Japanese manufacturers fear loss of Chinese workers

2011/04/29

Chinese seamstresses assemble garments at the plant of a Japanese affiliate in Shanghai. (Asahi Shimbun file photo)

The Great East Japan Earthquake forced Japanese manufacturers to cut production at plants in China. Now, they have another problem--hanging on to their newly idled workers.

There is a critical labor shortage in China, and any mass migration of workers would seriously hamper Japanese firms when they ramp production back up to normal levels.

In April, production dropped 30 percent from March, and, according to a 19-year-old worker at a transmission maker in Foshan city, Guangdong province, workers spent more time on job training than on the production lines.

Following strikes last spring, Japanese manufacturers in Guangdong province raised wages by about 30 to 40 percent, but labor shortages persist.

Another young Chinese worker said he is undecided on whether he will stay in his job and will probably do whatever his co-workers do.

Any prolonged suspension or significant cuts in production could easily lead to disputes between plant owners and workers, a situation the Guangdong provincial government is determined to avoid.

Japanese manufacturers believe it is crucial to maintain production levels in China, one of the world's biggest markets. With Japanese-made parts in short supply, they have allowed their Chinese plants to jump to the front of the parts line.

Nonetheless, Toyota Motor Corp. said it will cut production by 50 to 70 percent in China, while Honda Motor Co. expects to cut in half the number of Japan-made parts it sends to China. Mitsubishi Motors Corp. said it could temporarily suspend production in the country.

Since the financial crisis in late 2008, many Japanese manufacturers have downsized personnel.

However, they now find themselves in a quandary: Any further reduction in their workforces would make full resumption of production impossible, while holding on to surplus workers for an extended period would be financially untenable, an official at the Guangzhou office of Japan External Trade Organization said.

Some firms, such as Nissan Motor Co., are giving top priority to continuing production, saying they do not want to hurt operations at parts suppliers and dealerships.

Others, including Honda, are using the downtime to train workers, while others are looking at setting up long-term leave systems.

Nobuyoshi Nakane, president of Pioneer Technology (Dongguan) Co., which suspended production on weekends after the March 11 quake, explained the firm's work-share program at a meeting with all 4,000 company employees.

Under the program, all employees would have their workloads reduced equally instead of having to lay off some workers.

"All we can do is communicate our intentions to our employees as clearly as possible and then see what happens," Nakane said.

One result of China's one-child policy has been a dearth of young workers. With Volkswagen AG planning to open a factory in the province in 2013 and the Chinese economy still expanding, jobs are expected to increase in the interior of Guangdong province, driving demand for skilled workers even higher.

A professor at Renmin University of China, who served as an adviser to a labor union during last spring's strike, said the work stoppage occurred because wages didn't match worker performances. He said employers must provide detailed explanations of current business conditions and how they plan to protect jobs.

(This article was written by Nozomu Hayashi and Keiko Yoshioka.)