Toyota Motor Corp. and Honda Motor Co. halted production at factories in southern China after two suppliers’ plants were closed by strikes, extending disputes at parts makers in the nation to at least eight in the past month.
Toyota’s factory in Guangzhou, Guangdong province remains closed today after output was suspended yesterday morning because of a strike at a Denso Corp. venture, Hitoshi Yokoyama, a Beijing-based spokesman for the carmaker, said. Honda closed two plants in Guangzhou after a walkout at NHK Spring Co., said Natsuno Asanuma, a Tokyo-based spokeswoman at Honda.
Strikes have spread since Honda agreed last month to raise wages at a parts supplier by 24 percent to end a stoppage that halted its production in the world’s largest auto market. The unrest at foreign-owned factories in China reflects a shrinking supply of low-cost labor in the nation.
“This illustrates the growing pains the Chinese auto industry is going through,” said Ashvin Chotai, London-based managing director of Intelligence Automotive Asia Ltd., an industry consultant. “It’s facing the same labor problems seen earlier in developed nations. Over the long term, manufacturers need to have a range of contingency plans,” such as getting the same parts from multiple suppliers, he said.
BMW’s ‘Dispute’
Employees at a BMW car dealership in the city of Dalian, Liaoning province, went on strike to protest unpaid bonuses, the 21st Century Business Herald reported today. Duan Yi, a spokeswoman for Bayerische Motoren Werke AG in Beijing, said there was a “dispute” between workers and management and that said she couldn’t confirm whether employees were striking.
Toyota fell 1.7 percent to close at 3,220 yen in Tokyo trading, while Denso dropped 1.2 percent. Honda lost 1.5 percent and NHK Spring declined 1.4 percent.
Toyota supplier Denso Guangzhou Nansha Co., a joint venture in Guangzhou, halted production yesterday as workers walked out demanding higher wages and improved benefits, Denso spokesman Toshihiro Nishiwaki said by phone yesterday from Aichi, Japan.
The strike and negotiations are continuing today, company spokesman Goro Kanemasu said. He declined to elaborate on workers’ demands and said he wasn’t aware of disruptions at any other Denso facilities.
Denso, Japan’s largest car-parts manufacturer, is about 23 percent owned by Toyota, according to data compiled by Bloomberg.
Nissan, Foxconn
Toyota, the world’s largest carmaker, builds Camry sedans, Highlander sport-utility vehicles and Yaris compact cars at the Guangzhou factory.
The strike at the NHK Spring plant that supplies Honda began late yesterday, said Hiroaki Saito, a spokesman for the Yokohama-based parts maker. The factory, which makes coil springs and stabilizers for cars, is closed today and negotiations are ongoing, he said.
Nissan Motor Co., Japan’s third-largest carmaker, has yet to report any disruptions due to the spreading strikes in China.
“The events are not making us change our plans” in terms of inventory management or automation, Carlos Ghosn, chief executive officer of the Yokohama-based company, said after an annual shareholder meeting today.
Worker unrest has forced Japanese carmakers and other foreign manufacturers including Taiwan’s Foxconn Technology Group to spend more on labor. Suppliers to Toyota and Honda agreed to raise wages as at least six previous strikes broke out at their Chinese factories in the past month.
Toyoda Gosei
Employees at Toyota affiliate Toyoda Gosei Co. ended a strike on June 19. Workers at another Toyota supplier, Tianjin Star Light Rubber and Plastic Co., walked out briefly on June 15 before the dispute was settled when the company offered a pay increase.
About 300 workers are involved in the strike at Denso’s Guangzhou venture, Beijing-based spokesman Shen Meihua said yesterday. The plant, which makes fuel injection systems, employs about 1,100 people, according to a company report.
Toyota’s Yokoyama said the automaker’s factory in Tianjin, northern China, is operating normally. The carmaker closed the plant on June 18 because of the strike at Toyoda Gosei.
Honda agreed last month to raise pay 24 percent for workers at a parts plant in Foshan, Guangdong, after a strike shut down all four of its China car factories. Another Honda parts supplier in Foshan was shut June 7 to June 10 by a walkout.
More than 20 Chinese provinces and cities, including the manufacturing hub Shenzhen, raised minimum wages this year to help companies recruit workers and to boost domestic consumption, the city government said this month.
Long-Term Benefit
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, said David Abrahamson, project manager at the China Center for Labor and Environment.
Workers say the pay increases are necessary to help keep pace with the rising cost of living in China. Inflation accelerated to an annual pace of 3.1 percent in May, the biggest increase in 19 months. Property prices in May jumped 12.4 percent across 70 cities from a year earlier, the government said on June 10.
Increasing wages may help automakers in the long run by boosting demand for cars in China, said Andrew Phillips, an analyst in Tokyo at BNP Paribas SA. Carmakers are producing in China to meet domestic demand, not because of low costs, he said.
“Wages as a percentage of revenue are tiny,” Phillips said. “The concern is more loss of production.”
(bloomberg.com)
