The Truth About Cars » strike The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. Thu, 17 Jul 2014 10:00:28 +0000 en-US hourly 1 The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. The Truth About Cars no The Truth About Cars (The Truth About Cars) 2006-2009 The Truth About Cars The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. The Truth About Cars » strike Strike At DHL Could Cripple JLR Mon, 08 Jul 2013 12:52:01 +0000

Ah, the wondrous web of global automaking: Drivers and sorters at DHL are going on strike, and this threatens to cripple production at Jaguar Land Rover in the UK. JLR  has outsourced a good deal of its logistics to Deutsche Post–owned  DHL. DHL employees serving JLR’s plants at Castle Bromwich and Solihull voted for a strike after they did not receive terms and conditions extended to regular JLR staff.

JLR and DHL ware working on contingency plans to keep production going. “A source close to JLR played down fears that production could stop altogether and that the carmaker was studying “a range of options” to ensure parts continued to reach the production line,” Reuters says.

DHL workers at JLR’s Halewood factory in North West England that makes the Land Rover Evoque, are due to vote today. Workers at other logistics firms serving JLR may join the strike.

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GM Daewoo Workers Plan 4th Of July Walkout Thu, 27 Jun 2013 11:35:50 +0000 Korea Strike - Picture courtesy

Workers at GM’s South Korean plant will stage a partial walkout, ominously on Independence Day, July 4th, Reuters heard from a union spokesman. The walkout could turn into a full-fledged strike, union spokespeople said. Reports Reuters:

“Last week, 79 percent of union members at GM Korea voted in favor of strike action. Union leadership decided late on Wednesday to launch a partial strike for six hours on July 4, and to refuse overtime and weekend work for now, said Choi Jong-hak, a union spokesman. He said union leadership would decide whether to continue the partial strike depending on progress in the wage talks.”

This is yet another chapter in the suspense novel titled South Korean wage talks. Workers want more money, and they are upset that the next generation Cruze, and possibly the Mokka, will be produced elsewhere.

Four out of 10 Chevrolet-branded vehicles sold globally, and all Chevys sold in Europe come from South Korea. The Korean GM units is a key hub for CKD kits that are shipped to China and many emerging markets for local assembly. GM Korea makes Opel’s Mokka SUVlet, and the Chevy Spark.

The union says “cost per vehicle” is half of that in Australia and lower than in many other countries, Russia, included.  Workers fear a slow shift of GM’s production base from South Korea to China. The next generation Cruze will be made in China, others could follow.

From July to September  2012, GM Korea suffered its biggest-ever strike since it was created in 2002, resulting in lost production of 40,000 vehicles. In China, automobile production is relatively safe from industrial action. What’s more, street protests in China are known to  shift consumer sentiment away from certain other brands.

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Labor Unrest In South Africa Sat, 25 May 2013 08:37:04 +0000 Rubber bullets South Africa - Picture courtesy

South Africa’s main auto union threatened to “halt production” at a Volkswagen after union members were fired, Reuters says.

“We call on the Volkswagen South Africa oligarchy to immediately stop these dismissals of workers. If VWSA fails to adhere to this demand, we will be forced to halt production until this impasse is resolved,” the National Union of Metal Workers of South Africa told the wire.

Tensions in South Africa are high. On Tuesday, ten striking South African miners were hit by rubber bullets, as labor strife spread ahead of mid-year pay negotiations. A Mercedes-Benz plant in the country was shut for two days when workers walked out after they were asked to remove their overalls when going outside, and not to wear them when returning..

Metal workers in South Africa demand a 20 percent industry-wide salary hike.

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German Autoworkers Go On Strike Thu, 02 May 2013 14:48:14 +0000

German autoworkers want their share of the record profits announced by German carmakers last year. IG Metall labor union demanded 5.5 percent. Employers countered with 2.3 percent. Today, workers went on strike.

500 employees on the night shift at Daimler’s Mercedes  plant in Stuttgart- Sindelfingen walked off the job this morning. More walkouts are planned here and in the Porsche factory nearby, Bloomberg reports. According to IG Metall, “several thousand employees” are expected to join the warning strikes in Germany’s southern state of Baden-Wuerttemberg.

More walkouts are planned for tomorrow in Berlin, affecting a Mercedes component plant an factories of suppliers,

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GM Workers Go On Strike In Brazil Wed, 24 Apr 2013 14:15:36 +0000

Chevrolet’s Celta, Prisma and Onix models  will be in short supply when workers General Motors’ Gravataí plant in southern Brazil go on strike for higher pay and shorter hours. Workers of the plant’s first and third shifts already approved the strike, Reuters says, the second shift is expected to follow suit today.

