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Toyota Shuts China Plant as Workers at Honda Affiliate Return

Labor unrest in China spread to Toyota Motor Corp. last week, forcing the Japanese automaker to stop production even as strikers at a Honda Motor Co. supplier agreed to return to work with a promise of higher pay.

Walkouts spread through foreign-owned factories this month, with demands for higher pay underscoring China’s shrinking supply of low-cost labor. Strikes disrupted Honda’s production in the nation, forcing the Tokyo-based carmaker to raise wages at three suppliers and seeking to avert further work stoppages.

Workers at the Guangdong province plant of Honda affiliate Nihon Plast Co. agreed to return to work as talks continued on June 18, said Takayuki Fujii, a Beijing-based Honda spokesman. Staff at Honda Lock (Guangdong) Co., who agreed to pay increases according to Fujii, said they aren’t satisfied.

“We’re not happy but what more can we do?” said a 21- year-old woman who identified herself by the surname Hu. “I’m quite angry. We spent so much time on strike, and we don’t even get 300 yuan more.”

A worker surnamed Luo said monthly pay was increased by 200 yuan ($29.30) plus an 80-yuan allowance, compared with their request for 450 yuan more. Luo said employees would probably join if someone decided to start another strike because dissatisfaction is so high.

Photographer: Nelson Ching/Bloomberg

Workers leave the Honda Lock (Guangdong) Co. factory after finishing their shift in Zhongshan on Friday. Close

Workers leave the Honda Lock (Guangdong) Co. factory after finishing their shift in Zhongshan on Friday.

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Photographer: Nelson Ching/Bloomberg

Workers leave the Honda Lock (Guangdong) Co. factory after finishing their shift in Zhongshan on Friday.

‘Copycat Strikes’

Toyota closed its Tianjin factory June 18 after a strike at supplier Toyoda Gosei Co. in the city, said Mieko Iwasaki, a spokeswoman for the carmaker. Niu Yu, a Toyota spokesman in China, said the Tianjin FAW Toyota Motor Co. plant that shut down is normally closed on Saturday and Sunday.

A Toyoda Gosei Co. plant in Tianjin has been partially shut since workers went on strike June 17, said Shingo Handa, a spokesman for the affiliate, based in Japan’s Aichi prefecture.

“When strikes are successful, you do see replica strikes, copycat strikes,” said Geoffrey Crothall, a spokesman for Hong Kong-based advocacy group China Labour Bulletin. “I expect you’ll see more strikes in the coming weeks.”

Nihon Plast, based in Shizuoka, Japan, is 21 percent owned by Honda, according to data compiled by Bloomberg. The company also supplies Japanese carmakers Nissan Motor Co. and Suzuki Motor Corp., according to its website. It makes air bags and handles for Honda and Nissan, according to Kyodo News, which reported the strike earlier.

Nihon Plast’s Zhongshan factory makes steering wheels for all models from Nissan’s Chinese venture, Dongfeng Nissan Passenger Vehicle Co. Established in 2003, it’s 85 percent owned by Nihon Plast and 15 percent by Osaka, Japan-based Itochu Corp., and has 502 employees, according to the website.

Nissan Unaffected

Nissan’s production in China hasn’t been affected because the company has a sufficient stock of parts, said Yoshihisa Jun, a spokesman in China for the Yokohama-based carmaker.

Auto assembly plants in Guangzhou and Hubei province run by Dongfeng Nissan were set to resume yesterday, said Akihiro Nakanishi, a Guangzhou-based spokesman for the company.

Workers at another Toyota supplier in China, Tianjin Star Light Rubber and Plastic Co., also walked out briefly on June 15, Toyoda Gosei’s Handa said. The issue was resolved when the company offered a pay increase, said Zhu Hai Feng, a spokesman for the company in Tianjin. He declined to elaborate.

Toyota, based in the central Japan city of Toyota, fell 1.7 percent to close at 3,240 yen in Tokyo trading on June 18, while the benchmark Nikkei 225 Stock Average was little changed. Toyoda Gosei declined 0.4 percent and Honda dropped 1.7 percent.

Reduced Migration

Higher investment and improved wages in western China are deterring workers from migrating, pushing up pay in more industrialized regions like Guangdong in the south, David Abrahamson, project manager at the China Center for Labor and Environment, said by phone from Shenzhen.

A factory owned by Xiaotian (Zhongshan) Industrial Co., a maker of gas stoves and electric fans located 3 kilometers (1.9 miles) from Honda Lock’s plant, promised workers a monthly increase of at least 250 yuan, excluding overtime.

Some factories in China are losing as many as 25 percent of their workers a month, reflecting increased competition among employers to hire staff, said Ian Spaulding, Hong Kong- based managing director at Infact Global Partners, which advises factory owners on China work practices.

More than 20 Chinese provinces and cities raised minimum wages this year, the Shenzhen city government said on its website. In Shenzhen, which raised minimum wages an average of 15.8 percent, the government said higher pay will help companies recruit workers and will boost consumption.

To contact the reporter on this story: Liza Lin in Singapore at llin15@bloomberg.net

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