Strike Ends at India's Maruti Suzuki Car Group

June 17, 2011
Company estimated to have lost $93 million during strike.

Maruti Suzuki, India's largest passenger-car maker, on Friday said that an 11-day strike by 2,000 workers demanding recognition of a new union at a factory in the north of the country has ended.

Management agreed to reinstate 11 employees sacked during the protest, but refused to accede to the main demand for a new labor union, a company spokesman said.

"The strike has ended," the spokesman from Maruti Suzuki told AFP. "We have decided to reinstate workers sacked earlier and also taken a lenient view against them."

Production at the Manesar facility in the northern state of Harayana will resume on Saturday, he added.

The company is estimated to have lost nearly $93 million during the strike, which hit the production of about 12,600 cars.

The deadlock ended at midnight Thursday after Haryana state chief minister Bhupinder Singh Hooda met senior management and union leaders earlier in the day as the stoppage threatened to flare up into a wider industrial dispute.

The Japanese-controlled firm produces 1.2 million cars a year in India at Manesar and nearby Gurgaon.

Striking Workers Will Be Docked 33 Days' Pay

While management did not agree to the workers' new union, it has allowed labor representatives to sit on a governing council where issues can be discussed, the spokesman said.

The Maruti spokesman said striking workers will each be docked a total of 33 days' pay -- three days' pay for every working day lost.

According to Indian law, eight days' pay is normally cut from a worker's salary for each day of stoppage if a strike is deemed illegal.

Maruti declared the strike illegal, as no notice had been given.

The firm's shares rose as much as 3.69% to a day's high of 1,233.35 rupees on the Bombay Stock Exchange but fell back to 1,188, down 0.12%.

Strike Will Hit Diesel-Car Production

The strike is likely to impact delivery of diesel cars produced at the plant alongside some models for the export market, company chairman R.C. Bhargava said earlier.

One-fifth of the 350,000 cars produced each year by Maruti in Manesar are cheaper-to-run diesel models.

Analysts are likely to lower earning estimates for Maruti, fearing an impact on its profits for the financial year ending March 2012.

Mahantesh Sabarad, auto analyst of Fortune Equity Brokers, said the lack of resolution to the workers' key demand of recognition was an "issue of concern," potentially storing up problems for the future.

"The workers were coaxed and coerced into coming back to work by the management and the government," he added.

Maruti will now try to ramp up production in coming weeks to make up for the stoppage, analysts said.

Labor problems have previously hit production of automobile makers such as Hyundai Motor India and Honda Motorcycle and Scooter India, mainly due to issues such as low wages and poor working conditions.

Copyright Agence France-Presse, 2011

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