The plant’s 4,500 workers demand a 12 percent pay increase and a reduction in working hours to 40 per week from 42. They turned down GM’s offer of an 8.29 percent raise and a 41 hour work week  by next January,

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Labor Strife Paralyzes Dacia Plant Fri, 22 Mar 2013 14:49:17 +0000

A 36 hour strike at a Dacia plant in Romania led to the loss of 1,500 cars, as workers agitated for wage improved and increased working conditions.

Plant managers said that less than 20 percent of the workforce participated in the strike, but it was still significant enough to disrupt output for over a day. Workers at the Dacia plant are looking for a 25 percent bump in their wages, which average around 837 euros per month.

Workers at the plant claim that they are pressured to complete a car once every 40 seconds, and also objected to the apparent installation of alcohol testing at the plant.

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Strike At Lear Plant Ends, Oshawa Production Back On Track For GM Tue, 30 Oct 2012 16:33:17 +0000

A brief, two-day strike at a Lear seat plant near Toronto has ended, with production at GM’s Oshawa plant back on schedule.

400 workers at Lear’s Whitby, Ontario plant walked off the job for two days after talks between Lear and the Canadian Auto Workers union broke down. The plant supplies seats for GM vehicles like the Chevrolet Camaro and Buick Regal, as well as other vehicles built at Oshawa.

Reuters reports that the consolidated line, which builds the current generation Impala, was down temporarily, while the flex line, which builds the Camaro and Regal, stayed active, although production was disrupted. Westcast, the prolific exhaust manifold manufacturer, is still affected by a strike at their Ontario plant, and no resolution with the CAW appears in sight.

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CAW Strike At Key Parts Suppliers Mon, 29 Oct 2012 13:00:35 +0000

The drama over a possible strike at the Big Three was averted this summer, but it ain’t over yet; roughly 75 employees walked off the job at two key suppliers this weekend.

Westcast and Lear were affected by the job action. Automotive News, citing information from Westcast, reports that the exhaust manifold supplier has a 65 percent market share among the Big Three, and a 51 percent market share overall. General Motors will take the brunt of the job action at Lear, as workers walked off the job at their seat plant near Toronto. The plant supplies seats for vehicles assembled at GM’s Oshawa plant.

A statement released by the union regarding Westcast said that

“In the last few days, we’ve learned that General Motors intends to move the current work performed at Wescast to a facility in China. There is absolutely no reason that our members should agree to a new contract that undercuts their own jobs.”

Westcast announced this summer that it had struck a deal to be bought by Sichuan Bohong Industry Co, but the deal has yet to be finalized.

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CAW Mulling Strikes At All Three Automakers Wed, 05 Sep 2012 17:05:52 +0000

A report by Reuters suggests that the Canadian Auto Worker’s union may take the unprecedented step of striking at the plants of all three domestic automakers.

Traditionally, the union targets one company for bargaining and a possible strike, and that sets the precedent for contracts with the other two. This round of negotiations has been particularly tense; labor costs in Canada are considered to be the highest in the world, and auto makers are looking to bring them down to the level offered in the United States.

Reuters sums up the matter, stating

The Canadian Auto Workers (CAW) said strike committees will be formed by local unions at Ford of Canada, General Motors of Canada and Chrysler Canada this week, ahead of the union’s strike deadline of 11:59 p.m. eastern (0359 GMT) on September 17.

“It is our hope and intention to reach an agreement with at least one of the three companies before the deadline,” the union said in a leaflet distributed to members. “We must be prepared, though, to shut down operations at all three, should we be unable to reach an agreement.”

The unions are demanding that no more concessions be made on their end, in light of their sacrifices made during the bailout period contract negotiations. Compromises, such as profit sharing, have been floated by the auto makers, but only recently has the CAW changed their hardline stance against it.

TTAC readers with experience working in auto plants have suggested that a strike won’t happen, and that negotiations will eventually lead to an equitable settlement. It’s likely that talk of a strike at all three automakers is simply rhetoric in the run-up to more intense negotiations.

Reuters quotes Gary Beck, chairman of the CAW’s Ford master bargaining committee as stating

“We have been sitting down with all three companies, and no one has taken the initiative to lead,” he said. “This will, hopefully, wake them up.”

