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Is Maruti Firing Workers to Cut Costs?
Demand for cars is slowly reducing. If this trend continues in to next year then profits and earnings will take hit. This will mean carmakers will be forced to reduce volumes and cut costs. Cast saving measures usually involves lay-offs and Maruti Suzuki's hard stand not to allow its workers to enter the plant without signing the good conduct bond will definitely reduce the number of workers at the plant.
Maruti Suzuki has said it would hire new permanent workers but has so far only hired 100 temporary workers. If the current situation continues Maruti Suzuki can easily hire just temporary workers for the time being and not hire permanent workers.
Although Maruti Suzuki has suffered losses due to the strike which started on Aug 29th, a reduction in permanent workers will help the carmaker in terms of costs over the long term. Moreover, even if does hire new permanent workers, their salaries will be lower than that of the current workers.
Several carmakers have already downgraded their sales projection for the financial year 2011-12. If the current down trend in car sales continues, industry insiders predict possible job cats in car plants. The current labour dispute in Maruti Suzuki's Manesar plant is being considered as just the beginning of several job cuts in the auto sector.
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