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Wednesday, August 1, 2012

Beyond Manesar:Of cars,shampoos and ipads

The manufacturing facility at Manesar,Gurgaon belonging to Suzuki motor company of Japan is one which would put Americans,Europeans and Japanese to shame.With an installed capacity of 300,000 vehicles along with an engine production unit and a sea of ancillary manufacturing facilities;it is a perfect example of Japanese mass production facility.However on 18th July 2012,this facility rolled out something other than cars,something which would take the shame away from those Europeans,Americans and Japanese and put it back on the face of  Indians:it rolled out dead and injured bodies,a venom of anger and facts which were for so long being conveniently ignored by the political and  industrial class and bureaucrats alike

While the exact reason for the violence at Manesar plant on that dreaded day is yet to be ascertained.One thing is sure,that there was a general pent up anger among the workers for the inadequate compensation that they were being offered.Workers at Manesar facility were made to work for 9 hour shifts with just two 7.5 minutes break,which were timed to perfection and paid a motley Rs 6000 for this.Apart from this  they were denied medical and other facilities in case of accident and mishaps

The proponents of free market economy (I am a very strong believer in free markets too) along with the  so called active press of this country have put the blame on Japanese management and pointed out the fact that as markets become more free and government loosens its hold over the industry,such incidents are bound to happen.We are reminded of Britain in late 19th century when it too was faced with the dilema of balancing rights of industrialists and workers alike.So is this debate going to lead to preferred path of socialism..NO

While some problems pointed out above are certainly true but we must remember that free market economies cannot be traded for slavery and rampant debauchery of the fundamental rights of poor.Even Adam Smith,the founder of invisible hand theory believed that the state must ensure that sense of justice prevails in society to prevent free markets to be reduced to crony capitalism.

While most people seem to think that what happened at Manesar is a one off incident ,the truth is the unrest is seeping ,nay throbbing in each nook and corner of our economy.I happened to intern with a UK based FMCG player having a prominent presence in India.The conditions there were even more deplorable.Workers were made to work for 12 hour shifts without payment of overtime.Only one set of chemical masks were given to workers working in a factory whose air was intertwined with deadly chemicals.The plant had even done away with the safety officers.The workers "were kept under control" by a team of labor contractors (which was a decent name given by company officials for local thugs) and greasing the palms of concerned government officials.Similarly another Indian auto major with whom I was associated with for some time had a similar policy.Apprentices were brought from across the state and made to work on a salary which was one fourth of a regular workers salary.Further they were not given any medical facilities.Workers who got injured while working (including severe cases ranging from amputation to blindness) had to bear their own costs.Any worker willing to quit was threatened with the fact that the HR would ensure that apprenticeship would never be awarded by any organisation.While these might look gory facts but we must accept them or else it is impossible to come up with a solution

The problem lies with the fact that for long our policy makers have been toying with the idea that low cost production of goods and services is the solution to our economic woes and economic and social upliftment of poor.As numerous examples in economic history of world would prove,sustainable economic development is generated by ensuring a spirit of creativity, entrepreneurship and risk taking ability in society.Any economy founded on basis of low cost theory is bound to fail because sooner or later the workers (blue or white collared) are going to demand a higher pay and at this point the production of goods and services would merely be transferred to some other low cost global locations  by the capitalists of world.China the most prominent beneficary from low cost theory is already facing increased pressure and locals demand higher wages and unrest in economy increases.Closer home our low cost BPO's are already facing heat as our south eastern neighbours start competing with us.

The solution to the problem lies with government and enterprising people making active efforts to move up the value chain.We need to invest a large amount of money at R &D .Government on its part can ensure availability of capital for R&D purposes.This can be done by easing regulation on R&D loans and ensuring less government interference in such matters.It must be clear to us that free markets would force industrialists to innovation only when state tools like police,laws and courts start taking a more neutral approach.When this happens and labour rates climb, industries would automatically take refuge in innovation provided capital is available.Also we can toy with the idea of establishing labor futures on lines of some western countries and let free markets determine wage rates rather than babus with their hands greased with 500 rupee notes deciding that

If above is not implemented,the day is not far when Manesar would become a rule rather than exception.The first half of 20th century belonged to freedom fighters ,fighting against oppression of British rule.The first half of 21st century could belong to freedom fighter,fighting against systematic corruption and police of state trying to make slaves of humans.If we don't open our eyes now a systematic failure of Indian democracy and free markets is just around the corner


  1. From above - "the idea that low cost production of goods and services is the solution to our economic woes and economic and social upliftment of poor.As numerous examples in economic history of world would prove,sustainable economic development is generated by ensuring a spirit of creativity, entrepreneurship and risk taking ability in society." - great analysis. Maybe the govt also needs to implement patents and copyright policies more stringently.
    Great article !

    1. @ashustosh ..thanks for the appreciation..hopefully some sensible soul in GoI (if such a thing exists) reads this too :P

  2. itz good to knw dat yu have social apathy n concern fr the daily wagerz . cool

  3. Well..I completely agree with what u deliberated on and adding to the fact that our labor laws are pretty strong and can be easily enforced depending on the facts and circumstances..The only gap lies in the awareness which the people working in the plant sections are not provided with. The sheer violation of minimum wages act, factory act and other labor statutes can be easily studied in plant environment. The resolution could be that awareness programs for people working in plants should be done and that should be the inbound and inherent duty of management and the government.Had things been done in this way then such volcano of anger wouldnt have to be faced by Maruti. And the companies following the Japanese culture still would likely to face such situation in the near future coz people working in plants arent japanese buT INDIAN.