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).

20 Aug 1986

To:

Dear Friends                           

NOT ALONE

We are not alone.

When it comes to cutting costs and raising productivity, we have got company.

And who are they ?

It is an interesting list comprising

-      125 mills of National Textile Corporation         (NTC)

-      Hindustran Machine Tools                          (HMT)

-      Heavy Engineering Corporation                     (hec)

-      Bharat Heavy Electricals Ltd.                     (bhel)

-      Bharat Heavy Plates & Vessels                     (BHPV)

-      Burn Standard Company                             (bsc)

And what are they trying  (especially things which we have not tried yet !) ?

Central Govt. has  told General Managers of  125 textile mills that after  April  1987, Government  will not  reimburse their cash losses.

And what are NTC's problems ?

1.  Low Productivity

2.  Low Output

3.  High wages (34% - 207% of output  value)

4.  Excess Manpower (20% - 25% of workforce)

5.  Lack of discipline

How do they propose to solve these problems?

-      Economy Drive

-      Cut non-productive expenditure

-      Recruitment freeze

-      No promotion

-      No revision of wages

-      No replacement against retirement (550 in last 2 years)

-      Greater delegation of authority to GMs

-      Introduce new blended fabrics Introduce staple and blended yarn

-      Suspended 3 senior executives and a General Manager !

If all of this  sounds drastic, just remember that  during the last 3 years, these mills have incurred losses totalling

                     

Rs. 717 crores !

That is yours (and mine) tax-money !

As far  as the steps  proposed to  be taken by  the others is concerened, we are told that :-

HMT will .

-      raise  export  percentage  from 12.4%  to  20%  (including tractors & watches) modify existing products

-      introduce new products

-      do more project-consultancy etc.

-      save  2.5% of turnover  (sales) during 86-87  & 87-88  (we are ourselves aiming at about 1.5% in 86-87).

HEC will  reduce costs by Rs.  10 crores in  the current year through

  

-      saving energy (power)    

-      reducing inventory  from 7.3 months' stock  to 5.2 months'     stock    

-      reduce wastage 

-      upgrade technology    

-      stop fresh recruitment    

-      reduce surplus workforce

BHPV will try to

   

-      save  Rs.   50  lakhs  every  year   by  installing  word-    processors & micro-computers    

-      increase capacity utilisation from 66% to 75%    

-      reduce working capital need

-      improve material handling

The  newspaper does  not tell  us about  the  plans of  BHEL -whereas

SC lists the following problems (but no solutions .')

-      Lack of professional managers

-      inadequate funds for modernisation

-      high age of shop-floor management and of all things,

-      Low pay-scales ! (I wish we had that problem !)

But whereas  problems cannot  be borrowed  (these are our  own creation), solutions  can be borrowed.   I would like  to hear from  you which  of  these  solutions  we  should try  in  our company.

H.C. PAREKH