Archive for 8.5.4 Automobile

Industrial Sectors: Auto Parts : Honda and the auto parts industry in China

In automobile manufactures, the cost of the power control is estimated to share about 20% of the total production cost and more than 30% of the profit . Compared with other auto companies in China, Honda and her Chinese partner Guangzhou Automobile Group (GAC) are reported to have the highest per car profit margin. This is largely earned from the margins gained in the auto parts procurement in China. It is estimated that up to 80% of the total production cost of Honda’s automobiles and motorcycles is spent on the sourcing of the auto parts  and the local sourcing rate of Honda is one of the highest in the industry up to 78% in some car models. These include the sourcing of the assembled power engines and transmissions from Honda’s own subsidiaries in China via intra-firm trading and from the first-tier suppliers that have long business relations with Honda to follow and build supplier plants within the vicinity of Honda’s assembly plants in China. When Honda was beginning to globalise its production bases in key regional markets in the 1990s, the building of local auto parts production bases within the vicinity of the assembly plants is an important strategy. In China Honda has, compared with her competitors, a high in-house and local sourcing ratio in her manufacturing bases enabling direct control over the costs and the smooth running of the Honda lean production.

8 Energy Intensive Industries, 8.5.4 Automobile

Restructuring of the Honda Auto Parts Union in Guongdong, China: A 2-year Assessment of the 2010 Strike

Since the 1990s, Chinese workers at state-owned enterprises had put up many fights against privatization but with lackluster results. The migrant workers, on the other hand, have mostly been a silent majority, putting up with appalling working conditions. Though resistances among some of them have often arisen, most of these are spontaneous and not organized. However, the CHAM workers had been successful not only in winning an increase in their wages but also pushing the government and the company to agree to a revamp of the workplace union after a 19-day strike in 2010. The CHAM case attracted international concern on the potential rise of the Chinese workers’ power and this also pushed the ACFTU to make further reform. Yet, the question remains— does the re-elected Honda trade union really represent the workers? In this article, we will reveal the truth about the ACFTU’s engineered reform of the Honda trade union through workers interviews and data analysis.

8 Energy Intensive Industries, 8.5.4 Automobile

Collective Awakening and Action of Chinese Workers, The 2010 Auto Workers’ Strike and its Effects

“On May 17, 2010, a strike erupted at the Honda parts plant in Nanhai, a city located in the Chinese center of the manufacturing industry in Guangdong province. More than 1,800 workers participated, and the strike disrupted all of Honda’s spare parts production facilities in China and lead to the paralyzing of Honda’s car production in China. On May 28, the strike wave spread to a Hyundai car factory and on May 29 to US-American Chrysler’s joint venture Jeep factory, both in Beijing. On June 18, Toyota’s second car plant in Tianjin had to close, due to a strike. In July, the Chinese media were universally asked to restrict their coverage of the strikes, but the strikes in the auto industry still did not stop. Prior to July 22, at least two of Honda’s joint venture factories saw strikes. The organizers and most important participants of these strikes were migrant workers (nongmingong, peasant workers). During the strike wave they showed very strong collective consciousness and capacity for collective action.

8 Energy Intensive Industries, 8.5.4 Automobile

A Political Economic Analysis of the Strike in Honda and the auto parts industry in China

The strike that broke out in Honda Auto Parts Manufacturing Co Ltd in Foshan city of Guangdong province on 17 May dragged on for nearly one and a half month ending in early July. The strike involved nearly the whole work force on the shopfloor who are mainly migrant workers. By laying down their tools for 4 days, the workers in CHAM brought the production of 4 Honda assembly subsidiaries to a halt causing the company to lose 220 million Yuan by estimates. And for the first time in the industrial actions taken by the migrant workers, the strike articulated clearly the demands for reforming the only legal trade union, the All China Federation of Trade Unions. A paradigm shift in the Chinese labour struggle is expected and it is likely to be one that is led by the domestic migrant workers for economic justice and associational rights. The IHLO examines the causes as well as the implications of the strike in CHAM and finds a number of issues that should draw the interests of the international trade union and labour movement in their analyses and strategizing for organizing the auto industry and supporting the Chinese labour struggles.

8 Energy Intensive Industries, 8.5.4 Automobile

Implications of the Strike in Honda Auto Parts Manufacturing Co Ltd (CHAM)

The low wage regime in CHAM is not a single isolated example but the general condition in where CHAM is located. It is the result and the reproduction of the low-wage-based development model that Guangdong province has been relying on for achieving the fast speed economic development in the past 30 years.

