A " NO - WIN " SITUATION

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 1987
                                                                                                                                    
To:

Dear Friends                

A  " NO - WIN "  SITUATION    

A no-win situation is one in which no side wins.  If anything, both sides end-up losing!

The natural question that comes to the mind is,

"Why, and how, do people get Into such situations In the first place ? And having got Into it, how can they come out of it, without losing the shirt ?"

There Is no simple, straight-forward answer.  But one thing Is certain.  No matter what the outcone, as lonq as one party feels that It has  WON  and the other party is  made-to-feel  that It has LOST , there can be no lasting peace !   The side Which has apparently  lost, has a strong urge

       -    to  get-even    

-    to teach  a lesson  

-    to more-than-make-up for the loss.

So the  losing  party waits for Its turn !  At the opportune time It strikes  - and the game is played all over again.

It reminds me of the children's game of  SEE-SAW !

It may bo fun for the children, but for the adults - especially If the adults happen to. be the Managers and the Union-Leaders -  It could be a nerve-wrecking game.

And if you are forced to play It again and again, the tensions could prove fatal.  And the gains,  for either side, are. In any case temporary  -  like the few seconds when you are high-up in the air on a  SEE-SAW .!

But very few managers and trade-union leaders understand this  -  and still fewer are willing to give it up !

Sometime back I wrote to you (August 24, 1986) regarding the possibility of a strike at USX - America's largest steel-maker.  The Strike finally did take place when 21,000 workers walked out In August 1986.

Today, after more than 23 weeks (nearly 6 months). It Is the longest strike In the company's history.

Business Week magazine ( 19 - 1 - 1987)  gives us the following details about the situation  :

I s s u e

The competition (domestic and foreign) is literally driving  USX  out of the steel-business.

Ten years ago USX company was known as U.S. Steel company and  it had only one business ( 100%)  which was

-    making steel

Today steel-making Is only 30% of Its business.

By 1990 ( In another 4.years), steel-making will become only 15% - 20% of Its business !

I cannot help making a comparison.  In our own L&T, would you like to know  how  "share"  of Powai In our total  production (excluding ECC & Kansbahal Works) is shrinking  ?

REASON?

USX Management thinks that rapidly-rising labour-wages makes It uncompetitive.  So It wants USW (the labour-union) to agree to more than

10% reduction in wages !

USX MANAGEMENT STRATEGY

2.  Play it cool.  Show no-hurry to settle the Issue - although the company is losing a

revenue of Rs. 130 crores each month !      (The company is expected to lose Rs. 1500

crores by the time a      Settlement is reached).                                          

 

WHY THIS ATTITUDE ?

a.   With falling prices of steel, the loss you make, the less is the "operating loss".

b.  Unemployment benefits begin to expire this month for 19000 workers (out of 21,000) who are on strike.

WHAT CAN MANAGEMENT GAIN ?

We know what the company is losing.  Approx. Rs. 130 crores each month.

But If the management WINS, what can it expect to gain ?

If the Union agrees to $ 2/hour reduction in wages, the company will save Rs. 110 crores per year.

HOW TO COME OUT OF THIS MESS ?

Finally the management and the Union have agreed to appoint an outside mediator (Mr. Garrett).  He is 75 years old and for 36 years, he has specialised in settling disputes between managements and Unions !

It is expected that he will make,

-    the management agree to reduce subcontractinq

-    the Union agree to accept a wage-cut of $ 2/hour.

(I think we should start paying ourselves a "consultation-Fee"  How often It happens that what the Union and the management could have easily settled amongst themselves, they never do - until they appoint an outsider, and pay him a huge consultation-fee so that he may tell us to do what we already knew was the only way out ! )

Local Union leader, Donald Conn says his workers are willing to reduce wages by $ 2 per hour.  He says,

" The Issue is not the money.  But we cannot go back   If our Jobs are taken by outside contractors".

IN THE MEANTIME

Arthur Garrison (Machinist) says "Things will net tight ".   In 23 weeks he has exhausted his saving of $ 4000.  Govt. was  paying  him $ 129 every week for last 23 weeks as "unemployment benefit" which  will stop by end of January.  

(No such. security for striking workers in India. Our Government does  not have money to pay even the  WAGES  of lakhs of surplus workers In  the Public sector companies so it is trying to got rid of them by  Voluntary Retirement Scheme ! )   

But Arthur will get $ 60 per week from the Union Strike Fund. (Most Indian Unions have no  strike-funds.  How can they help the workers when the workers are so selfish ?  Indian workers only want to exploit the Unions !  Although, in many large engineering companies of Bombay - Including our L&T - worker's wages have gone up  TEN TIMES   In last 15 years, the Union fees have remained same  - at Rs. 12/- per year 2 Elsewhere In the world. Union fees are almost 2.5% of wages.  In case of Powai, this would mean Rs. 2.5.lakhs/month or Rs. 30. lakhs each year).

In India Unions dare not make any demands on the workers.  The Union will pet thrown dut the next day !

But it is a totally different story when it comes to making  Impossible demands on the company.  At that time the attitude is

"Whose father, what goes ?"

Unless the Indian workers change this attitude,  -  and fast  - they will have no  "chance"  to go on a strike  -  because there will be no Jobs  -  from which to go on a strike !

H. C. PAREKH

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 INTUC -  AITUC, 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	SOLTAH	TAD IRAN
Product                  :	Munition (Bullets/ Bombs)	Electronic Products
Sale                      :	1983 : Rs.l66.4 Crores 1985 : RS.102.7      "	1985:      Rs. 742.3 crores
Growth Rate                  :		1980-1982 : + 20 % 1983-1985 : + 5 %
ACTION                  :	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  free 

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