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A Lean Production System is Bad for Workers
A Delhi professor's thesis reveals how the Japanese lean production system ends up reducing permanent employment and denying workers a better life
Image: Amit Verma
Professor Annavajhula J C Bose, Shri Ram College of Commerce (SRCC), Delhi
In 1936, Charlie Chaplin released his movie Modern Times. The film starts with the shot of a herd of jostling pigs followed by a frame that captures a swarm of workers entering a steel factory. It makes a telling statement on the similarity in the behaviour of animals and humans. The movie then goes on to tell the story of Chaplin, whose job as a factory worker involves tightening nuts on a piece of machinery on the assembly line. After a few hours, as the line accelerates and work picks up a frenetic pace, Chaplin suffers a nervous breakdown, creates terror on the floor and ends up in hospital. Three quarters of a century later, nothing seems to have changed.
Bose is associate professor in the department of economics at SRCC. Over the past 10 years, he has trawled the factories and villages of Gurgaon, Noida and Faridabad to study the condition of workers in one of the largest automobile clusters in India. In his PhD thesis, which he submitted in July, Bose has uncovered shocking realities of the life of a worker and the pitfalls of following the Japanese lean production system blindly.
In the past four years, there has been an alarming rise in industrial conflicts in the National Capital Region. Skirmishes between workers and the management at Honda, Maruti Suzuki and Pricol factories have led to the loss of hundreds of jobs and many lives. What has caused such catastrophe? Bose blames it on the much-touted Japanese lean production system that, he says, has failed to deliver on its promised benefits. Not just in India but across the world. “People said there will be innovation in the automobile industry all over the world and they talked about lean production as its basis. A lot of people also said the industry will be the bellwether of employability in terms of labour relations,” says Bose. He, along with a few researchers, decided to check if there was any empirical evidence to back this claim.
What they found was startling. During the golden era of capitalism in the 60s and the 70s, all top Japanese companies ensured job security, wages based on seniority, enterprise unionism and consultative decision making—components that make up labour-friendly working conditions. They quickly junked the model when economic recession set in in the 1990s. What they proposed instead was a restructuring, dubbing it the ‘Japanese style of management in a new era’ and throwing job security and seniority-based pay system out of the window. According to the new principle, each firm should figure out how to separate ‘stock’ and ‘flow’ workers and decide pay strictly on the basis of performance.
Bose contends that this new form of lean production led to the rise of exploitation of contract labour. He explains how. On the pretext of maintaining a flexible workforce, the owner of a unit creates a fake contractor from among the supervisors and managers. The contractor is not registered as it would entail valid records, regular wages and other entitlements. He then informs the labourers that they are contract workers, pays them a pittance and never makes them permanent. “Doing field research on this is very difficult. Nobody wants to talk about the contractors. My own sense tells me they are dangerous people,” adds Bose.
A case in point is Maruti Suzuki. At the carmaker’s Gurgaon plant, the number of contract workers increased from about 40 percent of the workforce in 1983 to 70 percent (4,000) in 2007. Bose says the rest of the workers, about 1,800, were old and under pressure from the management to accept voluntary retirement. At its new plant in Manesar, the company had 85 percent contract workers in 2007. Two other automobile companies also have similar proportions—while Ford India has 75 per cent contract workers, the figure at Hyundai stands at 82 per cent.
Director of Industrial Relations Institute of India Dr R Krishna Murthy, who has seen Bose’s study, speaks of another problem that, till now, has been brushed under the carpet. He says several companies get trainees to do regular work for years, but without proper training. “There is barely any training for these individuals who work extra hours without getting paid. This is the other tinderbox waiting to explode,” he said. Bose and Murthy say that for several years Maruti, too, has followed such a practice. “This is dangerous and against labour laws,” says a former CII official who has followed the automobile industry for several years.
Murthy believes the contract workers perform better than the permanent ones. Yet, the latter are paid three to four times more than what contractors pay the former. “There is severe resentment and anger among them. What makes it worse is that the company turns down their demand for dealing with their union. However, the company is within its rights to say it won’t negotiate with workmen engaged by a contractor, which is exactly what Maruti did when the first round of violence took place,” he said.
In his research, Bose has revealed another alarming practice at Suzuki Motor Corporation. During his field research in 2007, workers told him that on the pretext of training, they, along with others from units in Pakistan, Bangladesh, Indonesia, Hungary and Thailand, were sent to the parent factory in Japan for mainline work. Only a quarter of the workforce at the factory is permanent. The rest are temps, and included the trainees who had to put up with a gruelling schedule, humiliation and an additional pay of Rs 1.25 lakh (over three to six months) along with their usual salary. Maruti dismisses this claim outright. In a reply to an emailed questionnaire, the company says that when Suzuki set up a facility in India, one of the objectives was to establish Japanese manufacturing practices, like kaizen, 5S, 3G etc. However, most of the locals recruited were from a rural background, with limited skills obtained at technical institutes. They had no exposure to either Japanese manufacturing practices, or to elements of Japanese work culture, like team work, common uniforms and canteens and so on.
