Toyota China Supplier Hit by Strike as Unrest Spreads

June 18 (Bloomberg) — Workers at a Toyota Motor Corp. affiliate in China went on strike, adding to a series of assembly-line walkouts that underscore pressure for higher wages in the world’s fastest-growing major economy.

The Toyoda Gosei Co. plant in the northern city of Tianjin has been partially shut since yesterday and talks with employees are ongoing, said Shingo Handa, a spokesman for the company, based in Japan’s Aichi prefecture. Toyota’s car production in China hasn’t been affected, said Ririko Takeuchi, a Tokyo-based spokesman for the automaker.

The stoppage comes as a Honda Motor Co. unit seeks to prevent workers at a parts factory in the region from resuming a strike. The carmaker said it hasn’t received word yet on whether an agreement was reached by a 3 p.m. deadline for wage negotiations, set by management and workers. Honda raised pay 24 percent to end an earlier dispute as two previous strikes in China disrupted output, fanning demands for higher pay at rivals.

“The Honda situation could be the start of a wave, as pent-up demand for wage increases surfaces and migrant workers, for example, become more assertive,” said Andrew Thompson, co- head of the automotive practice for KPMG in Shanghai. The pressure for higher pay will continue “as China’s economy continues to boom and people’s aspirations grow,” he said.

Deadline

Employees at another Toyoda Gosei company in China, Tianjin Star Light Rubber and Plastic Co., also struck briefly on June 15, Handa said. The strike was resolved when the company offered workers a pay increase, said Zhu Hai Feng, a Shanghai-based Toyoda Gosei spokesman, without elaborating.

Toyota fell 1.7 percent to close at 3,240 yen 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.

Management and union leaders at Honda Lock (Guangdong) Co., a supplier to Honda in Zhongshan, Guangdong, aimed to reach a wage agreement today to prevent workers from striking for a second time at the facility.

Yoshiyuki Kuroda, a spokesman for Honda Motor, said the company was still awaiting word on the outcome of the talks. Spokespeople for Honda Lock couldn’t immediately be reached to confirm whether an agreement with workers had been made by the 3 p.m. deadline.

‘Plenty of Factories’

“I would definitely get another job if I am not happy with the pay increase,” Du Jun, a 20-year-old worker at the white- walled Honda Lock factory, said before the deadline. “There are plenty of factories around here I can get a job from,” said Du, who moved to the region from his parents’ farm in Guangxi province last year.

The Honda Lock strike has yet to affect Honda Motor’s car production in the country, the automaker has said.

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.

Taiwanese electronics maker Foxconn Technology Group said this month it will double salaries for its lowest-paid workers after at least 10 Chinese employees killed themselves this year.

“In the short term, a rise in wages is negative, but it’s positive in the medium- and long-term,” said Hideo Arimura, who helps oversee $2.2 billion at Mizuho Asset Management Co. in Tokyo. “If wages rise, people will spend more, benefiting the companies eventually.”

Gas Stoves

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

Xiaotian Industrial decided to boost pay because “living costs are higher now and it should help relieve some pressure on labor shortages,” said Ms. Ou, a hiring manager at the Xiaotian factory in Zhongshan, who declined to give her full name. The company decided to raise wages before walkouts at Honda Lock and two other Honda suppliers in the past month, she said.

Volkswagen AG, Europe’s largest carmaker, said June 9 it will spend 520 million euros ($622 million) to add a new plant in Guangdong as the country’s car demand booms. The new factory, set to open in 2013, will join similar plants in the area built by other global automakers such as Toyota and Nissan Motor Co.

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 last Wednesday. 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.

–Takako Iwatani, Akiko Ikeda, Mark Lee, Liza Lin, Stephanie Wong, Naoko Fujimura, Yuki Hagiwara. Editors: Ian Rowley, Terje Langeland

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