Chinese Strikes: Uh-oh, Not Again! Honda Hit By Muffler Strike

Bertel Schmitt
by Bertel Schmitt
chinese strikes uh oh not again honda hit by muffler strike

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.

Join the conversation
2 of 5 comments
  • Mark MacInnis Mark MacInnis on Jun 08, 2010

    Muffler making is fairly capital intensive for a supplier (I was a financial analyst for a major international supplier of exhaust systems)....lines robust enough to reliably generate 750,000 mufflers a year would likely cost $10 to $12 million US, and that does not include the tube mill or ancillary machinery like cut-off saws, lap machines, etc. Then, there is the issue of tool and die...., and the necessary intellectual capital of enginneering and quality skillsets. So, "throwing together" a supplier company to replace the production is not nearly as easily done as other posters on this site make it sound.....not impossible, just not easy AND time consuming....eventually the constant cost cutting in the auto-supply industry HAD to reach the rock bottom cost....and it appears in China, with certain components, it has...

  • I_godzuki I_godzuki on Jun 09, 2010

    The Nikkei is not quite ight to say Honda has no capital ties. It owns 70% of the Japanese company that has a 65% stake in the striking factory.

  • Arthur Dailey I grew up in an era when a teenager could work pumping gas or bussing tables and be able to purchase a vehicle for a couple of thousand dollars and drive it with 'uninsured' status.If a parent advised on the purchase of the vehicle, they would most often point us to a large, stripped/base version, domestic sedan with the smallest possible engine.These cars generally had terrible driving dynamics and little to no safety features, but were easy to work, had large bench seats/interiors and not enough power to get out of their own way.
  • MaintenanceCosts I'll guess: 3rd owner, never did even basic maintenance, major component failed, car got towed from the apartment complex parking lot, no one bought it at auction because the repair bill exceeded the value.The chrome pillar appliques support this hypothesis.
  • MaintenanceCosts I'm generally in the "I want them to have all the new safety stuff" camp, but new cars are both too fast and too isolating these days. They mask speed enough that a new driver can get way in over his head without really realizing he's even going that fast. This is especially a concern with my youngest, who wants to do everything he does faster. (He has zero fear tearing down hills at 25 mph on his little 20" wheel bike.) I'm hoping for something that is slow and communicates speed well, although I'm not quite sure there is any such thing in today's market.
  • KOKing I test-drove a used Equus Ultimate (the one with all the back seat doodads) that was a trade-in at a Ford dealer, and although it was VERY nice to be in as a Lexus LS with Ultra Luxury, it was supposedly in a minor fender-bender that probably wasn't repaired correctly (like a pinched bus cable or something?), and random features didn't work at all.I think this car suffered the same problem in the US that the VW Phaeton did, and probably would've done better if it was badged a Genesis from the get-go.
  • Analoggrotto Tesla owners are still smarter than anyone else, regardless.