Toyota Closes China Car Plant as Honda Workers Return

June 19 (Bloomberg) -- Toyota Motor Corp. closed a factory in China because of a supplier strike while workers at a Honda Motor Co. affiliate agreed to return to their jobs with a promise of higher pay.

Walkouts have spread through foreign-owned industrial plants during the past month as workers demand higher pay, underscoring the shrinking supply of low-cost labor in the world’s fastest-growing major economy.

Strikes at Honda suppliers in China disrupted the Tokyo- based automaker’s production in the country and forced it to raise pay at three plants. Employees at Honda Lock (Guangdong) Co. agreed last night to accept wage increases, said Takayuki Fujii, a Beijing-based spokesman for Honda.

“We aren’t striking anymore and decided to take the offer,” said a 23-year-old Honda Lock employee who identified himself only by the surname Huang. “It’s not much of an increase, but there’s nothing more we can do.”

Toyota closed its Tianjin factory at noon yesterday after a strike at supplier Toyoda Gosei Co. in the city, said Mieko Iwasaki, a spokeswoman for the Toyota, Japan-based carmaker.

Honda is trying to prevent the resumption of a strike at a fourth parts maker. Nihon Plast Co. shut its Zhongshan, Guangdong province plant on June 17 after workers walked out demanding higher wages. They agreed late yesterday to return to work as negotiations continued, and operations resumed at about 9 p.m. Beijing time, Fujii said.

‘Copycat Strikes’

“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.”

Workers at Honda Lock, wholly owned by the carmaker, began their walkout on June 9 and suspended industrial action June 15. A Honda Lock employee surnamed Luo said the basic monthly salary has been increased by 200 yuan ($29.30) plus an 80-yuan allowance.

“It’s much less than what I expected,” Luo said, adding that there were no talks of more strikes. “I was hoping we would get at least 450 yuan more each month. About 80 percent of the workers in there were very unhappy with the increase.”

Employees would probably join in should someone decide to start another strike because dissatisfaction is so high, he said.

Production Unaffected

Honda’s car production wasn’t disrupted by the earlier Nihon Plast walkout, Fujii said.

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 manufactures steering wheels for all models from Nissan’s Chinese venture, Dongfeng Nissan Passenger Vehicle Co.

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

Assembly car plants in Guangzhou and Hubei province run by Dongfeng Nissan will resume today, said Akihiro Nakanishi, a Guangzhou-based spokesman for the company.

The factory in Zhongshan is 85 percent owned by Nihon Plast and 15 percent owned by Osaka, Japan-based Itochu Corp. It has 502 employees and was established in 2003, according to the website.

Pay Rises

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 Toyota affiliate, based in Japan’s Aichi prefecture.

Niu Yu, a Toyota spokesman in China, said the Tianjin FAW Toyota Motor Co. car plant that shut down yesterday is normally closed on Saturday and Sunday.

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 fell 1.7 percent to close at 3,240 yen yesterday in Tokyo trading, 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, last week.

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.