In our eyes, that’s a fairly strong piece of evidence to support the above theory.

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CAW Approves Strike Mandate As Talks Resume Today Mon, 27 Aug 2012 14:59:05 +0000

Members of the Canadian Auto Workers union have voted overwhelmingly in favor of a strike mandate as talks between the union and the Big Three resumed today.

Workers at Chrysler, General Motors and Ford were 99, 98 and 97 percent in favor of striking respectively. The CAW hasn’t gone on strike since 1996, but President Ken Lewenza’s stated promise of no further worker concessions, along with a strong desire to cut costs by the auto makers, will inevitably lead to tough negotiations.

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Report: CAW Will Target Chrysler For Strike Fri, 17 Aug 2012 14:22:53 +0000

The Canadian Auto Workers union is expected to target Chrysler in the event of a strike, but will reportedly wait until Labor Day before taking action.

CTV News reports that

Tony Faria, an automotive expert at the University of Windsor, predicted Chrysler will be chosen because it has the largest Canadian footprint of the Detroit Three and therefore has the most at stake. “They can least afford a shutdown of operations in Canada, so they’re the most vulnerable in terms of a strike threat,” Faria said Wednesday. “But even though Chrysler is not pushing for two-tiered wages, Chrysler is going to push hard for lower starting wages.”

Canada is home to the plants that build some of Chrysler’s key products, including the Chrysler/Dodge minivans, the Chrysler 300/Dodge Charger and the Dodge Challenger. Canadian sales would be especially impacted in the event of a strike, since Canada is a key market for the Dodge Caravan.

CTV News quotes Faria as saying that Chrysler will probably ask for a further reduction in the starting wage, and an increase in the time it takes workers to reach the maximum wage (from six years to eight years).

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Chrysler Would Be Hit Hardest In CAW Strike Wed, 25 Jul 2012 17:42:46 +0000

With 25 percent of its manufacturing capabilities in Canada, Chrysler would be hardest hit in the event of a strike by the Canadian Auto Workers union.

An article in the Windsor Star outlining the upcoming negotiations between The Big Three and the CAW describes how Chrysler is most vulnerable to a potential strike by the CAW. Tony Faria, professor emeritus of business at the University of Windsor told the paper

“The minivan is still a very important product, even though the segment is down…For Chrysler, the minivan represents about 10 to 12 per cent of its global sales.”

The Chrysler minivans are built solely at the Windsor plant, meaning a strike would cripple one of Chrysler’s core products in both the U.S. and Canada. Faria also noted that

“Ford, however, wouldn’t have much to lose since it’s producing low-selling vehicles, such as the Edge and Flex, and GM could shift at least overflow production of its hot-selling Chevy Equinox to its plant in Spring Hill, Tenn.”

Of course, this is all assuming there even is a strike. The whole thing could be averted if negotiations between the automakers and the CAW goes well – which is up for debate. The automakers are pushing hard to bring labor costs down to U.S. levels, while the union is looking for wage increases and a cost-of-living-adjustment. Chrysler’s Sergio Marchionne has suggested alternatives, including profit sharing and other lump-sum deals in lieu of wage increases.

Observers, including Faria, feel that Chrysler will most likely be targeted first for negotiations (since the first deal reached with an automaker generally sets the tone for the other agreements), but GM may also emerge as a contender, since the CAW is looking to secure product guarantees for their Oshawa plant. GM CEO Dan Akerson recently claimed that Canada was the most expensive place in the world to build cars.

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South Korean Auto Unions Gearing Up For Strike Thu, 12 Jul 2012 13:00:43 +0000

More than 70 percent of Hyundai’s 45,000 strong worker’s guild voted in favor of job actions, including a walkout planned for Friday. The guild is building up towards Hyundai’s first labor strike since 2008, as they seek better wages and reduced hours.

A report by Bloomberg lists the demands of Hyundai and Kia workers (who are also participating in the job action) as

a 151,696 won [$131] increase in monthly base pay [salary is around $39,000 for the average worker] and that the companies return 30 percent of net income to employees as bonuses…other demands include switching Hyundai Motor’s plants to two eight-hour shifts from the current double 12-hour rotation system…

Hyundai’s last strike in 2008 lasted 12 days and cost the company approximately 44,645 vehicles. The expanded overseas manufacturing presence of both Hyundai and Kia should help mitigate some of the damage, but a strike will still have negative effects on the steady sales growth of the two brands. While South Korean production only accounts for 46 percent of total production (down from 60 percent in 2008), overseas plants are operating at near full capacity, leaving little breathing room.

