Honda hit by strikes in China

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Published: June 9,2010

Tags: automobile industry, labor, strike

SHANGHAI — Workers at a second auto parts factory affiliated with Honda Motor Co. walked off the job today as a strike dragged on at the other facility, forcing the company to halt production at two of its Chinese car assembly plants.

The latest labor dispute was at Honda Lock (Guangdong) Co., in Zhongshan, a city near Honda’s production base in the southern city of Guangzhou and began yesterday morning, said Yoshiyuki Kuroda, a Honda spokesman in Tokyo. He said the reason for the strike was unclear.

Separately, Honda said in a statement that production at its two car plants would remain suspended tomorrow due to “labor negotiations” at parts maker Foshan Fengfu.

Production at Honda’s other two China car assembly plants was not affected because they had a sufficient supply of parts on hand, the company said.

Workers at Foshan Fengfu Autoparts Co. walked off the job earlier this week, seeking pay raises, just days after Honda settled a two-week strike at a wholly owned parts supplier that had forced the Japanese automaker to freeze production at all four of its car assembly factories in China due to a lack of parts.

The conflicts reflect rising tensions between workers and foreign companies that rely on China as a source of cheap labor and a fast-growing market. Companies in China are finding it harder to attract and keep workers, who are demanding better pay and working conditions.

But Honda’s own situation is unique in that apart from its car assembly joint ventures with local partners Guangzhou Auto Group and Dongfeng Motor Group, it tends to run its car parts businesses without teaming up with local partners.

The lack of a local partner — Foshan Fengfu is owned by Honda subsidiary Yutaka Giken Co. and a Taiwanese partner, Moonstone Holding Co. — can mean a lack of support in persuading or forcing workers to return to their jobs.

“The first strike was in a parts factory wholly owned by Honda, which makes a lot of difference in terms of how the company is run, its corporate culture and how it treats workers,” said Zhang Xin, an auto analyst at Guotai Jun’an Securities in Beijing.

“Most foreign companies still cooperate with local companies even if joint ventures are not required for parts plants, unlike car assembly plants. Honda is a rare exception,” he said.

The strikes have hobbled Honda just as it was gearing up to expand production to meet strong demand. Foshan Fengfu makes exhaust pipes and other parts for Honda’s Odyssey, Accord and Fit models. Honda Lock’s website says it makes ignitions, handles, mirrors, wheel sensors and key sets, among other parts.

Wage disputes and strikes are common in China, but rarely attract as much attention as the Honda strikes and other disputes that surfaced following 11 suicides and three suicide attempts — mostly by jumping off tall buildings — at Taiwan’s Foxconn Technology Group, a contract manufacturer in China of iPhones and other name-brand electronics.

Labor activists accuse Foxconn of having a rigid management style, an excessively fast assembly line and forced overwork. The company denies the allegations, but has announced two raises for its Chinese workers. It also is installing safety nets around buildings and hiring more counselors.

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