China Strike Halts Production at Car Factories

BEIJING, June 23, 2010 -- Toyota, the world's biggest automaker, and Honda were forced to stop production at several of their plants in southern China today after workers at a parts supplier went on strike.

A representative for Toyota Motor Corp. confirmed to ABC News that employees at the Denso factory, which supplies fuel injection equipment and other parts, stopped working on Tuesday, thereby bringing the auto giant's Guangdong operation, which can churn out 360,000 cars a year, to a halt. Honda Motor Co. was also forced to stop assembly lines at two of its plants.

It's the latest in a series of strikes that have revealed growing discontent among China's young laborers who have low wages, harsh working conditions and a growing wealth gap. Toyota has suffered at least three strikes in China this month since Honda agreed to increase wages by 24 percent to end a strike that halted its production.

So far the strikes have been limited to foreign-owned manufacturers. There is a perception that foreign companies are more likely to be embarrassed by the walk-outs and that more publicity can be garnered by striking against international employers.

Chinese authorities have discouraged domestic media from reporting on the labor unrest. But while mainstream media may be avoiding the subject, the internet is buzzing with talk of it. One internet user wrote this morning, "The Denso strike did happen but authorities have sealed off the news. To my knowledge, there were three reasons for the strike: One, discontent with the pay and benefits; two, discontent with the Union and the management; three, discontent with the human resources management."

Many of the disaffected young workers themselves have been using online chat rooms, instant messaging and mobile phone texts to organize strikes and spread the word. One wrote last night, "I'm one of those who took part in the Denso strike. Now I can see police cars patrol outside the company. Some journalists claimed their crew were stopped by the police. The crew couldn't shoot what was happening in the company. I appeal to the whole society to pay attention to this event."

An End to China's Cheap Labor Supply?

The labor disputes have raised the question of whether China's endless supply of cheap labor may finally be drying up. Many young workers feel that their wages have not increased in line with the soaring profits of the companies they work for and that they cannot keep pace with growing inflation.

Earlier this week, the nation's sole, and government-run, trade union body, called All-China Federation of Trade Unions, released a report which found that China's "new generation of migrant workers" (those born after 1980) expect better pay and increased rights. And unlike the previous generation, they are more willing and vocal about defending their rights and filing complaints. The report concludes that "these demands and problems have begun to have negative effects on our country's political and social stability and sustainable economic development" and that central and local governments must allocate more funding for housing and education and social benefits for migrant workers.

The push for improved living conditions for migrant workers was echoed by China's Premier Wen Jiabao last week. But neither the report nor the premier made reference to the recent outburst in labor disputes, nor did they mention increased pay specifically.

For now, there is no sign that the strikes are going to stop.

"Strikes in an industry like this can have a copy-cat effect. Workers think, 'If you can settle your problems by striking, why can't I?'," Chang Kai, a labor law professor at Renmin University in Beijing told Reuters. "This effect may continue unless basic problems are dealt with."