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Strike At GM South Korea Thu, 05 Jul 2012 11:50:01 +0000 At home, GM is at peace with the unions, benefits of having the UAW as a major shareholder. Abroad, GM Europe has been in a low intensity conflict with the European unions that oppose cuts at Opel. Now, a labor conflict flares up in an unexpected part of the world: Korea.

Workers at GM’s South Korean factories will go on strike for three days next week, Reuters reports. Workers at Hyundai and Kia will vote next week on joining the action, until then, it is GM that is in the crosshairs. Says Reuters:

“GM Korea is one of the U.S. automaker’s key Asia production bases, producing a quarter of GM’s Chevrolet cars sold globally, and 98 percent of cars such as the Cruze and the Aveo subcompact sold in Europe.  China is also a major export market for GM Korea’s complete knock-down kits.”

GM’s South Korean labor relations have been frayed ever since there were discussions on moving some of the Korean production to Europe. Choi Jong-hak, a spokesman for GM Korea’s labor union, warned the union would “wage a war” if GM shifts output to Europe.

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UAW Backs Off Transplant Organizing Goal, Attacks Hyundai Wed, 30 Nov 2011 20:23:15 +0000

At the beginning of this year, the United Auto Workers pledged that it would launch a campaign to organize the foreign-owned, non-union “transplant” factories in the US, threatening to tar uncooperative automakers as “human right abusers.” The campaign initially lost steam, but the UAW stuck to its pledge, re-iterating on several occasions that it would organize “at least one” transplant factory by the end of 2011. With one month left to accomplish that goal and no signs of progress in sight, the UAW has officially called off that goal. In fact, the UAW now hopes to simply pick an automaker to target by the end of 2011. Spokeswoman Michelle Martin tells Bloomberg

At this point, our hope is to make a decision about who we’re going to target by the end of the year. But obviously, we won’t have the organizing campaign completed by the end of the year.

This is not too surprising, considering the UAW announced last week that it would be focusing on dealership pickets initially rather than factory organizing. And sure enough, the first dealership picket has begun, targeting Hyundai dealerships. And yet, says Martin

This has nothing to do with the domestic organizing campaign. Hyundai is not the target.

Huh? If the UAW is not committing to organizing Hyundai’s assembly workers, why picket Hyundai dealerships?

The Freep explains that the union is targeting 75 Hyundai dealerships, in order to show international solidarity, a recurring theme in the presidency of UAW boss Bob King. Says King

The UAW has embraced a global vision of social justice and will mobilize its membership to defend labor rights here and in other parts of the world

So, what is the UAW picketing in solidarity with? Martin tells the Freep that Hyundai’s Korean unions are picketing across Korea to protest the firing of a worker whistleblower. According to Martin

The worker, who is employed by a Hyundai subcontractor, was fired after she reported the sexual harassment in 2010 to Korea’s National Human Rights Commission… The commission ruled in the worker’s favor and ordered the subcontractor to pay damages and rehire the worker, but the subcontractor has refused.

A UAW statement adds

Holding banners that read, “Stop Sex Discrimination at Hyundai” and “Reinstate Ms. Park,” UAW members from Los Angeles to New York, at more than 75 different dealerships, informed American auto buyers about an injustice to an autoworker on the other side of the globe.

“Though we may work for different companies and in different countries, as workers, we support each other’s struggles and know that one of the best ways to hold our employers accountable is through consumer action at dealerships,” said Mike O’Rourke, an 33-year employee and president of UAW Local 1853 at General Motors’ Manufacturing Facility in Spring Hill, Tenn.

Hyundai Motor America’s response: the worker was an employee of a subcontractor at Glovis, a Hyundai “affiliate,” therefore

the issue has nothing to do with Hyundai Motor Company

In other words, the UAW will be alienating itself from Hyundai’s US workers and dealers over one person who doesn’t even work for Hyundai. Standing on principle is great, but trying to block sales of cars will not exactly endear Hyundai’s assembly workers to the union. Meanwhile, similarly to the UAW’s last protest against Hyundai, there doesn’t seem to be as much moral clarity on this issue as the UAW would like it to appear. Of course sexual harassment has no place in the workplace, and  the circumstances of this case in particular do not sound good, but by hammering on the treatment of contracted employees, and by associating the contracter “affiliates” with the automakers they work for, the UAW opens itself up to criticism along the same lines.

