Toyota Plant in China Suspends Production Due to Strike

Labor unrest is once again affecting production at a Toyota Motor (TM) plant in China. Toyota said Tuesday it suspended production at a car-assembly plant in southern China after workers at a parts supplier went on strike, according to reports. The action comes just a day after the world's largest automaker resumed production at a separate Chinese plant that had been disrupted by worker unrest.

The strike at a plant run by Denso, a unit of Japan's Denso Corp. (DNZOY), has resulted in a shortage of fuel injectors and other components, forcing the shutdown of two assembly lines at Toyota's plant near Guangzhou, The Wall Street Journal reported.

The Denso plant employs 1,100 workers and also supplies Honda Motor (HMC) and other automakers operating in China. A spokesman for Honda China said car production at Honda's Chinese manufacturing joint venture was continuing as usual, Reuters reported.

A Denso spokeswoman said management was negotiating with workers over demands for higher wages and better benefits. The work stoppage is latest in a string of labor actions that have hobbled production at Chinese plants, forcing the shutdown of a supplier of locks to Honda, a Toyoda Gosei plant and Chongqing Brewery, among others. All have since been resolved.

The wage increases demanded by the workers would have little impact on the cost of products made in China and aren't a threat to the country's manufacturing base, Reuters said. Last week, China's central bank said it would allow the yuan to have greater flexibility on currency markets. A rise in the yuan's value could help tame Chinese inflation, which may in turn help to reduce workers' wage demands.