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

Wednesday, 31 December 1986

EMPLOYEE SEMINAR" AT LONAVLA

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 Dec 1986

To:

Corporate Management Members (Individually)            

SUB :   "EMPLOYEE SEMINAR" AT LONAVLA"

I have been  continually discussing with  our Union, the need to maintain  an on-going process of  relationship between the Management on  the one  hand and  Union and  employees on the other, since  I  believe that management of  productivity  in the  coming  years will  depend  increasingly  on  the  single crucial  factor  of  employee  motivation through  harmonious employee-employer  relations.   The response  from  our  Union has been  very encouraging  and as an  important step  towards this end, it was  jointly decided by us and the Onion  to hold a  seminar,  away  from the  work  environment,  to generally discuss  important  issues  which  require  solutions  in the coming years and  to invite the Union Committee Members  (Shop Representatives)   as   well  as   the  JGMs   and   DGMs   of Manufacturing Units to participate.

The  Union suggested  that the  seminar  should be  held at  a facility  with the  bks, which  was  recently commissioned  at Lonavla  -  "SWAPNA  POORTI"  where  seminar  hall  and  other facilities  are  available.  Management  agreed  to  bear  the expenses  for  the  seminar.  We  also  invited  Shri  Dattaji Salvi   and  Shri   Ramakant  More,   president  and   General Secretary  of  the  parent BKS  Body,  to participate  in  the seminar, and they also accepted  the invitation.

The  final list of. participants comprised  the President  and General Secretary 'of the parent body of the Union,  the Joint Secretaries of the  L&T Unit, and the committee Members  (Shop Representatives)  of  Powai, Madh  and City  Offices,  totally numbering about 165 persons.   From Management side, Messrs, A.Y. Divekar, V.S. Kaushikkar, S.  Samu, R.B. Bhambhani,  P.M. Mehta,  J.P. Madan,  Kalyan Chakravarti, A.M. Deshmukh, V.P.Singh  and  the undersigned participated.

The participants  left  for Lonavla  in our  buses on  Friday, the 19th December,  1986 after the end  of the 1st shift,  and spent  the  night  in   Lonavla.  The   seminar  was  held  on Saturday (weekly off),  the 20th December 1986, between 8.00 a.m. and  4.00 p.m.  The stated objectives of this  joint seminar were :

1.  to educate  the Shop Representatives  regarding the Company,   its   operations and its strengths, weaknesses, opportunities and threats (SWOT),



2.   to  throw  up for  discussion  and  debate,  issues which in the perception of the  Management and the Union representatives,  are  or
will  be  vital for the continued prosperity of  L&T in general and the     
Powai Unit in particular,

3.   to accelerate the PARTICIPATIVE PROCESS.                      


The seminar programme  was designed to devote as much time  as possible  to  discussion  and  debate  of  vital   issues  and therefore, 3  1/2 hours were allotted  for this purpose.   The rest of  the time was  devoted to a presentation  on L&T as a Company,  the  employer-employee   participative  process   in Japan, and talk  by the  Union leaders as  well as Management Representatives on issues before the Company.
                                                    
The  enthusiastic response  from  the Union  leaders  and the Shop Representatives  was beyond  expectation and  to a  large extent,  this seminar objectives  have been  fulfilled.   This has  laid the ground for  further seminars of  this nature  at which  the shop-supervisors and  workmen can also  be brought together  to  strengthen  ' the bonds  of  the  participative process.

Our  immediate plan  is to conduct  2 seminars,  covering  the Foremen and  Production/Assistant Production Managers.   These are  scheduled  for  3rd January  1987  and  4th  April  1987. These will  be  followed by joint  seminars at  which  Foremen and Shop Representatives/workmen shall participate.

A video  recording of  the seminar proceedings  has been made and  I would request  that  I may be  permitted  to present  a part of  the video tape  at the next  Policy Review Committee Meeting, alongwith  a part of  the video  tape which we  shall make for the proposed  Foremen's seminar.

H.C. PAREKH

Saturday, 27 December 1986

SUN RISES IN THE WEST —(Part V)—

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).