“In fact, these were practically unknown across corporate India,’’ the spokesperson writes. “It was decided that the best way to inculcate these values in the workers, and train them in the manufacturing practices, would be by giving them first-hand exposure. Unless they worked on the shop floor and saw for themselves, they would never appreciate these practices. Rather than classroom lectures, it would be far more effective if they experienced some of these practices and values as they were being applied on a shop floor in Japan.’’
Bose says this is information that workers have shared with him. He pursued the Maruti management for three years for meetings but the company did not oblige. “I have stood at the factory gates for hours. Once, I even got a meeting but they were acting funny, in a sense implying that they don’t entertain researchers,” he says. If this is the condition of the mother unit, Bose wonders what happens to workers down the supply chain. “World over, people are aware that there is a three-tier structure for sub-contracting. By the time you come to the third tier in India, you can see production in slums, semi-rural settings, household and unregistered illegal units… you are in a completely invisible world,’’ he says. “Discovering this structure is hell.’’
(This story appears in the 14 September, 2012 issue of Forbes India. To visit our Archives, click here.)
Comments 21
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Kasturi ,gProf J C Bose has very clearly brought out the systems of exploitation that is going on in this country in the name of induction of modern technology practices. Since a great many number of people are left with no regular employment in India they are perforce driven to accept this slave like working conditions. We are actually in 19th and early 20th century european industrial scenario in 2015 [ in India] mindset on this front as rightly pointed with the episode of charlie choplin. Imagine the response of the system that reacts violently to a empirical study on the premises by a Academic scholar. Even on a customer complaint addressed to the M D Of Suzuki in Japan they virtually treat as toilet paper and donot even acknowledge. This is my personal experience. But let us all appreciate Lean Management as a concept is worth emulating providing we are practice democratic principle first on the shop floor and our manager's get out of their feudal thinking first. Good service done to the society and all those who simply salivate at the mention of MNC in India. thanks Kasturi G
on Feb 4, 2015 -
Y Hemanth Kumar
First of all i think , Lean, is misunderstood by Professor Annavajhula J C Bose. If he had understood it correctly, his article would not have CREATED so much of waste that we all are doing by trying to spend our time commenting on the article and adding NO VALUE to the article.
on May 26, 2014 -
Deepak Chaudhury
Well first of all the name of the article is shocking, but as you read along you discover that the issue mentioned in the article has nothing what-so-ever to do with Lean. Lean is a management philosophy, and to put in the simplest form - a way of gradually focusing the entire work force on waste identification and elimination in the business processes, and there by creating a culture of continuous improvement and learning. What is clear from the article is that the company and management are saying that they are implementing lean, where as they are actually doing the reverse. The reason for that might be - first, they do not understand what LEAN is - then this is not the problem of LEAN. Second they know what LEAN is, but they have no idea about how to implement it. And in the process create their own management system and call it LEAN - which results in a workplace that is self-restricting and self-destructing; which again has nothing to do with real LEAN - it has to do with proper understanding of how Lean can be useful in your environment. As somebody has mentioned correctly, the naming of the article somewhat diminishes the credibility of the article. I would say the author\'s understanding of Lean is questionable. Obviously the problems raised in the article are eye opening, real and needs attention, but they have nothing to do with Lean.
on Jul 20, 2013 -
Vineet Dutt
I would agree with others - this has nothing to do with lean and somewhat diminshes the credibility of your article. However you do raise some very valid points - you should adjust the context of your findings to more accurately reflect your research...
