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

Monday, 23 December 1985

SURVIVAL-OF-THE-FITTEST

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).


23 Dec 1985


To:
Dear Friends

Only a  few days back I  wrote to you regarding  the problems being faced by
-      Refrigerator industry
-      Alloy Steel Plant - Durgapur
Thereafter  I came across a  write-up  about ASP  in a  news paper - reproduced below:
It reads
"ASP management  has given an  assurance (to  the Union?) not to declare any worker surplus...."
This I do not understand.!
Due to changing technology/methods or due to lack of orders or due to any reason what-so-ever,  if people become surplus, one has to simply declare them as "surplus"!
The facts cannot be changed! even if you were to hide  your face in the sands like an ostrich! I Facts remain facts!
On  the  other  hand  I  can  understand  very  well  that  a management gives an assurance to such  surplus employees that although they are surplus, they will not be retrenched.
But  if any  company has  to  carry such  "Dead-Wood" on  its shoulders,  it   goes  without  saying  that   the  remaining workforce has to become even more productive than before.
Unless, of  course, that organisation  decides to get  rid of the "Dead-Wood"  as it  seems to be  happening in  the Andhra Pradesh (read following article).
In  this Vikram  Samvat 2042,  it looks  as  if even  in "Ram (Rao)    Rajya",    it    has     become a  matter    of "survival-of-the-fittest"  and  consigning  dead-wood  to the flames!
I  don't  think  it  can  be  any  different  proposition  in "Shiv (Rao) Rajya" !

H.C. PAREKH

Friday, 6 December 1985

PRODUCE PRODUCTIVITY OR PERISH

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).

6 Dec 1985

To:
Dear Friends
What is common between
a)  Refrigerator industry
b)  Central Govt. Staff Strength
c)  Tamil Nadu Electricity Board Agreement with Union  ?

Apparently  nothing  -  except  that  the  following  reports appeared in a newspaper on the same day !

What   difficulties   are   being   faced   by   refrigerator manufacturers ? To name a few:
u    Rising Material/Component Costs
u    Rising Labour Costs
u    Heavy Taxes (excise etc.)
u    Fierce competition (entry of voltas)
u    Slack demand.

The report  says Kelvinator is carrying  a stock of  ONE LAKH refrigerators valued at Rs.30 crores!

This is  despite reports that  Kelvinator has  not raised its selling prices during last  5 years - and this is despite the fact that  Kelvinator employees raised  their productivity by 75% in  the same 5 years  (from 8  refrigerators per employee per month  to 14 refrigerators  per employee  per month)  (See my Circular of .7.2.85).

Amongst the ''products that we make at Powai,  do we have any  which will  end-up  like  refrigerators with  profit margin of only 0.8 to 0.5 percent ?

In  my February  circular,  I had  also  mentioned  about the productivity of Maruti - employees.

Last month, while  in Delhi,  I got the  latest figures about Maruti from one of their senior executives.
  



Country/Company/World
Average Cars assembled per employee in one year
1
Premier Automobile/
Hindustan Motors
1.9
2
World Average
19
3
Maruti Udyog
25
4
Nissan (Japan)
40






