Hi Friends,
                                              Even as I launch this today ( my 80th Birthday ), I realize that there is yet so much to say and do.
                                                  There is just no time to look back, no time to wonder,"Will anyone read these pages?"
                                       With regards,
                                       Hemen Parekh
                                       27 June 2013

Wednesday, 28 January 1987

SUN RISES IN THE WEST ? ( PART VII )

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).


28 Jan 1987

To:
Dear Friends

SUN RISES IN THE WEST  ? NO -IN   THE MIDDLE EAST !                     
(Part VII)

Perhaps you  know that the biggest  share-holders (therefore, owners ?) of L&T are the Financial Institutions like,

-    UTI (Unit Trust of India)
-    LIC (Life Insurance Corporation)
-    etc., etc.

Between  them, I  believe,  they hold  more than  35%  of  L&T shares and  they nominate members on our  Board of Directors. The Board  takes policy-decisions and  guides  the destiny of the company.

Now, if  bks (Bharatiya Kamgar Sena)  were to be  the largest share-holder  of L&T,  what  kind of  policy-decisions  would they take with respect to L&T's   

-    Future operations  ?
-    Current Operations ?
I do not know !
I will not even guess       !!

But I do know about a  large trade-union federation (like our INTUCAITUC, etc.) of Israel  and the kind  of decision it is taking in a company it OWNS. !!

The Federation                      :      HISTADRUT
Membership                          :      12 lakhs workers
Group of Companies        :      KOOR INDUSTRIES
"owned" by this Union

KOOR SIZE :
KOOR  is the  largest manufacturing  industry in  the Middle-East, with 250 subsidiaries and offices in 40 countires.

           1985 Revenue            :      Rs. 3120.00  Crores           
1985 Profit             :      Rs.   22.75  Crores

KOOR PRODUCTS :            
Ammunition/Mortars           
Electronic Products           
Antibiotic Drugs           
Mayonnaise (like butter)           
Pilotless Airplanes !

KOOR COMPENSATION :              
·     20% higher than other  Israel companies             
·     One month bonus

KOOR WELFARE          

1.  Subsidised meal
2.  Discount consumer co-operative stores
3.  Loans (to members) for, child care college tuition

KOOR ACTIONS :

When KOOR's  profitability started  going down, what  did the owner-Union do ?

They  did  the  same   thing  that  capitalist-management  do anywhere else in the World !

They  hired  a  professional  (M.B.A.  -  Business  graduate) Manager -  Mr. MEIR  AMIT to  set things  right !   AMIT took following actions,  fully supported by  the Top  Management -sorry. Top Union !                         

1.  Closed money-losing motor-factory.
2.  Cement Factory     
(a)—Reduced manpower from 900 to  600 (33% less)    
(b)  Increased production from 300,000  Tons to 700,000 Tons ( + 233%)
3.  Added new products in  -   
(a)  electronics     (b)  metals     (c)  chemicals
4.  Tripled (3 times) employment in 9 years's time.
5.  Located  new-plants in unpopulated  parts of Israel
6.  What  happened at  the  Subsidiary companies of  KOOR ?

Name of Subsidiary : Company
TAD IRAN
Munition (Bullets/ Bombs)
Electronic Products
Sale                      :
1983 : Rs.l66.4 Crores 1985 : RS.102.7      "
1985:      Rs. 742.3 crores

1980-1982 : + 20 %
1983-1985 : + 5 %
Lay-off 20 % 2000 workers
Lay-off 8% of 12600 workers



KOOR PHILOSOPHY :

1.  President AMIT said,

"I  am  not a  Welfare  department  of  HISTADRUT"  (the Labour Union who is the
owner of KOOR).

2.  When Union-leaders objected to  manpower reduction, AMIT replied,

"I am  a  good socialist,  and I  am in  favour  of even (uniform) spread of wealth.  But 
first you have to have something  to  spread  !   To  spread   "nothing" evenly
(uniformly) is no-big deal".

3.  Next President GAVISH said,

"We  are in  a business  that must  make  profit.  First comes profit, then welfare".

4.  Not to be left out. Chairman bluementhal adds,

"For us  Profit-making is  the measuring-rod  that tells us whether we are on the right track".

"  Our main aim  is to create jobs.  To do that we have  to survive  .in   the  fre
market. Jobs should take precedence over earnings".

And because Union is the  sole owner of KOOR, you would think that   they  will   announce a big dividend, for the shareholders (that is, for  themselves).  Afterall, who is
to stop them ?

No way !

KOOR management's (I mean Union's) policy is -                  
NO DIVIDENDS - NEVER  !

Typical case of

"When a  lover gets  married and  becomes a  husband, he ceases to be a lover '."

Moral of the story  (for the Government of India ?)

Do not  be in a hurry  to put a  worker on  the Board of Directors.

Let  "Worker-participation-in-Management" begin where it should - on the shop-floor.

H. C. PAREKH

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