The Freep is also reporting today that the UAW has called off a protest that was planned at GM’s Orion Assembly plant, over contract negotiations with a supplier at that plant. Workers at the GM affiliate supplier LINC, who organize and deliver parts for the Orion plant, make ten dollars per hour, less even than the “Tier Two” wages that most Orion assembly workers make. And yet, with GM’s stock (which funds part of the UAW’s VEBA account) remaining weak, it seems unlikely that the union will actually protest, let alone strike, over the LINC wages. Which raises a tough question for the union: why are they so concerned about transplant workers making $14.50 per hour and up when they are working alongside folks making $10 per hour? And if workers at a Hyundai supplier are Hyundai’s responsibility, why isn’t the UAW livid at GM for allowing LINC to hire workers for such low wages? And in light of these fundamental contradictions, a single case of apparent injustice half the world away seems even less relevant.

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The UAW Brandishes The S-Word Sun, 31 Jul 2011 18:31:14 +0000

The talks about a new labor deal between Ford and the UAW have barely begun, and both sides already utter the dreaded s-word: Strike.

“The last thing we want to do is incur a strike,” said Marty Malloy, Ford’s vice president for labor affairs, when the talks started. “We work great with the UAW.”

UAW’s Bob King answered: “I don’t think about strikes. We don’t collectively think about strikes.”  According to Reuters, the UAW might seek the members’ permission to strike, but King said that was routine and had been done many times in the past.

So why pull out the s-word when the talks have just begun?

Ford is the only automaker where the UAW can strike. At GM or Chrysler, there is a no strike clause.

Also, there is an interesting piece of new math.

Malloy said Ford’s total costs were about $58 an hour per hourly worker, $8 more than its foreign rivals.

King has different numbers. But “we would respectfully do our math a little bit differently, but we’ll talk about that at the bargaining table.”

Amazing. Didn’t we hear that they work at near slave labor wages down South, and now they are only 8 bucks apart?  And if King has different numbers, then that can only mean that he thinks Ford’s labor costs are closer to the foreigners.

Interesting, interesting.



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Hyundai And Kia Run Out Of Parts Sun, 22 May 2011 10:15:59 +0000

Assembly lines at South Korea’s Hyundai Kia ground to a halt this weekend after the companies ran out of a needed engine parts. Production of Hyundai’s Tucson ix, Santa Fe and Veracruz and Kia’s Carnival has stopped. On Wednesday, production of most of  Hyundai’s and Kia’s cars will be affected unless the parts shortage is solved. The Korean units of GM and Renault will suffer, as well as Ssangyong. Do they all get their engines parts from Japan?

They don’t. South Korea’s Yoosung Enterprise delivers 70 percent of the piston rings used in the popular models of Hyundai and Kia, writes Reuters. Yoosung has not been hit by a tsunami, but by a good old strike. Union members occupied production lines on May 18 over disagreements on new wage and shift systems.

“Yoosung’s piston rings account for around 50 percent of the parts used in our engines,” a GM Korea spokesperson said.

“Yoosung supplies all of the camshafts used in our SM5 2.0 models. We have an inventory of four days, but a prolonged strike could affect our production,” a spokesperson for Renault Samsung Motors said.

They better settled that labor dispute. Because as this old video shows, when Korean unions strike, they strike hard.

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Chinese Strikes: Honda Gets No Respect Sat, 17 Jul 2010 11:52:42 +0000

Honda is the Chinese version of Rodney Dangerfield. No respect. After a series of strikes, first at Honda’s parts suppliers, then at Honda itself, things looked liked they are calming down. Until yesterday.

On Friday, Honda-affiliated transmission-maker Atsumitec had to shut down their Chinese factory in Foshan, Guangdong Province, because workers went on strike. Honda holds 48 percent stake in the venture.

The factory supplies transmission parts to Honda’s four Chinese factories and a Nissan Motor plant, says The Nikkei [sub]

So far, the freeze has not affected those assembly lines. Honda learned from past disasters: “We hold the parts in stock,” said a Honda official. “So our Chinese production will be unaffected for now.”  This could be a longer strike – until the supply runs out.

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Chinese Strikes: Honda Hit Directly. Bots To The Front Fri, 09 Jul 2010 13:40:16 +0000

So far, the strikes in China were just small – but effective – sideshows. Strike at a small, but strategically important supplier, and  whole car factories shut down.  That, however, only led to wage increases at the small, but strategically important supplier. Until last Wednesday.

