Synopsis: Communication For Productivity
Letters written to some 7500 Workers / Managers /
Union Leaders, following a period of strike / Go slow / Murders (1979 -
1987), at Mumbai factory of Larsen & Toubro Ltd. This direct / open /
honest communication led to a remarkable atmosphere of trust between
Workers and Management, which, in turn, increased productivity at 3% per year
(ave).
|
31 Jan 1986
To:
KTL VS. KCL
KTL stands for Kirloskar
Tractor Limited, and KCL stands for Kirloskar Cummins
Limited. And, when I wrote
KTL Vs. KCL, my intention was not
to make it sound like "Australia Vs. India", but I do
like to read about corporate matches
(since you cannot see them on T.V.).
After
reading the enclosed articles, you may discover more mis-matches than I could - and if you
do, please write to me.
In KTL
article, I discovered mis-match between:
-
Size of
market Vs. licenced capacity
-
Installed
capacity Vs. actual production
-
Actual
production Vs. inventory level
-
Competitor's
price Vs. KTL's price
-
Competitor's
material cost (75%) Vs. KTL's material
cost (85%)
The
only item in which KTL scored over its competitors was "salaries and related expenses" which, in their
case, were only 7%, as
against 8% of
other reputed tractor manufacturers. (I have not
revealed this figure for L&T's
Powai Works).
But,
apparently' it did not help KTL - holding just one card of Ace. For
remaining alive, in a "dog-eat-dog"
type of competition, a company
needs, besides an "Ekka", several other cards of "Raja" and "Rani" and "Gulam". It is never enough to have just one "Ekka". And it seems
that this is what KCL (Kirloskar Cummins Limited) is also discovering:
-
share of the
diesel engine market (45%)
and
-
fast rising
employee productivity.
See
following table.
Year
|
No. of
employees
|
No.of
engines manufactured
|
Engine per
employee
|
1973-74
|
1,865
|
2,206
|
1.2
|
1983-84
|
1,865
|
6,400
|
3.4
|
Therefore,
rise in productivity = 28.3%
And, Arun Kirloskar says,, "we are, perhaps, the only diesel engine
manufacturing company which has not
raised prices for the past four
years, despite escalations in the prices
of basic inputs. Rather,
we have successfully absorbed
the increases in input prices by improving
productivity".
So, on one
hand, we have KCL which,
because of its high productivity (this is my firm belief), is able to
sell 22% of its production
abroad (including to U.S.A), and
on the other hand, we have KTL which finds it difficult to sell its tractors even
within India - with a 1.8% share of the market.
And, if the top Manager of the "most profitable company in the private sector in 1983"
(Economic Times) worries that,
"At
this rate, engineering companies,
such as KCL, may not see the 21st century",
What, may we
expect to happen to us?