The news-report on "Central Govt. Staff Strength" speaks of

u    Winding up departments/sections
u    Reducing Staff Weeding-out inefficient, unwanted corrupt employees
u    Recruitment freeze of last 3 years
u    10% reduction in staff strength Sub-contracting/Leasing out
u    Surrendering unfilled posts
u    Handing over loss-making units to private sector
But if  a private-sector unit  starts making  loss, who shall it hand-over itself to ?
To Govt. ?
No  chancel !  The  Government  is  not  likely  to  make  that mistake again!
And as  far as other private-sector  companies are concerned, there are a  few willing to take over a  "Sick" unit.  And if ever someone is ready, his first condition is,
"Get rid  of all your  existing employees  before I  take over".
And  in case  you have  not heard.  National Rayon  had  a 18 month strike/lockout in 1984-85.  They  reopened in May 1985, but are back  in trouble once again.  And  this time it looks like  "terminal"  illness'. Their  chief  executive Mr.  R.P. Kedia is reported to have said (Fin Exp. Oct.17) that
u    it  took  National Rayon  30  years  to  build  up  a reserve of Rs.27 crores.
u    it has taken 3 years of employee agitation to  reduce it to ZERO;
And further east in Durgapur,  The Alloy Steel Plant (ASP) of Central Govt. has  accumulated a loss of  over Rs.ll7 crores! With  manpower  numbering  7400  and earning  an  average  of Rs.35,000  per year  (highest  amongst  SAIL plants),  direct manpower-cost alone  comes  to Rs.26  crores/year!   And from October 3,  they have  "stopped working"'. (This assumes that they were "working" earlier!!)
Mr. Nayak,  a Senior Executive  of that Company  has appealed to the employees in the following words.
"In view  of  disturbing financial position  of  the Company, such a plant  would have to be closed down but,  this was not done because  it is still hoped that the  plant would recover by the determined  and united efforts of  all of us  ...  Any industry has  to make internal efforts  to counteract adverse external conditions  in order to survive  ...  Total manpower should not  be further  increased.  This  is a  necessity for the survival  of ASP ...   It is well-known  that overmanning led to  reduction  of efficiency  of individuals  as  well as groups of people".

Turning   to  the   agreement  signed   between   Tamil  Nadu Electricity Board  (TNEB) and  the unions,  we find  that the staff strength will be reduced as follows:
u    Field staff                 ...      19300    
u    Revenue staff             ...       3610    
u    Stores Staff               ...        150
But will someone explain the meaning of,
"The Post of Helper  ... has been abolished but 18250 helpers now in  employment will not  lose their  jobs as  26700 posts are lying  vacant  because of  no recruitment  to this  cadre since 1974."
I have asked  for details, but I suppose they know  what they are talking!
Whichever way you look, the message is clear. it is no more    
"Produce or Perish"
It is,    
"Produce productively or perish"

In the context of Powai Works, this reads, "Produce more with less people or perish"
And we  do not have  to go very  far to  understand why  I am making such a statement.
In  the  seventeen  months,   (since  we  signed  our  4-year agreement), the D.A. has gone up as follows:


Increase

April 84
Sept. 85
Min. D.A.
906
1021
115
Max. D.A.
2160
2436
276
After we allow for,
u    Service increment of April  1984
u    Normal increment of April  1984
u    Normal increment of April 1985,
wages, at Powai, have gone-up as follows:                         

TOTAL WAGES  (RS./MONTH)
AT MIDPOINT OF THE GRADE

Month
Clerk I
TA I
HS
SB
SSA
April '84
3366
3253
3251
3208
2530
2246
Sept. '85
3728
3643
3635
3585
2987
2629
Net )
increase )
per month)
362
390
384
377
457
383
Wages  include Basic,  DA, HRA,  LTA, SPL  Allowance, Medical Allowance and Conveyance Allowance.
And what  is expected to happen  to our  manpower strength at Powai ?
Let us see

Retirements in Calendar year 1986
Net Additions planned during budget-year 85-86
1. Sup/Of f/Cov.
14
36
2. M.R. (Unionised)
14
21
3. D.R. (Unionised)
14
21
Total
42
78
(* excludes all types of Trainees)
What I do not know for sure is,
"While  calculating net  additions  whether replacements  for persons retiring are included or excluded".
And I suppose, it would be a safe guess that
"Department-heads  will  certainly ask  for  replacements  of employee separations due to death/resignation/termination".
What will this do to us?  This  rising manpower and galloping wages  ?  If there  is very  little we can  do to  stop wages from rising, let us at least bring-down manpower!
And let  us do this  before some of  our products  sink below the minimum profitability-line, taking some of us with them!
It is time to stop saying "this is not my job".
Tomorrow there may be no job!

H.C. PAREKH