Last Wednesday, workers at a Honda factory in Guangzhou walked out. This was the first time workers struck  an auto plant, instead of Just a supplier. The Honda plant remained closed until ” workers and management reached an agreement on wage increases and other matters by Thursday evening and operations were resumed,” said an official at a local Honda unit to The Nikkei [sub] Details were not disclosed. With 1,000 workers, the plant makes 50,000 cars a year, mostly Jazz compacts for export.

The student of recent Chinese strikes may recall that Honda had been the first company to be affected. Of course, other carmakers are no bracing for similar action.

Other manufacturers take a different route. The Japanese autoparts manufacturer H-One will quadruple the number of welding robots in its three Chinese plants “in an effort to limit labor costs by increasing production line automation,” writes The Nikkei [sub]. Robots don’t strike and produce more consistent quality.

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Chinese Strikes: It Ain’t Over Until It’s Over – Toyota And Honda Down Again Wed, 23 Jun 2010 11:04:46 +0000

You thought the strikes that affected Honda and Toyota in China are over, and both are happily churning out cars again? That makes two of us. But we are mistaken.

Toyota stopped the lines at their Guangzhou assembly plant Tuesday, after they had run out of fuel injectors. The parts were supposed to come from Toyota-affiliated  Denso (Guangzhou Nansha) Co., where workers went on strike on Monday, says The Nikkei [sub]. This Wednesday afternoon in China, the Denso workers are still saying “hell, no” (or Chinese words to that effect), and the Toyota plant sits idle. Reuters says no decision has been made to re-start production.

Toyota’s  Guangzhou plant  accounts for more than 40 percent of Toyota’s Chinese output.

According to Nikkei’s information, the Denso plant also supplies parts to Honda, Suzuki, and Mazda.

Lo and behold,  today Honda halted production at one of two plants of their Guangqi Honda joint venture. An  operation spokesman told Reuters he does not know when production  will resume.

A little later, the second plant of their Guangqi Honda JV shut down. This time, because of a lack of springs. Turns out that a Chinese factory of  Japan-owned NHK Spring was hit by a strike late Tuesday. Reuters says, they also make springs for Toyota and Nissan.

As a sign that it’s news when a Japanese auto maker remains open in China, The Nikkei [sub] quotes Nissan’s CEO Carlos Ghosn, who said today that “so far, things are going smoothly” at Nissan in China. Let’s hope they are well stocked on springs.

An interesting pattern evolves:

  • Strikes at strategically chosen suppliers, often involving only a few hundred strikers, can paralyze big manufacturers. The Chinese did learn well from the U.S. and Europe.
  • There are no strikes at carmakers themselves, which are part of joint ventures, usually with government-affiliated partners. They shut down because they have no parts, not because there is a strike.
  • So far, the strikes affect only Japanese carmakers. The lines at GM, Volkswagen, Ford, BMW etc. are running.

GM’s Kevin Wale remains unimpressed. He’s seen worse at home. “It’s common. Labor issues occur everywhere, but China’s huge market potential is more important,” said Wale to China Daily.

Meanwhile at the media front, that epitome of journalistic integrity, ABC News, can’t help themselves and reports that “domestic media has been instructed not to report on the subject.” As proof, they cite an anonymous “internet user” who says: “The Denso strike did happen but authorities have sealed off the news.” You don’t say.

Someone should tell them that it’s as easy as going over to state-owned China Daily, where the strikes are daily news fodder. They have the Denso strike right here. Same at Global Times, the English version of the Communist Party’s Newspaper, People’s Daily.

Global Times even mentions a report by the All-China Federation of Trade Unions that warns: “The accumulation of these demands and problems has begun to have a negative effect on our country’s political and social stability and sustainable economic development.” Doubting China’s political and social stability? In a party-owned paper? Where’s the world coming to?

Update: Reuters says NHK strike settled, Honda plant 2, up again. Plant 1 still closed due to Denso strike.

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Who’s Unhappy About Higher Wages, Stronger Currency in China? The Japanese. For Starters Tue, 22 Jun 2010 10:19:52 +0000

It stands to reason that Japanese car makers would rejoice over rising wages in competing China and over an appreciating Chinese currency. Rising wages make production there more expensive, a rising Yuan makes exports more expensive. Both should give the Japanese more breathing room. That reasoning is falling by the wayside. The Nikkei [sub] reports that these developments pose ”serious threats to Toyota’s profitability in China, strategic challenges that other Japanese companies must also deal with.” Just goes to show that you need to be careful what you wish for. And wait who else should worry.

