October 10, 2011 / 17:27 IST
Striking employees of Maruti Suzuki, India's biggest carmaker, have seized control of the Manesar factory hit by weeks of labour unrest, the company said on Monday, as a stand-off that has cost the firm over USD 150 million descended into violence.
Workers attacked managers and supervisors and damaged equipment at the plant, Maruti said, shutting down production for a third consecutive day as the company battles slowing demand in Asia's third-largest economy.
"The plant is effectively captive in the hands of striking workers who are bent upon violence," the company said in a statement, describing the situation at the factory as "grave."
Maruti has said it would not compromise with the workers who began their initial strike on Aug. 29 after refusing to sign a discipline agreement ordered by the company following accusations of workers deliberately sabotaging car production.
A spokesman for the Maruti Suzuki Employees Union (MSEU), the body co-ordinating the unrest that is not recognised by the company, was not reachable for comment on Monday. But the union has repeatedly denied sabotaging production.
"What we are demanding is that the casual workers should be taken back," MSEU executive member Sushil Kumar told the Press Trust of India on Saturday, referring to hundreds of part-time workers fired by Maruti during the unrest.
Maruti, 54.2% owned by Japan's Suzuki Motor, said 1,500 workers were inside the factory on Monday. The plant produces about 1,000 vehicles a day and the unrest has caused a production loss of 2,600 cars since Friday afternoon.
Supporting strikes by workers at other Suzuki-owned plants in India that supply parts to Maruti's second car factory have resulted in a total loss of production of about USD 22 million.
Maruti announced an agreement with striking workers last week to end a month-long strike that has already cost the automaker Rs 660 crore (USD 134 million) in lost output and contributed to a 21% slump in September sales.
The carmaker's total losses due to labour unrest this year stand at close to USD 250 million, following a 13-day strike by 800 workers in June at Manesar that crippled production and caused more than USD 90 million in lost output.
The continued unrest at Manesar comes as Indian carmakers reported a 1.8% drop in September sales, as rising interest rates and vehicle costs hurt demand in the world's second-fastest growing major auto market after China.
"The company cannot throw out mobs of people," a Maruti spokesman told Reuters. "The action has to come from the police and the authorities."
The strikes at the Manesar plant, which produces the popular Swift and A-Star hatchbacks, have also sparked unrest at Suzuki Powertrain India, which provides engines to Maruti. The unrest had reduced output at the plant to around 65% on Monday.
Gunshots were fired by a labour contractor at a Suzuki motorcycle factory after workers there also downed tools to support the Manesar action, a Maruti spokesman said.
Shares in the carmaker closed down 3.8% at Rs 1,071 (USD 21.79) on Monday, against a 2.2% rise in Mumbai's benchmark index.
Maruti shares have fallen nearly 24% in 2011, underperforming a nearly 20% fall in the broader market.
