Honda has high hopes for China, as the automaker plans to increase sales from a projected 630,000 units in 2010 to 830,000 in 2012.However, before it can focus on hitting those targets, Honda has got to deal with a growing labour issue in China.
Honda has to shut down all four of its Chinese factories due to a labor strike. The latest problem arose when 1,850 Honda parts workers walked off their job on May 17. This ultimately forced Honda to temporarily shut down two plants in Guangzhou on May 24. The parts factory started operation in 2007 and makes transmissions for the Accord, City, Odyssey and Fit models. On the 26th, the automaker followed suit with another factory in Guangzhou as well as the production in Wuhan. The Honda parts workers demand a salary rise from CNY 1,500 (SGD 308) per month to somewhere between CNY 2,000 to CNY 2,500 per month, so that they are on par with Honda’s Chinese auto-assembly plants. The increase may seem like a huge quantum in percentage terms but it's still a fraction of what Honda pays in more developed markets. For example, a typical Honda worker in Marysville USA is getting about USD 366 (SGD 512) per day.
According to Mr Lee Chang Hee of the Internal Labour Organisation in Beijing, China is experiencing a labor shortage that's shifting the natural bargaining power to workers. Cheap products from China may become a thing of the past in the near future.