Back to basics at Maruti

If you retain your sanity in good times and avoid going overboard, the chances are, you’ll carry that into troubled times when you need it the most.

Speak to Maruti Suzuki employees and the top brass, they’ll tell you how. While the global economy is deep in the recession roil and its tremors being felt in India, the country’s largest automaker seems unfazed. On the contrary, there’s a palpable sense of poise in Maruti Suzuki’s office corridors. There’s no special medicine for recession,” says MD & CEO, Maruti Suzuki, who believes it’s always back to basics in such circumstances. You have to do what you must.

Little wonder then, while most firms across sectors show knee-jerk reactions to the slowdown and are busy making midcourse corrections in their strategies — Honda, Japan’s second-largest carmaker, last year postponed the opening of a new factory in India and Hyundai, South Korea’s largest automaker, said it will cut temporary staff in India and may reduce production this year. Maruti is planning for the next three years. Most of its plans are well on track as if nothing has changed despite two bad quarters of negative sales. The firm posted negative sales of 3% and 11% during July-September and October-December 2008, respectively.

What is helping Maruti today, is the company’s ability to constantly innovate even beyond product. For years it has developed business models in line with existing issues with a long term view.

Nothing happens in auto industry overnight and what we see in Maruti today is the result of evolution of the company’s years of best practices. You have to ensure that any disruption in the environment does not jeopardise your market position, and Maruti has done that well. If the earlier phase saw emergence of related businesses for the company and additional revenue streams, current CEO’s focus is on internal processes and new projects is readying the company for the coming years.

The company has completed its capacity expansion to ten lakh units, up from eight lakh and introduced its new technology engine, K10B on the A-Star model. Its export port facility at Mundra is up and running and the company’s incessant investment in R&D continues. When most companies, hit by recession, are cutting jobs and salaries, Maruti has increased its headcount of R&D engineers to 730, up from 350 and wants to take the number to 1,000 by 2010. There has been no salary cut at Maruti.

Although a Suzuki subsidiary and have to align ourselves to the fortune of the parent, they are optimistic that employees could also expect hikes when it is due later.

Only those businesses that hope for the best and prepare for the worst can speak that kind of language . And Maruti has been doing just that for the last several months. Mission critical attitude and fiscal prudence has been a way of life within Maruti, good or bad times notwithstanding. And what has fuelled this over the last 18 months is the Japanese major’s 3-G philosophy which is ‘going back to basics’. Arm chair management does not help.

Genba (go to actual spot), Genjitsu (see what is happening) and Gembutsu (identify actual problem) have laid down the framework for Maruti in its 3-year rolling plan till 2010-11. All that had come in handy when the slow down hit Indian shores. The company was all charged up to face the challenge. They have ensured that whatever they do should have a long term perspective. After all, it had months of solid combat preparedness to do that. When sales declined in the second and third quarter last year, Maruti looked at focus areas that held promise and went all out to leverage them.

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