Shinzo Nakanishi, the 65-year-old managing director and chief executive officer (CEO) of Maruti Suzuki India Ltd (MSIL), spent the better part of last week visiting and apologising to injured colleagues across half a dozen hospitals in Gurgaon, Haryana.
“There have been labour troubles in Japan after the second World War. But I had never expected anything like this. What led to this violence, I do not know,” said Nakanishi, referring to the July 18 scuffle between workers and the management at the company’s Manesar unit in which a senior executive was killed and 93 injured.
With administrative offices and portions of shop-floor area damaged beyond repair, India’s largest car maker has declared an indefinite lock-out at the Manesar facility.
The latest worker-management stand-off, the fourth in the last one year, is costing the company losses of Rs 70 crore daily. Still, the veteran Suzuki executive stands firm: “We will not compromise on violence,” he says, adding this is the “worst labour unrest” he has seen in his 41-year career.
The 3,000-strong workforce has disappeared after the incident and union leaders are absconding. Besides, the morale of management executives working at the facility has taken a hit. “While we do want to resume operations at the earliest, we have to ensure the safety and security of our employees. That’s my top priority. Investigations have to be completed and the guilty arrested.”
While Nakanishi is not specific about whether he suspects “external influence” in creating trouble at Manesar, he rules out lapses in industrial relations. “We have experienced labour unrest in the past, but what occurred on Wednesday (July 18) is criminal. I did not see any shadow of external influence when we signed the settlement agreement in October last year. We acknowledged our workers’ demand for a new union and even helped them institute it. If there was outside influence, it’s our mistake that we couldn’t find out about it.”
The brass at Maruti Suzuki says wage negotiations have been on for three months and a final settlement was expected to be inked in three-four weeks. Besides, though Manesar has been a hotbed of labour unrest, operations at the units of Suzuki Powertain and Suzuki Motorcycles at Gurgaon have been mostly strife-free.
The three labour unrests at Manesar last year had resulted in revenue losses of around Rs 2,500 crore and knocked off five percentage points from the company’s share in the passenger vehicle sales in the domestic market.
“There have been sporadic instances of labour unrest at the Manesar unit and the company has been trying to establish a connect with the workers. But in a situation where there are external influences, there is not much the management can do," says Abdul Majeed, partner and leader (automotive practice), at accounting firm PricewaterhouseCoopers (PWC).
Nakanishi says the company had taken steps to improve relations with the workers at Manesar, “but perhaps it was not enough”. He is, however, resolute that the company will stay put with its plans to expand capacity at Manesar and said there is no plan to move out of the region.
This is not the first time Nakanishi steps in to directly steer Suzuki’s operations in India. The man who has played a significant role in the formative years of Maruti in the early 1980s came to be known in India only in the 1990s, when the government and Japanese auto giant Suzuki Motor Corp (SMC) waged a bruising battle for control of the joint venture.
Nakanishi has kept such a low profile, especially in India, that very few know he is related to Osamu Suzuki, CEO of SMC.
Soon after the dispute was resolved, he retreated into the shadows, only to emerge again towards the end of 2004, when misgivings gained ground between the two partners over fresh investments in the company. Nakanishi authored the new joint venture agreement between MSC and the government in early 2006.
In his long years with MSC, Nakanishi has served as the group’s key figure in markets like China, Indonesia, Hungary, Pakistan and East Asia. He was appointed MD and CEO at Maruti Suzuki in December 2007 and in 2010, his tenure was extended for three years. He is not known to be a hands-on CEO, which is in sharp contrast to Jagdish Khattar, the former Maruti managing director, who has enjoyed excellent relations with dealers and component suppliers.
But colleagues who have worked closely with Nakanishi say he delegates responsibilities and is the best man to head Suzuki’s operations in the country. Those who follow the way the company handled the latest crisis won’t disagree. "The company has managed the situation reasonably well,” says PWC’s Majeed.