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

Thursday, 22 January 1987

SUN RISES IN THE WEST

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).

22 Jan 1987

To:
Dear Friends

SUN RISES IN THE WEST

(Part VI)

The imaginary dateline that divides "To-day" from "Tomorrow" passes in the Pacific Ocean.

Look-up any good map  of the world.  You will  find that when the  island of  TONGA  is  getting  ready to  welcome  Monday morning, a few hundred Kilometers  in the East, the residents of   SAMOA  island  decide   to  lie   in  bed   for  another half-an-hour because it is a beautiful Sunday morning!

So that  is as  far west  as the sun  can  rise I No farther. For our purpose,  let the sun, this time  rise in the city of detroit - the car-capital of America.

Some 30 years  ago (in 1956), I spent  one summer-vacation in Detroit,  working  as  a  draftsman,   in  a  company  called Massay-Ferguson Ltd.   It was a temporary  job. Many American companies  hire college-students  for a  short period  of 2/3 months  during their  summer vacation  and I  was one  of the lucky ones.

But perhaps it. was more than mere luck.

From 1948 to 1955, for nearly  7 years, I had spent all of my vacations in the  repair-garage of my brother  in Rajkot.  He was a dealer of  Ferguson tractors and  35 years ago, farmers did not know how  to use a tractor nor did the mechanics know how to  repair one.  So  there were plenty of  tractors to be repaired  and many-a-times  I was  in the  garage well-beyond the midnight  trying to  find fault in  the hydraulic system. In those  6/7 years, I learnt a  lot about Ferguson Tractors' - and may be that is why I got the job in Detroit.

With very  few friends, all I could do  on the long week-ends (Saturday and Sunday were  weekly-off days) was  to walk for many miles on  the Grand River Avenue  - a straight road  that perhaps  stretches  for  10/15 km.    And with  thousands  of second-hand cars  (which appeared brand-new to me!) for  sale on  both   the siaes  of  this  road,   Detroit made  a   deep impression on  me.   It was  truly the  industrial-capital of America just as Bombay is the industrial capital of India.

Detroit was  the power-house of  the American  Economy.  When Detroit  sneezed,  America  caught  cold!   Almighty  Detroit fought  (and  won) all  major  battles  of American  economic Mahabharata!.

And 30 years  later, in  1986, Detroit  is  living thru  the 'Mahabharata  once again  - except  that this  time  it is  a different episode.
                        
Those  of you  who  have  read Mahabharata  well,  know that, after  defeating the  Kaurava-army, Arjun  became  very proud and  considered  himself  an  "Almighty".   So  Lord  Krishna decided to  teach him a lesson.   He asked Arjun  to escort a group  of   "Gopis"  thru'   the  jungle  and   provide  them protection.  Half-way  through the jungle, a small number of ordinary  robbers challenged Arjuna  who at-once  readied his famous  bow  "Gandiva" and  started  shooting  arrows  in the direction  of  the  robbers.  Disregarding  the   arrows, the robbers  attacked,  captured Arjuna,  tied-up  his  hands and feet and ran-away with the Gopis !

So Tulsidasji was inspired to write,

"Kabe  Arjun Luntio, Wohi Dhanush Wohi Ban"

In Detroit too,  the mightiest of the mighty  is licking dust at  the  feet  of  ordinary   robbers!   The  Mighty  General Motors!!  The car (manufacturing) King of America!

And you dont have to guess "how" I will tell you,

(1 )    GM Profits
1983        - $ 5.5 billions
1986 (est.)      - $ 0 (zero) (Trying very hard to avoid a "loss")

( 2 )    GM's Market  Share           

During  the last 7  years, GM  has lost  its marketshare from 46% to 42%.

So What does GM do ?

( 1 )    On Nov. 6, 1986, GM announced plans  to shut down 11 factories  during  the 
next  18   months,  reducing capacity to 70%.

( 2 )    GM plans  to cut  its  salaried work-force  (office-staff) by  25%  and reduce  its 
fixed  cost by  Rs. 6,500 crores  ($  5 billion)  every year.  GM  will also  retrench 
29000 workers  (about  4%  of  work force ).

( 3 )    Reduce price of a car by $ 1500.
(a few days ago Premier  Automobile reduced price of PADMINI  model  by 
Rs.6500/-  calling  it  "economy MODEL".  I believe 4 hub-caps have  been
removed and the  metal   bumpers  are  substituted   by  moulded bumpers!)

( 4 )    Sell cars on  "hire-purchase" with  interest-rate of  0%-2.9%.
(I  am told  you  can drive-away  a  PADMINI car  by paying Rs.  24000/-  now and  rest in  easy installments -  no more waiting 7 years or paying Rs. 30,000/- "ON" money!)

And  since the  customers are  getting tough  with GM,  GM  is getting tough with  the Union!  (GM stands for General Motors - not General Manager!).

UNION HAS A ROLE TO PLAY :
United Auto Worker (UAW) is the Labour-Union of  GM.

UAW has agreed to reduce the number of assembly-line job classification from 140 to 2!

UAW also agreed to adopt a  team approach which will put 6 to 12 workers  in charge  of a production  area, and  try out  a 4-day work-week (3 unpaid weekly-off) on one shift!.

Five years  ago when Chrysler  Car Company  (also in Detroit) was about  to close-down, UAW  (it is the same  Union for all American Car  companies) accepted  a wage-cut from  $ 12/hour to $ 8/hr ! - 33% reduction.

THE FATSO !

But  with fat  labour-costs, the  mighty  Detroit  has become flabby!  It is not in a fighting shape!.
Look at 1986 Wages in Car-industry:

That makes American-cars expensive, very expensive!

w-64(iii)

And the profits are shrinking

At  $ 96.4  billion annual sales  (1985), General  Motors  is World's largest industrial company.

And although

·     its market-share is shrinking
·     its capacity is shrinking (closing down old factories),
·     its profits are shrinking,

it is installing $ 20 billion worth
of automatic machinery to

-    reduce costs/car 
-    remain competitive

So that it can survive!

The sun  may, afterall  rise on the  West coast  of Lake  Erie where Detroit is situated!

H.   C. PAREKH

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