GUANGZHOU – Japa’s second largest automaker Honda was forced to halt production at its four assembly plants in China as workers at one of its parts suppliers went on strike on May 17, demanding higher wages.
The strike came after Honda announced a boost in its annual production capacity at GAC-Honda Automobile Co., Ltd. from 360,000 to 480,000 vehicles. Workers at Honda Auto Parts Manufacturing Co., Ltd. (CHAM) staged strikes starting May 17, claiming that they are paid on average ¥1,500 ($217) per month, 50 times less than their Japanese colleagues. The striking workers were demanding wages of ¥2,000-¥2,500, equivalent to salaries at Honda’s car making factories in China, the company said.
A worker surnamed He told Xinhua that some of them only earn ¥900 a month, which is lower than the minimum wage in Foshan. Meanwhile, a Japanese employee of CHAM claimed to earn ¥50,000 a month, excluding bonuses and allowances.
The company’s salary scheme is divided into five ranks, each with fifteen sub-ranks. There are 75 ranks in total. It normally takes 15 years to move up five ranks, according to an insider.
CHAM workers won a raise after staging two strikes over pay. The Japanese parts maker agreed to give workers an extra allowance of ¥350, but the move failed to meet expectations. Employees voiced their objection to the raise, and the strike continued on and off through late May.
CHAM workers wearing company white uniforms, caps and even masks, rallied at the company gate on May 27, asking for an increase of ¥500-¥1,000 in their monthly pay.
Strike leaders dismissed
CHAM let go of two strike leaders on May 22, broadcasting the news to all employees that same day, said a representative from the company’s general affairs office to People’s Daily. But CHAM claimed that the two workers were fired because their behavior was “overly aggressive and against company rules.”
One of the two dismissed workers sought for help from local labor bureau, claiming that he did not receive any compensation except for May wages.
Local media reported that CHAM demanded all its interns to sign papers promising not to get involved in any strikes in the future.
Local government officials of Foshan City have intervened in the talks between workers and the automaker, Honda China’s spokesperson Zhu Linjie told Bloomberg. The local government issued a statement in late May saying that Honda had’t violated China’s rules on workers’ compensation or the working environment, he said.
Xia Yeliang, a labor economics expert from Peking University, believed that the enormous pay gap between Chinese and Japanese workers at CHAM is definitely unreasonable. He said the company owes its workers an explanation and should offer equal pay for equal work.
“A strike is the last resort for the workers. They undergo great distress and pressure during a strike, as well as risks afterwards,” said Xia. “Unlike developed countries that have sound trade union policies and protection of workers’ rights, China still lags far behind.”
Honda faces hefty losses
Foshan-based Honda Auto Parts Manufacturing Co., Ltd. is Honda’s wholly owned automobile powertrain components production subsidiary in China, which supplies transmissions and engine parts for Honda’s joint ventures in China. It currently produces 480,000 transmissions per year for seven models including the Accord, City, Odyssey and Fit, according to the company.
Honda China confirmed that GAC-Honda’ two plants, Dongfeng-Honda and Honda Automobile China (export-only facility) all halted production as a result of the strike.
CHAM reportedly lost ¥40 million per day during the production stoppage. And Honda’s four car making plants in China are losing more than ¥200 million each day in output value.
“Without the gearbox, we cannot move on with installation. Production has been halted since May 26,” said GAC-Honda spokesman Yang Guang.
The other Honda JV Dongfeng-Honda stopped production on May 26 too. “If the parts supply shortage problem cannot be solved in the short term, we will resort to other solutions,” Chen Binbo, executive vice manager of Dongfeng-Honda. The Wuhan-based JV will import parts from Honda’s Japanese or Thai factories should the strike continue, and CHAM will have to pay for the extra costs.
The China market accounted for 17 percent of Honda’s global sales last year. It sold 219,514 cars in China during the first four months of 2010, a 39 percent surge from the same period a year ago.
The Japanese automaker eyes boosting its China sales 9 percent this year to 630,000 vehicles, Honda CEO Takanobu Ito said in April.