As chronicled here, Honda and Toyota had to stop the lines because they were left partless by strikes at some of their parts makers.

Over the weekend, the world joined a chorus of “ding-dong, the peg is dead” , after – in a lead-up to the G20 summit – China announced it would be a bit more lenient with their Yuan/Dollar valuation. Today, the USD/CNY official mid-rate stands at 6.7980 vs 6.8275 yesterday, a breathtaking 0.5 percent “bounce.”

So why would that bother the Japanese? Says the Nikkei: “The price of new cars in China is similar to that of Japan. This translates to fat profit margins in China — now the world’s largest auto market — thanks to lower production costs. But rising wages are likely to reduce those margins, warned a Toyota executive.”

That’s just the beginning. Many parts used in worldwide production are made in China. Rising wages and a stronger Chinese currency make those parts more expensive abroad. This is not just a Japanese concern.  What’s more, a stronger Yuan makes it cheaper for Chinese companies to import the latest manufacturing machinery from abroad, strengthening their competitive posture in the long run. Students of economic history will remember Germany and Japan.

Foreign automakers with joint ventures in China have short term reasons to be worried.  Exports amount to one third of China’s GDP. A stronger currency and higher wages make Chinese exports less competitive in international markets. A more frigid business climate will most certainly result in a cooling-off of China’s red-hot auto market.

“The booming sales that continued until March have gone,” said a Toyota dealer to the Nikkei. “Sales growth could slow further if falls in exports choke economic growth.”

If you think that’s a great problem for Toyota to have, think again:  Guess who’s also unhappy about higher wages and a stronger currency in China? General Motors. GM sells more cars in China than in the U.S. The Europeans can take a more sanguine posture: The Euro had dropped so much in value against major currencies that they can shrug off wage increases and an 0.5 percent rise in the Yuan. Volkswagen will “significantly exceed” last year’s results, mostly because of China. One country’s depression is the other country’s euphoria.

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Chinese Strikes: Toyota Back To Work On Monday Sun, 20 Jun 2010 10:23:51 +0000

Toyota was (after Honda) the second Japanese car company that came down with the current Chinese strike bug. Toyota is gladly taking a back seat on this. They solved their problems much quicker than Honda. Toyota said today that their largest plant in China will definitely be open for business on Monday.

A strike at two Toyota-affiliated parts makers in Tianjin had brought Toyota’s largest assembly plant in China to a halt.  FAW Toyota Motor Co., a joint venture between Toyota and China’s FAW Group, ran out of parts.  More than half of the cars Toyota manufactures in China come from this plant.

The strike had to be settled quickly. As The Nikkei [sub] reports, this is “a crucial time for the auto maker, which saw a relatively moderate growth in sales in China of 21 percent to 700,900 vehicles last year compared to a nearly 50 percent surge in the country’s overall market to about 13 million vehicles.” Toyota wants to make sure it won’t happen again: “In this sensitive period, Toyota will take the initiative to actively communicate with workers in any of our plants to understand their mindset and requirements,” said a Toyota China spokesman to China Daily.

Any guesses who will be next? Going by size, it ought to be Nissan. However, they already had a short brush with the strikes, because a striking parts supplier of Honda also makes steering wheels for Nissan. Nissan’s production in China remained  unaffected, because Nissan hadn’t taken just-in-time all to seriously and kept a sufficient stock of parts.

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Chinese Strikes: Toyota Shuts Down Largest Plant In China – Will Reopen Monday Sat, 19 Jun 2010 12:49:36 +0000

A strike at two Toyota-affiliated parts makers brought Toyota’s largest assembly plant in China to a halt. No parts, no cars. Toyota’s factory in the port city of Tianjin near Beijing stopped production on Friday. A day later, it is unclear if production would resume on Monday, Reuters says.

The strike at a small plastic maker stops production at Toyota’s most important plant in China. Tianjin FAW Toyota Motor Co. is a joint venture between Toyota and China’s FAW Group. More than half of the cars Toyota manufactures in China come from this plant. Among the cars assembled here is the Corolla and Crown cars. The factory has an annual production capacity of 420,000 vehicles and manufactured about 380,000 units in 2009.

The parts shortage was caused by strikes at a Toyoda Gosei plastic parts factory  in Tianjin (42 percent owned by Toyota). This strike was preceded by a work stoppage at another Toyoda Gosei auto parts factory, Tianjin Star Light Rubber & Plastic.

