Honda China Says `Most' Striking Employees Willing to Resume Work Today

May 31 (Bloomberg) --Honda Motor Co., Japan’s second- biggest automaker, said “most” workers at a parts factory in China were willing to end a strike that has stopped its auto production in the country.

While the employees expressed willingness to end the walkout in a meeting with management yesterday, talks are ongoing and it’s unclear when they may return, Zhu Linjie, a Beijing-based spokesman for Honda, said by phone today. The carmaker’s Chinese plants will remain mostly closed today, and no decision has been made about output tomorrow, said Yasuko Matsuura, a company spokeswoman in Tokyo.

The maker of Accord and Civic cars shut down all four of its auto assembly plants in China last week after workers at a parts unit went on strike demanding a pay raise. The walkout is the first to stop Honda’s production in the country, the Tokyo- based company said last week.

“If the strike ends in a short period of a few days, damage is light,” said Tatsuya Mizuno, director at Mizuno Credit Advisory in Tokyo. Still, Honda’s image in China may be damaged by the walkout, he said.

Honda rose 0.2 percent to 2,784 yen as of the 11 a.m. trading break in Tokyo, while the benchmark Nikkei 225 Stock Average fell 0.2 percent.

Photographer: Nelson Ching/Bloomberg

Honda shut down all four of its auto assembly plants in China last week after 1,850 workers at a parts unit went on strike demanding a pay raise, halting the company’s output in the world’s biggest vehicle market as parts ran short. Close

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Photographer: Nelson Ching/Bloomberg

Honda shut down all four of its auto assembly plants in China last week after 1,850 workers at a parts unit went on strike demanding a pay raise, halting the company’s output in the world’s biggest vehicle market as parts ran short.

Pay Demand

Honda closed two plants in Guangzhou, Guangdong province, on May 24 and factories in Guangzhou and Wuhan, Hubei province, on May 26 after 1,850 workers making transmissions and engine parts at Honda Auto Parts Manufacturing Co. in Foshan, Guangdong province, went on strike May 17. An export-only plant in Guangzhou will make 50 Jazz compact cars today using parts inventory, according to the company.

The striking workers are demanding monthly pay be boosted to between 2,000 yuan ($293) and 2,500 yuan, from 1,500 yuan, Honda’s Matsuura said on May 27.

Honda produces about 3,000 vehicles a day in China, according to Koji Endo, a Tokyo-based analyst at Advanced Research Japan.

“It’s difficult to say, but my guess is that it will take less than a week to get production back at full capacity once the strike is resolved,” said Tianshu Xin, managing director at IHS Global Insight in Shanghai. Honda will likely add shifts to make up the lost production, he said.

China Sales

The affected factories, joint ventures between Honda and its Chinese partners, make models including the Accord sedan and Civic compact and have combined annual capacity of 650,000 units.

China accounted for 17 percent of Honda’s global sales last year, and the brand ranked fifth in China by unit sales in April, according to J.D. Power & Associates. Honda may increase China sales 9 percent to 630,000 vehicles this year, Chief Executive Officer Takanobu Ito said last month.

The parts factory, a wholly owned Honda subsidiary, started production in 2007 and makes transmissions for the Accord, City Odyssey and Fit models, according to the company.

Honda plans to raise production capacity in China by 28 percent to 830,000 vehicles a year by the second half of 2012 and introduce two new models as car demand grows in the country, Ito said in Guangzhou on May 25.

Auto sales in China may rise 17 percent to 16 million this year and annual demand may climb to more than 30 million, according to an official at the State Information Center.

The strike is a sign that automakers can expect rising labor costs in China, according to Yasuhiro Matsumoto, an analyst at Shinsei Securities Co. in Tokyo. Trade unions and employers appear to be reporting a growing number of work stoppages in China, although there are no official numbers, according to the International Labor Organization in Beijing.

“To enhance workers’ payrolls, production costs will rise,” said Mizuno at Mizuno Credit Advisory.

--Tian Ying, Makiko Kitamura, Liza Lin. Editors: Terje Langeland, Ian Rowley

To contact Bloomberg News staff for this story: Tian Ying in Beijing at +86-10-6649-7571 or ytian@bloomberg.net

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