27 Dec 1986

To:
Dear Friends

Sun Rises In the West
—(Part V)—

While  I  an)  waiting  for  the   list  of  our   restrictive work-practices  to grow, I promised  to tell you  what  is the SECOND THING that must happen for  creating jobs.

And that happens to be

"Wage-increases"   will  have   to  be   less   than  the inflation-rate.

Example

In France,  FORD MOTOR  CO. was  giving wage-increases  as high as 10% during 1980-84.

Last 2 years, it is giving no more than 4%!

Example     
Current average inflation-rate in Europe is  6%.    
Expected rise in manufacturing pay in 1986 is  5.75%.    
All wages are now increasing roughly  in line with prices!

Example

According  to Mr.  Larry Mishel, an  American Researcher, there  had been an  average  13% decline  in  wages since 1973 when adjusted for inflation.

RESULT NO. 9

Adjusted  for  inflation,  wage-cost  of manufacturing  a single  unit of  product declined  by  0.3% from  1982 to 1985  !!  - bringing  back  ability to  compete  with  the world.

Writing in Economic  Times of December 4, 1986,  ("America Worries Over  lost  Competitiveness"),  Jayshree Sengupta gives us following information:


IN 1985
JAPAN
AMERICA
1.
Average Annual Work-Hours
2100
1800
2.
Paid Annual Vacation (Days)
14.6
19.6
3.
Vacation Enjoyed (Days)
8.2
19.6
4.
Increase in Hourly Factory Output
5.6%
2.2%

But coming back to the question,     

"Why is America succeeding in creating  jobs ?"

Let  us  look at   the following   chart  from Business  Week (Sept.22, 1986)/

Compensation pains for all  Private Industry Workers


From the chart shown above, can we conclude  that,    

Lower Wages   —>         Lower Product cost   —>    More Demand                   
                     More jobs  <—  Factory  Expansion <


And while we are on  the subject of wages, let us see what  is happening 18000 Kms. away from America

-    In POWAI !
Annual Average Wage  * Bill per DR Employee (Powai + Madh)

Percentage Increase Over Previous  Year
*Basic +D.A.  + Payroll Related Allowances




I  know  that  some  of  you  will  immediately  jump  to  the conclusion and say,

"That is  why we are  losing jobs in  Powai.  Look at  the following chart"

DR - Employee Strength at Powai


Let me assure  you that there are  other reasons as well,  the most important  being that  no industry  is allowed to  expand within the Greater Bombay.

But  of-course, fast-rising  wages  continue  to be  the  main concern -  not only  for L&T but  for almost  all the  leading engineering  companies of  Bombay,  as you  can  see from  the following chart :

Total Emoluments - 1985 (Over 1983 = 100)


And  if   you  want  to   know  what  is   happening  to   the profitability of these companies,  keep looking at the  Notice Board for my next circular.

H. C.  PAREKH


 P.S.  In view of the Economy Drive, I am not sending individual copies.  If you get a chance to read this on the notice board do tell others.

Wednesday, 17 December 1986

SUGGESTION SCHEME - REPLIES TO REJECTED ONES

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).
17 Dec 1986

To:

Suggestion Scheme Co-ordinators     

(Group-wise)

SUB: SUGGESTION SCHEME - REPLIES TO REJECTED ONES

I am  glad to find that,  starting this month  I see, in more cases a detailed explanation  on the reverse of the  formatted reply.  I wish  to assure you that  this extra effort on your part will go  a long way in  encouraging many more  suggesters to come forward with their suggestions.   PI. keep it up.

In  yesterday's  meeting  each  one  of  you  showed  various parameters  to show  how. the scheme is  doing in  your  area. Each  one of  you  had a  different  but  interesting way  of looking - measuring  the scheme.  I was quite encouraged with your analysis.  Could we synthesize  all of these in a single standard format ?  PI. try.

That brings  me back  to the question  of "Standardizing* the monthly progress  report slides.   If you apply  your mind to it, I am sure you could reach an agreement.

As far  as computerisation  is concerned, it  is high-time we put  this  project  into  the  second-gear  now !  Modh has already  got his  micro and  IRS is  getting his  today.  The rest of  you cannot  remain lagging behind.   But once  again, please  ensure COMPLETE standardization of  software &  output statements.

