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).
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16 Dec 1979
To:
Dear friends
THE
NIGHTMARE YEAR
The year 1979 is drawing to a close.
It has been
a bad year so far. What little is left does not appear all that cheerful. The future looks as bleak
as a Hindi film does around interval! (except that in the
case of a Hindi film, your eight-year old can
predict 'The
HAPPY End' rather accurately !)
We have seen
some bad years before.
What is so special about
1979?
FIRST:
The
Management and the Union signed
a 4-year
Agreement in January 1979, that gave
an average wage-rise of over Rs 200 per month
to the workmen, resulting in a
recurring annual expenditure of
Rs 125 lakhs. Then
there was the one-time lump sum
payment of Rs 90 lakhs.
Now there
is nothing basically 'wrong' in such a big
wage-increase, if it were to be neutralised by a
corresponding improvement in
the labour-productivity as incorporated in the Agreement. Not only
labour-productivity remained at the same level throughout the year, it
went down in some shops !!
SECOND
The labour-cost further kept on rising throughout the year. The maximum DA
which was Rs 1145 in January rose
to Rs 1305 in November - a rise
of Rs 160 so far.'
D.A. rise alone has cost the Company around
Rs 90 lakhs during the course of the year.
THIRD:
Most of the
raw materials and components
are costing us today,
between 25% to 50% more than what these cost
us 11 months ago. Shortages
of raw materials caused
loss of production and
termination of—'Temporaries'
.—And—this—could happen
again and again !!
FOURTH:
A company needs borrowed money to
run the business. When labour-cost and materials-cost go up sharply, we
need more money. And the borrowed money
itself has become
more 'expensive '
because banks increased the rates of interest.
How bad can
one get?
FIFTH :
Most of our
business is a 'Fixed
price' business.
Today, we are executing orders
which were booked by us
12/18 months ago at 'firm prices'.
With all costs rising
sharply, our 'margins ' are shrinking fast.
This is what
makes 1979 a bad year.
SIXTH;
Maharashtra is going through one of
the worst POWER CUTS, ranging
from 35% to 55% (and 100% for 5 days in May 1979). We have survived so far, on our own generated power - which costs us 6 times as
much. But if diesel
supplies go down further, (current stock
is just enough for 7 days) the first to
be affected would be the Company's transport.
FINALLY:
1979 began
with all outstanding issues between the
Union and the Management peacefully settled.
7,000 people of Powai paid a heavy price in 1977 and thought that the worst year in L&T's history had come
and gone.
Apparently
some people have thought otherwise and
would like to make 1979 THE WORST
YEAR I The 'Go-slow' agitation is crowning the nightmare of 1979.
At a time
when we should all be unitedly fighting the 'evil'
forces of the ECONOMY, through higher production, do we have to make matters worse, by inflicting wounds on ourselves by resorting to 'Go-slow'?
When you go
home today, ask your eight-year old what
he thinks 1980 would be like - for us and for our families.
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