The supply of parts to all four of Honda’s assembly plants in China, which has been disrupted because of a strike at its parts supplier in the southern city of Foshan, could be resolved this week following a breakthrough with workers, said the Japanese carmaker.
Production of gearboxes and engine parts at Honda Auto Parts Manufacturing was brought to a standstill last week following a dispute staged by workers demanding a wage increase.
The 1,900 staff at the Guangdong Foshan Honda Plant facility, which makes gearboxes and engine parts, were demanding their monthly wages be increased from Yuan 1,500 ($220) to Yuan 2,500 ($360). An offer has now reportedly been accepted by the majority of the workers while talks continue with the remaining strikers.
“The labour dispute at our parts factory has started to settle down. The company offered the pay increase and the majority of the associates have accepted it,” a spokesman for Honda told Automotive Logistics News.
On June 1, the factory resumed some of the parts production. We believe and hope the vehicle assemble factories, which were obliged to suspend production, will soon resume the production as well.”
According to Honda the minimum local wage in the Foshan area is Yuan 920, with the previous monthly starting salary at the company’s parts plant set at Yuan 1,049, with regular allowance and benefits bringing it to just over Yuan 1,500 yuan.
“Through negotiations, the management has agreed to raise the salary by Yuan 366 ($55),” said the spokesman.
Full production is likely to remain halted into the latter part of the week, however, and it is estimated that Honda has been losing output of up to 3,000 vehicles a day since the closures.
The company was forced to shut two assembly plants in Guangzhou, Guangdong province, on May 24 and suspended plants in Guangzhou and Wuhan, Hubei province, two days later.
Three of the production facilities are joint ventures with Chinese firms for domestic supply – two with Guangzhou Automobile and one with Dongfeng Motor. The fourth wholly-owned facility makes Jazz models for export.
It is the first time a strike has stopped Honda's local production, the company said.