Negotiations at Tianjin Toyoda Gosei are ongoing. The Nikkei [sub]  reports that police blocked a road leading to the main entrance of  the plastic factory. Management and workers seem to be holding negotiations.

More and more media outlets switch their reporting from the old cliches (oppressive government brutally crushes strikes by exploited workers) to a more sophisticated view. From France’s AFP to the New York Times, more and more reports believe that the strikes have the sympathy, if not the guiding hand of the Chinese government.

China’s workers have perfected the art of hitting small, but strategically important nodes of the supply chain. Says the Nikkei: “Any prolonged disruption at the parts plant in Tianjin could affect Toyota’s business throughout China.”

While the media is full with speculations that China might be losing its cost advantage, China’s Commerce Minister Chen Deming is unimpressed. “A small proportion of the contracts may be transferred to countries with lower costs, but China has yet to lose its labor cost advantage,” Chen told China Daily.

He has good advice for Chinese companies that relied too much on cheap contract manufacture: To address rising costs and keep their advantage in the international market, companies should climb the value ladder in design and marketing.

Update: The Nikkei [sub] says that the strike has been settled, and that Toyota’s main assembly plant can resume work on Monday. Workers agreed to accept a 20 percent wage increase, along with increased allowances for summer heat and for perfect attendance.

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Chinese Strikes: It’s Toyota’s Turn Fri, 18 Jun 2010 09:02:17 +0000

The Honda strikes have been settled – more or less. Now it’s Toyota’s turn. Workers at an auto parts factory in Tianjin, China, run by a Chinese subsidiary of Toyoda Gosei,  42 percent owned by Toyota, went on strike Thursday and had not returned to their jobs today, a Toyoda Gosei spokesman confirmed to the New York Times. The factory makes plastic parts for a FAW-Toyota joint venture assembly plant in Tianjin. It’s not the only strike that affects Toyota.

The strike comes after a one-day work stoppage at another Toyoda Gosei auto parts factory, Tianjin Star Light Rubber & Plastic. Employees came back to work after the company promised pay increases.

Toyota HQ in Tokyo first said that car assembly operations in China were “unaffected for now.” On Friday afternoon, the situation changed.

Production at Toyota’s Tianjin assembly plant are reported as partially suspended, due to a lack of plastic interior parts. France’s AFP says that “foreign-run factories in China have been targeted in recent labor unrest as workers gamble on overseas companies responding to their demands and government officials supporting their actions.”

The New York Times calls it a “labor revolt by text message and video upload, underwritten by the Chinese government.”

It is hard not to notice the many op-ed pieces in Chinese state media that express sympathy with the striking workers and call for wage increases. It runs a bit against the cliché of an oppressive regime and millions of slave laborers, but it is what it is.  And it’s one way to address the trade imbalance.

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Chinese Strikes: Uh-oh, Not Again! Honda Hit By Muffler Strike Tue, 08 Jun 2010 13:47:44 +0000

Did we say that the strike at a crucial Chinese parts plant is being closely watched? Last week, a 20 percent pay rise was given at a Honda-owned transmission plant, and slowly, everything went back to normal. Until today. Honda is in trouble again.

Now it’s a few hundred workers at a muffler supplier in Foshan, Guangdong Province. They walked off the job yesterday, The Nikkei [sub] says. The plant has no capital ties to Honda, but Honda depends on them until an alternative is found. Also, the plant is in the same Foshan as Honda’s transmission plant. A Honda spokesperson in Toyko said that a lack of exhausts will  halt work Wednesday at one of its three auto assembly plants in China.

The New York Times sees “growing signs that China’s huge migrant work force is gaining bargaining power.” An article that appeared an hour ago in The Nikkei [sub] raises the specter of “an end to the era of low wages on China’s mainland.”

Japanese-owned factories that supply parts to Nissan’s Chinese joint venture recently gave workers 70 percent pay raises. Says The Nikkei: “That was apparently done to stave off a shutdown of production lines at a time when the plants are operating at full capacity.”

Some suppliers prepare to open factories in inland cities such as Chongqing to escape the wage pressure in coastal areas. Whether that will work in the long run is doubtful. Pay hikes have a tendency of following workers and factories.

Those who think that wage pressure will create jobs in the U.S. will most likely be disappointed, whereas Vietnamese have reason for hopes. “A further rise in labor costs could prompt companies to consider moving some facilities elsewhere, such as to Southeast Asian countries,” says the Nikkei.

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