THE BATTLE OF SURVIVAL

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).

13 Feb 1983

To:

Dear Mr.

THE BATTLE OF SURVIVAL

Sub: Growth, Survival And Productivity

This is with reference to the discussions I had with you, & some of your Jt. Secretaries on 10th inst. when I took the opportunity of briefing you on the Management's decision to wind up the Company's activities in the area of Packaging Machinery manufacture and the consequent task of re-deployment of the persons concerned.

In my recent letters to BKS Union, on the subject of 'Productivity' I have mentioned about fierce competition to many of our products and the consequent threats to their survival. When one or more competitor offers better-quality products or cheaper cost products (or both), we lose our market-share and production-volumes go down.

On the other hand, costs keep on rising -

- the material costs

- the labour costs

- the financing costs etc. etc.

Rising costs force us to raise our selling-prices and we lose still more orders.

This vicious circle goes on and on;

Sometimes we succeed in breaking this circle by raising productivity and manage to survive that product.

But sometimes, we fail and must give up the manufacture of such a product !

This has happened to us several times in the past. For example, in the past, we have been forced to stop the manufacture of

- mild-steel vessels

- sheep-foot rollers

- domestic switches

- connectors

- marine junction-boxes

- diamond & T.C. bits

- drilling equipment etc., etc.

On several occasions, we have come very close to stopping manufacture of petrol-pumps.

And based on similar considerations, recently we decided to stop the manufacture of 'Packaging Machinery'.

One more product has fallen in the 'battle of survival' !

This means that, the group of persons who constitute the Packaging Machinery Dept. will be required to be moved to other Departments/Units in order to save their jobs.

In a language that we - you, I, workmen - all understand, this means that we must-now re-deploy these employees in other areas of our operations.

You will recall that when we discontinued the manufacture of drilling equipment in Madh Works, with your cooperation, we were able to re-deploy over 250 workmen in other areas and thus, we were able to save their jobs. As compared to the re-deployment of Madh workmen, the re-deployment of Packaging Machinery Dept. will not pose much difficulty considering that only 22 workmen are involved.

The names of the persons affected are given in Annexure 'A'.

As mentioned during our meeting, we have started working on the preparation of a re-deployment plan and I shall make the same available to you within 10-15 days.

I wish to thank you for the understanding shown by you and your colleagues during our meeting and I feel confident that, with your cooperation, we will be able to carry out the re-deployment exercise smoothly.

We must however, look beyond the immediate problem. By a copy of this letter, I am requesting the Group General Managers to let me know if, in our other operations, there exists areas of 'weaknesses/competitive threat' where we may run into a similar situation in the foreseeable future. Early identification of products which we may be forced to discontinue to manufacture in the months and years to come, would help the company do some forward planning with regard to the manpower that may be rendered surplus. It would enable all of us to do some thinking regarding the 're-training' of such employees and their most effective re-habilitation.

With kind regards,

Yours sincerely,

H.C. PAREKH