Maruti Suzuki India’s Manesar assembly plant in new New Delhi has been shut down following a worker riot that left one manager dead and nearly 100 executives wounded.
Worker riot closes plant
The production halt on July 18 has kept about 3,000 workers home for five days at the time of this writing, as an investigation into the matter continues.
Maruti Suzuki said in an email Saturday:
“Following the incidents of violence and arson at the Manesar facility, the management believes that if employees are asked to report for work at the facility, their lives will be endangered.”
Worker dispute turns deadly
The riot began when a worker got into a physical scuffle with one of the managers. Workers have reported that the manager used a caste-based slur against he worker, although management denies it. In the wake of the fight, union representatives stepped in, blocking management from enacting disciplinary measures. Executives were then blocked from leaving the plant and were later attacked by workers when negotiations broke down. Some parts of the plant were set on fire as angry workers ransacked management offices.
Worker/management conflicts are common in the nation, but they rarely escalate to this degree. A human resources manager, Awanish Kumar Dev, was killed in the violent riot.
Investigation and arrests
Police continue to investigate the incident. One the day after the riot, Indian authorities said that all 3,000 workers were to be charged with attempted murder. However, other reports since that time say that just under 100 workers have been arrested.
Huge losses for Maruti/Suzuki
Maruti says it is losing $9.1 million every day that it remains closed. It also said it has no idea when it will be able to resume operations.
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Japanese automaker Suzuki, which has the controlling shares in Maruti, will also feel the pangs of the shutdown. According to Wall Street Journal, Suzuki’s operations in India amounts to nearly half of all its production outside of Japan. It did have plans to expand further into the country, but those plans are now uncertain.
Kenichi Ayukawa, a managing officer for Suzuki, referred to its investment plans in India:
“We can’t comment yet on whether we would slam the brake.”
Diesel customers may look elsewhere
Diesel cars are far more popular in Europe and Asia than they are in the U.S. The Manesar plant plant made Suzuki’s best-selling diesel models, the Swift hatchback and the Swift Dzire sedan.
Umesh Karne, an analyst at BRICS Securities Ltd. in Mumbai, said the event could spell long-term trouble for Maruti.
“There’s big demand for diesel vehicles and most of Maruti’s diesel models are made here. This may also change customer perception as this is happening regularly and customers may avoid booking and waiting for Maruti cars.”