on Dec 25, 2012 -
Saptarshi
Ignorance is bliss Enough has been said and written about industrial relations. Labor laws their interpretations, examples opinions from various named and unnamed industry sources have led to destructive distillation of this \'matter\', so much now I wonder if there is any fruitful essence left. If there were so much of wisdom in the ecosystem, one ponders how IR issues surfaced round the year (last) at a steady frequency much like Salman\'s Id block-busters! Hit stories. And now Dr. Bose from SRCC goes oriental in his analysis. The Japs have got it wrong he says! While the article is pitched using \'Modern Times\' which is far from the land of the rising sun, I wonder what exactly is the bloodline of this viral accusation! Chaplin\'s hit aimed at the Fordist regime, Taylorism if one would say. And lean manufacturing is common place to any manufacturing and business process. Japanese belief systems are approaches, mainly, disciplined ways to go about achieving such ends. Dr Bose should have, while he waited at the gates of Maruti\'s manufacturing facility, tried to appreciate basic lexical meaning of terms which are often peppered in conversations as \"concepts\". Who would not want maximum resource utilization to run a production facility? Who would not want to reduce waste so that throughput of an assembly line goes up and there is maximum efficiency? Putting an acronym to things (5S, 2S, Kaizen etc.) and also focusing on basic elements of shop floor management to end up doing better is \'Modern Times\' (pun intended!). And it requires due diligence, quite a bit of discipline and dedication to roll out these simple commandments of overall good manufacturing/operations practices. You visit the TVS Motor Company manufacturing plant at Hosur, Tamil Nadu and you would realize what good manufacturing practices are. Swarms of workmen get down from the company buses and queue up to enter the factory. It would be a horrendous mistake to draw comparison with Charlie Chaplin and a cinematic \'herd of jostling pigs\'! Employees in TVS queue up to deposit their mobile phones before entering the unit. Stealing from Arindam Chaudhari I am tempted to ask \"Dare to think beyond the Japs\"! The learned doctor has been myopic about his evaluation of Japanese work practices. He has made a heady cocktail of incorrect assessment and ill-informed concepts. Nowhere does TPM, TQM talk about contract labor usage. No where do they talk about short circuiting work through trainees at half the compensation. If you visit the TVS Motor Canteen at Hosur you would see the intent to follow guidelines. The President sits with employees for his lunch. No one chooses best lunch buddies there! Sequentially people take their meal portions and occupy tables serially. Employees and managers alike wash their plates preliminarily and then leave the canteen. Outsiders and guests enter only with lunch coupons duly signed. And it’s a sumptuous meal I tell you. There are even options for diet meals for employees and managers conscious of their waist-lines! Who says education or lack thereof is the fulcrum for good manufacturing practices? Who says Indian units are just looking at low hanging production fruits to be eaten using oriental \'chop-sticks\'? Why is the need felt to drown in self-pity and then cry foul regarding the Japanese way of life? Employees of TVS Hosur unit sit after their shifts to draw up QC Story and talk about what contributions they have made to manufacturing lines and product quality. How they have affected and effected QCD parameters! They use OHP sheets and present using OHP and Vice-Presidents of various departments chair those sessions. Quarterly awards have been instituted. Employees participate in national level QCC and Productivity Council competitions and \'fly international\' to present their case, present their contribution towards business outcomes. Truly, for these employees, the \'labor pain is worth the birth\'! I wonder how we would ever progress with negative intent. The Delhi professor has hardly a ring side view into Indian auto industry and yet some macro criticism of reputed organizations and their manufacturing facilities have been so easy to voice. And sadly enough he has even questioned the Japanese philosophy without understanding its bare essence. Without learning the grammar of the language, our learned Doctor writes a prose, now that really can be \'painful\'. IR is not equal to shop floor manufacturing practices; the later would be management, the earlier would be an art. And there is no scope here of generalizing things. Who would have stopped us to apply these management principles without being sly in the art of man management? Or maybe the Doctor wants to say that its only the Japanese cloak that hides the dagger of exploitation and subversive tactics leading to factory operations? Indian organizations running on conventional methodology are puritans, sans any ills? He would not have waited outside factories run by traditional Marwari business families. He would not have waited outside European industries who have milked money out and then dumped their units. Has Dr. Bose heard of Bhopal Gas Tragedy? UCIL? Dow Chemical Company? Why does he not talk about Hindustan Motors, the grand old lady of Indian Automobile Industry? The unit which used to roll out the beloved \'ambassador\' is now coughing, struggling to stay alive! Who owns this mammoth manufacturing facility? And trust you me, Dr. Bose, it’s not some oriental gentleman. Its a Birla group company! Incidentally TVS Motor Company is headed by Venu Srinivasan, an Indian passport holder. Let the concepts work their magic, doctor, let believers apply and better themselves. For as the English would say, ignorance is bliss and in the land of the blind it’s dangerous to be one-eyed!
on Sep 18, 2012 -
Prof R K Gupta
I am also from corporate sector background with more than 35 years industry management experience. Indian baniyas have been exploited labor for hundred years. Every where story is same. In connivance with corrupt politicians of India, these so called MNCs are allowed to do loot and plunder. The local industrialists are no less. I am shocked to see such sketchy and superficial contents of this article which are known to every one every where sinne last 2 decades.What is research in it that merits PhD level work? Perhaps Forbes should improve their publishing standards. The contractorship labor system has nothing to do with lean manufacturing.The whole contents of this article are messy and worthless. I am sorry but I am greatly disappointed.Truth is bitter.
