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. Before it can focus on hitting those targets, however, Honda's got to deal with a growing labor issue in China.

Automotive News reports that Honda shut down all four of its Chinese factories through at least yesterday, May 29 due to a labor strike. The latest problem arose when 1,850 Honda parts workers walked off the job on May 17. This ultimately forced Honda to temporarily shutter two plants in Guangzhou on May 24. On the 26th, the automaker followed suit with another factory in Guangzhou, as well as one in Wuhan.

Automotive News quotes Honda spokesperson Yasuko Matsuura as saying the striking parts workers seek a raise from about 1,500 yuan ($219 in U.S. funds) per month to somewhere between 2,000 ($293 U.S.) and 2,500 yuan ($366) - basically equivalent to the wages earned by workers at Honda's Chinese auto-assembly plants. That's a big jump on a percentage basis, but it's still a fraction of what Honda pays in more developed markets. For perspective, if you include benefits the typical Honda worker in Marysville, OH likely costs the company over $366 per day.

The bigger problem for Honda and other automakers is that, according to Chang-Hee Lee of the Internal Labor Organization in Beijing, "China is experiencing a labor shortage that's shifting the natural bargaining power to workers." We're thinking automakers that have invested billions of dollars in China will be pretty unhappy if a long-term worker shortage leads to steadily increasing labor rates.

[Source: Automotive News - Sub. Req.]


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