Last,  but  most' important,  bring  with   you  to  the  next meeting,  your   firm  committment   for  1987  TARGETS,   for Suggestions and  SAVINGS.  Bring senior  managers with you  if you like.

H.C. PAREKH

Monday, 15 December 1986

SUN RISES IN THE WEST (PART IV)

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).


15 Dec 1986

To:
Dear Friends
Sun Rises  in the West
(Part IV)

To  improve  employment   situation,  the  French  Government finally did something!

In January 1986, it passed a law,

which  gave  companies  right  to  introduce flexible working   hours,  if   they  
would   reduce  average work-week from 39 hours to 38 hours!

So in  one stroke, French  Government expects  to achieve TWO results,

RESULT NO. 6

·     Increase   employment   opportunity   by   decreasing working hours.

RESULT No.  7

·     Increase  productivity   of  labour-force  by  giving managements flexibility.

French Company MERLIN-GERIN did not lose time.        

·     It rescheduled work-time.
·     It   introduced   round-the-clock,   six-days-a-week, working in factory.

1984  —>        62 Hours/Week.
1986  —>       102 Hours/week

French Government also found out something else!

Hundreds 'of  Companies  were  applying  for  "laying-off" workers  - because  they  had 
no work  to give  to  their workers.

But

In  13% of the  cases, the  labour-inspector was  refusing permission  (in Bombay,' what  is this  percentage?   Will the Labour Commissioner, please enlighten!).

So,

The Government passed a new  law and removed the power of the labour-inspector to refuse lay-off!——


The Germans  were red in the face! The French had  taken the lead !!

Not to be out-foxed, the German Government sprang a  surprise. It passed a new law,

Which allows .companies to hire workers on  "Contract" of  upto 18  months.  When  contract  ends, companies can lay-off the workers  !!

How did the german Industry react?
Here are two examples:

( a )        West German Metal Industry  reduced work-week from an average of 40 
hours/week to 38.5  hours/week without reducing pay!

( b )        German car-manufacturer VOLKSWAGEN,

·     In 1982/83, froze recruitment for 18 months
·     In 1984/85, hired 19000 workers.
·     In 1986,    plans to add 10000 workers.
·      
NET   RESULT NO. 8

·        19 European  (OECD) countries are expected  to create 800,000 jobs in 19861 -
best performance since 1979.

Question ;     
How did this reversal become possible?

Answer   :

Through a  realisation on the  part of  the workmen -  and the Unions  - that  if JOBS are  to be  saved, two  things must happen  :

( I )        Restrictive Work-Rules/Practices must go         

Example

Amalgamated  Union of Engineering  Workers (AUEW)  has 10 lakh members in Britain.

For creating  a mere 500 jobs,  it recently agreed  to NISSAN MOTOR  CO. (of Japan)  - who wants  to start  a factory   in  Britain   -  to   wipe-out   restrictive work-rules.

This is  the same  Union, which prevented  closing of british  LEYLAND   -  a  car  company   -  and  saved thousands   of-  jobs,  by   co-operating   with   the Management  
and   removing   restrictive  work-rules (rigid job-classifications).

And before I go on  to tell you what is the SECOND thing  that must happen  in order  to create  jobs, I  would like  you  to take  a  look  at  some  of  the  restrictive  work-practices existing in our own POWAI FACTORY right now !!

1.  Getting ready to leave as  early as an hour before actual closing time.
2.  Breaking for  lunch earlier than the scheduled time and leaving the place of work for canteen earlier.
3.  Collecting of funds for different purposes during working hours.
4.  Spending time  for planning and purchase  of material for pujas, felicitations, etc.
5.  Punching cards before changing into uniforms.
6.  Tendency to waste time at  the start and end of the shift and also before and after tea/lunch recess.
7.  Extended tea breaks.
8.  Visiting  dispensaries for very minor non-industrial ailments which can be treated during non-working hours.
9.  Employees gathering in groups and chit-chatting for  long durations.
10. "This is not my job" attitude.

Those  of you  who think  the list  is incomplete,  please do write to me!