on Sep 15, 2012 -
Manoj Khare
Dear Sir, no doubt an illuminating aspect of the crisis that seems to persist in the factories in NCR. I am sure there are HR and IR issues which have been mishandled by the Suzuki management, as they are unmindful of the indian cultural sensitivities. However, to call it a design flaw may be going too far. What it points to is a criminal lack of institutional mechanisms in the region. Governments, happily collecting taxes from such setups do not seem to have functioning safety valves that would prevent escalation of conflicts to such limits. Large scale contract labour under the guise of trainees is surely an aspect that could not have gone un-noticed if there was someone doing their job at Suzuki plant or at the state labour department. This has nothing to do with lean, but I too noticed SE Asian workforce as much more flexible and hard working than indian. Whether that needs to change, and if so, how, are issues for the institutional members to decide. Yet, these are big questions for India\'s ambition of promoting industrialization of the country.
on Sep 11, 2012 -
Mahesh Khairnar
I strongly agreed on the statement of Vinod
on Sep 8, 2012 -
Ajcbose
I want to make a correction in that I prefer to use \"New Fordism\" as a vulgarized form of lean production model. My plea to anybody is simply this: say something on the basis of actual observations and fieldwork rather than theoretical models.
on Sep 8, 2012 -
A.k.bhandari
The article gives a glimpse of the situation in the manufacturing sector in one of the Auto hubs of India.However the situation is no different and potentially more dangerous in process industries.A Maruti like situation in a critical process plant can not only stop production but can also cause irreparable damage to the unit and in some extreme case create catastrophic situation for the employees as well as the living population in and around the unit. Having worked in large Process Plants for over 35yrs. I have experienced changes in the work culture , industrial relations , contract labor ,external environment etc. and there effect on the performance of the plants. I have seen how committed management with the support of the State can transform a sick organisation in to a profitable organisation and continuously grow.On the other side I have also seen that how a most efficient unit becomes a sick unit over a period of time due to poor management , excessive external intervention etc. I would like to document my experience for the benefit of working professionals.However being a shop floor professional almost throughout my carrier I am finding difficult to do it. May be Professor Bose or someone else interested in studying and document it .In such a case I can provide the necessary inputs and collaborate.
on Sep 7, 2012 -
Vinod Grover
The researcher is confused. He has no understanding of Lean. He thinks bad management practices in Indian firms are part of Lean manufacturing. Do all the companies practicing Lean in Japan/ US employ trainees/ contractors at 20% of wages? If they did, would they be allowed to get away – like the Indian companies do?
on Sep 7, 2012 -
Mark Graban
Lean manufacturing is NOT about workers doing the same thing over and over for 8 hours. In a Lean environment, workers are cross trained and rotate jobs often - and they are engaged in problem solving and process improvement (using their brains, not just their backs). The professor (or the article) is really off base.
on Sep 7, 2012 -
Yogesh
Here I have remembar the drama of Mahabarat - In Mahabharat One charater \"Dhutrasht\" He was already blind and another is \"wife of Dhutrasht - Gandhari\" she desided I will live as blind and she was weare black cloths on her eyes. - They both was not constrative on child and what heppen - Create Mahabhart. Our Inidan Law is very strong but money maker uitilize it. We are too large but helpless. Only one thing I will never take wrong decision for me and my inida.
on Sep 7, 2012 -
Kevin Hop
This article has nothing to do with lean manufacturing. It lacks any credible references to anything lean. It would be wise for the author to first learn and read the dozens of excellent books out there on lean. Then to go and experience it in an actual lean environment for at least a few weeks. Actually practice the principles. Then he can write accurately about it. Who did fact checking on this?
on Sep 7, 2012 -
Op Goel
The article appears not to focus on title, but on HR strategies, Work Force Attitudinal problems, circumventing labor laws/ lower productivity of Permanent workers in comparison to others viz contract workers, though compensation package costing company is much higher for permanent workers than that of other workers. Solution is to analyse labor laws, easy implementation of rules in labor laws regarding willful carelessness, avoiding work accountability, and employers real exploitation. The labor laws for these purposes need to be integrated and rationalized objectively, with out favoring labor or employers. The opportunistic political populism and vote caching at the cost of hampering National wealth creation is deplorable.
on Sep 7, 2012 -
Benjamin Scherrey
Geez - this has NOTHING to do with Lean. I've never seen mention in any lean process book to not hire permanent people and make everyone contractors. These factories certainly have labor relation problems but lean is not part of it.
on Sep 6, 2012 -
Dishin Soni
Very alarming situation for the developing country who have no expertise to evaluate the systems to be adopted from the developed countries. On the very first stage, we need to create a group of institutions who themselves are experts of the world business environment and who are committed to work for the betterment of the ground level people. This is the immediate need of the time to address the alarming situation. Kudos to Mr.Bose for his work in this direction.
on Sep 6, 2012
