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Chinese Honda Plant Restarts After Wage Strike

Wed, 06/02/2010 - 4:34am
Joe McDonald, AP Business Writer

BEIJING (AP) — Honda Motor Co. said a key parts factory in China resumed full operation Wednesday following a two-week strike over wages that forced Honda to halt production at four assembly plants.

The strike highlighted tensions between workers and foreign companies that look to China as a source of cheap labor and a fast-growing market amid weak demand elsewhere.

Work resumed after employees of the factory belonging to Honda's joint venture, Guangqi Honda Automobile Co., accepted Honda's pay increase offer. The plant in the southern city of Foshan, near Hong Kong, makes transmissions and engine parts.

"Our factory in Foshan is back to normal production," said a Honda spokeswoman who would give only her surname, He. "Every worker is back to their normal production line."

A company statement said Honda's four assembly plants elsewhere in China would remain idle until at least Thursday and no date was set for production to resume.

Companies in China are finding it harder to attract and keep workers, who are demanding better pay and working conditions.

Also Wednesday, Taiwan's Foxconn Technology Group announced it was raising pay by 30 percent for factory employees in China following a spate of suicides. Foxconn makes iPhones and other products under contract.

Foxconn hopes the raises lead to a "happier work environment," said a company official in Taipei who asked not to be identified further. Activists accuse the company of overworking employees but Foxconn denies the allegations.

China's communist government prohibits independent labor unions but has permitted protests in recent years over labor grievances. Protests are common in the Yangtze River Delta near Shanghai, though rarely reported in the state controlled media.

A man who answered the phone at the Foshan office of the Honda factory's government-affiliated union referred questions to the city government propaganda office. Phone calls there were not answered.

Honda said Monday the factory employees agreed to a pay raise of 366 yuan ($53.60) per month for each full-time worker. That would increase pay for a new employee to 1,910 yuan ($280) per month.

Some workers held out for more and the union said about 30 people fought with union officials Monday, leaving some people hospitalized. Honda said some production resumed Monday but was halted Tuesday.

The factory in Guangdong province, which abuts Hong Kong, employs 1,900 people.

Guangqi Honda also announced Wednesday that it is recalling more than 32,000 cars in China because of an apparent problem with the power steering. A statement posted on its website says that as of Thursday it is recalling Odyssey vehicles made between June 22 of last year and May 19 of this year.

The statement says a pipe related to the power steering might need tightening and could be a safety risk. Guangqi Honda released the Odyssey in April of last year.

Honda has no estimate yet for strike-related losses, said Hideto Maehara, a company spokesman in Tokyo. He said it was not clear yet whether the company will be able to make up lost production.

"We will try to make up for the lost production through measures like increasing production after hours and on weekends," Maehara said.

The strike came at an awkward time for Honda, which announced plans last month to expand production capacity in China by nearly one-third by 2012 to meet surging demand in the world's biggest auto market.

Strong sales in China helped Honda jump from a loss to a 72 billion yen ($774 million) profit for the January-March quarter.

Output was suspended at two Guangqi Honda factories that make Accord sedans and Odyssey minivans and at Honda Automobile China, which makes Jazz hatchbacks, all in Guangzhou near Foshan. Dongfeng Honda in the central province of Hubei suspended output of Civic sedans and CRV SUVs.

___

Associated Press researcher Bonnie Cao and Associated Press Writers Jay Alabaster in Tokyo and Annie Huang in Taipei contributed to this report.

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