Japanese suppliers must raise workers' wages
Yang Jian Automotive News | 2010-6-25 SHANGHAI -- A walkout this week at a Denso fuel injector plant in south China was the seventh strike against a Japanese-owned automotive supplier since late May. What is most interesting about these stoppages is the central government's attitude, which has shifted its support from the companies to the workers. In a tight labor market, the Japanese suppliers' just-in-time production strategy left them vulnerable to strikes. All four of Honda's assembly plants were forced to shut down three days after workers staged a walkout at the automaker's transmission supplier. Beijing's sympathy for the strikers leaves their suppliers no choice but to raise the workers' wages. And this marks a big change in China's labor climate. Under China's existing laws, strikes are not allowed. Governments at different levels in the country have long been friendly towards foreign-invested companies for jobs and tax revenue. So when workers staged a walkout on May 19 at a Honda transmission plant in south China's Guangdong province, the local government sided with management and urged the strikers to return to work. But with work stoppages spreading to other Japanese factories, the central government became anxious to get things under control and maintain social stability. So Beijing began sending signals to the employers. In recent weeks, state media such as the Xinhua news agency published editorials expressing sympathy for the strikers, who endure harsh working and living conditions. On June 14, Chinese Premier Wen Jiabo appeared on TV urging government and society to "treat young migrant workers as they would treat their own children." Most of the strikers are in their early 20s. They have migrated from inland China after finishing high school and vocational school. They typically work about 10 hours a day and earn a monthly salary of 1,000 to 2,000 yuan ($146 to $293). Now that they have the government on their side, workers in other Japanese-owned factories are likely to strike and demand pay raises. What can these companies do to resolve the strikes? Well, they have no choices but to raise wages. Can they quickly hire new workers to replace the protesters? No, they can't. The labor market in coastal China -- where most of the foreign auto companies are located -- already is very tight. With industrialization picking up speed in inland China, many migrants are returning to work in factories near their homes. Is it possible for suppliers to relocate their factories to inland China or other low-cost countries like Vietnam and Cambodia? No, that's not an option either. The just-in-time production system requires suppliers to remain close to the automakers, said Yale Zhang, China director of CSM Worldwide, an automotive research firm. That system, which has long been Japanese auto companies' powerful weapon in cost reduction, has turned out to be a major weakness during strikes. For example, Toyota was forced to halt production of the Camry and Yaris on Tuesday soon after Denso's employees walked out. That explains why six parts plants supplying Honda and Toyota in China resolved their strikes by agreeing to raise wages by 20% to 30%. Beijing hasn't issued any new edicts on wages, but it won't have to. The government's message is clear: wages should go up, and they should go up soon. _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
