TOKYO (Bloomberg) -- Honda Motor Co. reopened a parts plant in China as most workers ended a walkout that shut down all of the company's production in the country.
The factory resumed operations even as the company continues to negotiate with some workers, said Takayuki Fujii, a Beijing-based spokesman at the Tokyo-based company.
Honda's four car-assembly factories in China, which closed last week after the strike caused a shortage of parts, will remain shut at least through Wednesday, he said.
Honda offered a 24 percent pay raise to persuade most employees at the parts plant to return to work. The strike is a sign that automakers can expect higher wage costs in China, according to analysts including Tianshu Xin, a Shanghai-based managing director at consulting company IHS Global Insight.
“Labor costs will rise,” Xin said. “Manufacturers in China will need to work on cost-cutting and also improve technology content and overall quality to remain competitive.”
Honda shut two car-assembly plants in Guangzhou, Guangdong province, on May 24 and factories in Guangzhou and Wuhan, Hubei province, on May 26 after workers making transmissions and engine parts at Honda Auto Parts Manufacturing Co. in Foshan, Guangdong, walked out on May 17, demanding higher pay. It is the first time a strike has stopped Honda's auto production in China, the company said.
Workers accept pay rise
Most of the parts factory's 1,900 workers accepted an offer this week for a pay raise to 1,910 yuan ($280) a month, according to Honda. The employees had demanded between 2,000 yuan and 2,500 yuan.
In Foshan, workers at the parts plant returned to work after discussions with Honda managers. An intern at the factory, who would only give his family name, Lai, said working conditions, such as the food and housing, are better than at other factories where he has worked. The only bad thing about working for Honda is that the wages are too low, he said.
Another intern at the factory, who gave his name only as Wang, 19, also decided to go back to work today. The worker, from Shaanxi province, said he was called to a group meeting with the factory's general manager and told that the company would raise salaries by 400 yuan to 500 yuan a month.
Reopening the assembly plants may take one to two days once full production resumes at the parts factory, Honda has said.
The company builds about 3,000 vehicles a day in China, according to Koji Endo, a Tokyo-based analyst at Advanced Research Japan. The closed factories, joint ventures between Honda and its Chinese partners, make models including the Accord sedan and Civic compact and have combined annual capacity of 650,000 units.
China accounted for 17 percent of Honda's global sales last year, and the brand ranked fifth in China by unit sales in April, according to J.D. Power & Associates.
Work stoppages growing
Trade unions and employers appear to be reporting a growing number of work stoppages in China, although there are no official numbers, according to the International Labor Organization in Beijing.
Labor unrest may become increasingly common as demands are growing for workers' rights and better pay, according to Kiyoshi Kasahara, a professor at Tokyo's Rikkyo University who studies industrial relations in China.
The nation remains attractive to manufacturers as wages are still low and employees are hardworking, Xing Xinmin, a labor- law specialist at the China Center for Labor and Environment in Beijing, said earlier this week. While disputes are common, they are usually easily resolved through talks between companies, the government and industry unions, he said.
Honda aims to increase China sales 9 percent to 630,000 vehicles this year. The carmaker plans to raise production capacity in China by 28 percent to 830,000 vehicles a year by the second half of 2012 and introduce two new models as car demand grows in the country.
Auto sales in China may rise 17 percent to 16 million this year and annual demand may climb to more than 30 million, according to an official at the State Information Center.