Toyota's Supplier Affected by Second China Strike

A supplier of parts for Japanese carmaker Toyota Motor Corporation announced today that it was experiencing a strike in China, the second this week and the most recent in an outbreak of factory-labor disputes around the country.

The possibility of additional industrial action also shrouded a Honda factory in the southern manufacturing hub of Guangdong, where auto workers reported no discernible progress in spite of today’s deadline for management to offer a revised pay deal.

Growing discontent among approximately 130 million Chinese migrant workers, whose labor has spurred China’s growth, could undercut the government’s authority and hurt the country’s competitiveness as an affordable global manufacturing hub.

Wages constitute just five percent of total manufacturing expenses, but other costs like water and energy are becoming costlier. Some manufacturers are already shifting production to other, more affordable locations like Bangladesh and Vietnam.

China’s officials, who are adamant about stability but also claim they can guarantee a better life for people at the lower end of a rapidly growing gap between the rich and the poor, have censored coverage of the labor unrest in the state media while voicing support publicly for auto workers.

The Authorities Intervene

Toyoda Gosei reported that production had halted since Thursday afternoon at a factory in Tianjin, a northern port city, where it produces things like instrument panels.

Auto workers verified that the strike was still in force. Police vehicles could be spotted on the plant’s grounds.

Reuters obtained a poor-quality video filmed by an auto worker on his cell phone inside the manufacturing plant on Thursday night. The video showed fights between workers and police, mixed with yells of “The police are coming.”

A different production stoppage ceased work at a separate Toyoda Gosei factory on Tuesday, but work has now resumed at that plant.

The publication of the Communist Party of China, the People’s Daily, requested higher worker wages this week in the interest of stability, and Premier Wen Jiabao called for improved treatment of auto workers.

Although tightly controlled, the sympathetic reports of workers’ grievances in the state’s media hint that Beijing would like to circumvent a full confrontation with the auto workers and might accept some concessions.

Tensions with Japan

The relationships between Chinese manufacturing units and Japanese automakers is especially strained and complicated, which may be why they have been the flashpoints for the spate of labor disputes lately, according to an expert.

“In our investigations, we consistently found that the most tense relations were with the Japanese and South Korean partners," explained Wen Xiaoyi, a research analyst at the China Institute of Industrial Relations in Beijing specializing in labor relations in the auto industry.

“You find the Japanese and South Korean companies are much more involved in managing production at the factories. Also, they don't have a tradition of collective bargaining or give-and-take in their Chinese factories," Wen commented.