force. An independent labour officer will also be a permanent member. The strikes could not have come at a worse time as auto makers boost production to meet increased demand for cars in the run-up to the Hindu festival of lights, Diwali, next week. During the strikes, Maruti sacked or suspended 94 workers for a range of offences including sabotaging cars and assaulting other employees. As part of the settlement it has decided to recall 64 of the workers. Another 30 dismissed for more serious offences will remain suspended, the company added. Analysts estimate that Maruti has lost nearly three to four percent of its market share in the first half of the current financial year, to 39 percent. Maruti has been further hit by a strong yen to the rupee, affecting margins as it makes payments for raw materials and dividends in the Japanese currency. Company shares rose nearly four percent to a day's high of 1,155 at the Bombay Stock Exchange after the announcement. Shares eventually closed up 1.53 percent. The strikes compounded a slump in sales of new cars in India, which has also hit other automakers, due to spiralling inflation, the increasing cost of fuel and a rise in the price of raw materials.