8 Energy Intensive Industries, 8.5.4 Automobile

Appendix Two: The Automobile Strategy of the Guangdong Government and the Guangdong Automobile Group

In 2005 the Guangdong provincial government launched the Plan for the Development of the Nine Pillar Industries in Guangdong Province (2005-2010). The grand development plan aims at re-structuring the industrial base of the province for capital and technology-intensive industries in the secondary and tertiary sector. The pillar industries include: information technology, electrical machinery, chemicals, textile and garment, food processing, construction materials, pulp and paper, pharmaceuticals and automobile. The plan sets the target of achieving an annual growth rate of 18% between 2005-2010 for these industries to reach total industrial value of 5160 billion yuan and 77.6% share of the province’s total industrial value.

8 Energy Intensive Industries, 8.5.4 Automobile

Appendix Three: Policies of the Chinese Government on the Automobile Industry

Contains information about the State Council Policy on the Automobile Industry Promulgated on 12 March 1994; and the State Council Policy on the Automobile Industry Promulgated on 12 March 2004.

 

8 Energy Intensive Industries, 8.5.4 Automobile

Open Letter from the Delegation of Representatives of the Honda Strike Workers for Negotiation

Workers in Honda Auto Parts Manufacturing Co., Ltd. of Foshan City started to resume work on a conditional basis in the evening of 1 June.  The resumption of work was a result of the mediation of members of the National People’s Congress and Mr. Zhang Qinghong, Deputy Director and General Manager of Guangzhou Automobile Group Co., Ltd.  We agree to temporary resumption of work for three days on the condition that the management shall provide satisfactory answers to our demands.  Otherwise, the strike action will continue.  In the presence of Mr. Zheng Qinghong and representatives of the upper level trade union as observers, workers of Honda Auto Parts Manufacturing Co., Ltd elected 16 representatives. The representatives held the first meeting right after the election. In the meeting, we demanded explanations from the trade union for the beating of workers by the trade union officers. We also reiterated our fundamental demands namely, salary increment by RMB800 for the whole workforce including the intern workers; improvement in the wage structure and job promotion mechanism; and last but not least, re-structuring of the branch trade union in Honda Auto Parts Manufacturing Co., Ltd. Another fundamental demand we made was the commitment of the management to non-retaliation and no dismissal of workers participating in the strike. These demands were accepted by the General Manager of Guagnzhou Automobile Group Co Ltd, Mr. Yamada Ichiho山田一穗 in the morning of 1 June. The night shift workers started to resume work in the evening on the same day. The worker representatives contacted Mr. Zheng Qinghong again on 2 June and the first meeting with the management after the resumption of work took place at 2pm on 3 June.

8 Energy Intensive Industries, 8.5.4 Automobile

Auto Industry Strikes in China

Between May and July of this year a series of high-profile strikes in foreign-owned auto parts plants spread throughout China’s coastal regions. Strikes in China are nothing new, but the recent strike wave was remarkable in at least three respects: the amount of concessions granted to workers; the degree of publicity it initially received in the Chinese media; and the prospects for showcase union reform that it has helped push onto the agenda. Although the strikes were directed primarily at unfair wages, there were some attempts to address the more political question of union representation. Workers that I spoke with who had participated in strikes at Honda factories had clearly been politicized by the events and were well aware of strikes occurring throughout China’s auto industry.

8 Energy Intensive Industries, 8.5.4 Automobile

Special Report on the Honda Fonshan Strike

In May 2010, about 1800 workers from the Honda Auto Parts Manufacturing Co., Ltd. (CHAM) staged a strike to demand higher wages and the reform of the enterprise trade union. This strike caused disruption not only to the production of CHAM, but also to three other Honda branches in China. At the beginning, the company tried to suppress the strike with the help of the party-affiliated trade unions and the local government, but this was to no avail. Workers were very persistent in the pursuit of their legitimate demands and in the end the company  bowed to pressure and entered into negotiation with workers’ representatives, who were democratically elected during the strike. In the negotiation, the company agreed to raise the monthly wages of formal workers and student interns by 32.4% and 70% respectively. Highlights of this strike are captured in this report.

8 Energy Intensive Industries, 8.5.4 Automobile