[A-List] Honda to raise wages for striking China workers
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Wed Jun 2 14:02:50 MDT 2010
Honda to raise wages for striking China workers
Automotive News | May 31, 2010 - 8:39 am EST
UPDATED: 5/31/10 12:46 p.m. ET
(Bloomberg) -- Honda Motor Co. will raise workers' monthly wages after a
parts factory strike shut down almost all Chinese production.
The workers will receive a 24 percent pay increase to 1,910 yuan ($280
dollars) per month, Honda said in a faxed statement today. Most workers have
accepted the offer, while talks continue with those who are unsatisfied, the
Production at all four Honda car factories in the country will remain
suspended through at least Wednesday, with plans beyond that date to
tomorrow, the company said in a separate statement. Production of manual
transmissions at the parts plant resumed today.
The maker of Accord and Civic cars shut down all four of its auto assembly
plants in China last week after workers at the parts unit walked out,
demanding a pay raise. The strike, the first to stop Honda's production in the
country, may be reducing its output by as many as 3,000 vehicles daily,
“My guess is that it will take less than a week to get production back at
full capacity once the strike is resolved,” Tianshu Xin, managing director
at IHS Global Insight in Shanghai, said prior to the settlement
announcement. Honda will likely add shifts to make up the lost
production, he said.
The carmaker shut two plants in Guangzhou, Guangdong province, on May 24
and factories in Guangzhou and Wuhan, Hubei province, on Wednesday after
1,850 workers making transmissions and engine parts at Honda Auto Parts
Manufacturing Co. in Foshan, Guangdong, went on strike May 17.
A line making manual transmissions at the parts plant reopened today,
Yasuko Matsuura, a spokeswoman for Honda, said by phone. Other
at the plant remained shut. The striking workers had demanded monthly pay
be boosted to between 2,000 yuan ($293) and 2,500 yuan, Matsuura said
The original salary of about 1,500 yuan was already far above the legal
minimum wage of 920 yuan, Honda's auto parts division said in a statement.
"We are currently trying to convince those who continue to object to the
offer ... to return to full operation as soon as possible," the company said.
Honda produces about 3,000 vehicles a day in China, according to Koji
Endo, a Tokyo-based analyst at Advanced Research Japan.
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, CEO 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 Tatsuya
Mizuno, director at Mizuno Credit Advisory in Tokyo, adding Honda's image
in China may have been tarnished as a result of the strike.
Elsewhere in China, more than 1,000 workers at a parts factory near
Beijing that supplies South Korea's Hyundai Motor suspended work for most of
Saturday to demand higher wages. They returned to work after management
promised a pay rise, local media reported.
"There was a little production disruption on both May 28 and 29, but it
has been back to normal operations since May 30," a Hyundai spokesperson said
in an e-mail from Seoul.
Reuters contributed to this report.
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