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China parts strike idles Toyota factory

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China parts strike idles Toyota factory

It's 3rd walkout to hit auto giant

BY MAKIKO KITAMURA AND YUKI HAGIWARA

BLOOMBERG NEWS

Toyota halted production at a car plant in Guangzhou, China, after one of its suppliers was shut down by a strike.

Toyota suspended output Tuesday, Hitoshi Yokoyama, a Beijing-based spokesman for the carmaker, said. Workers at a Guangzhou venture of Denso, Japan's largest auto-parts maker, walked out Monday demanding higher pay.

The carmaker has suffered at least three strikes in China, the world's biggest auto market, this month after employees at Honda's suppliers won wage increases. Toyota's vehicle sales in China surged 35% last fiscal year, accounting for about a fourth of its global deliveries.

"Workers know the companies are vulnerable and that they'll pay up," said Edwin Merner, who oversees $3 billion as president of Atlantis Investment Research in Tokyo. "There will be more and more of these strikes."

Toyota fell 0.6% to 3,275 yen in Tokyo, while Denso dropped 1.8%. Denso is about 23% owned by Toyota.

Labor costs

Strikes are spreading through foreign-owned factories as demands for higher pay underscore China's shrinking supply of low-cost labor. 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, disrupting production.

Toyota affiliate Toyoda Gosei ended a strike Saturday. Workers at another Toyota supplier, Tianjin Star Light Rubber and Plastic, walked out briefly on June 15 before the dispute was settled when the company offered a raise.

About 300 workers at Denso's Guangzhou venture have been on strike since Monday morning, and negotiations with management are ongoing, Denso spokesman Shen Meihua said.

The venture manufactures and supplies fuel-injection systems for customers including Toyota. The plant employs about 1,100 workers.

Toyota's Yokoyama said the automaker's factory in Tianjin, northern China, is operating normally. Toyota closed the factory on Friday because of the strike at Toyoda Gosei.

Honda's pay raise

The carmaker builds Camry sedans, Highlander SUVs and Yaris compact cars at the Guangzhou factory.

Honda agreed last month to raise pay 24% for workers at a parts plant in Foshan, Guangdong province, after a strike shut 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.

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 raises are needed to help keep pace with the rising cost of living in the world's most-populous nation.

link:

http://www.freep.com/article/20100623/BUSINESS01/6230312/1331/China-parts-strike-idles-Toyota-factory

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