plus 3, Booming China Finds Workers in Short Supply - New York Times

Booming China Finds Workers in Short Supply - New York Times
Congress panel cites evidence of Toyota concealment - Reuters
Automakers and the EPA: Frenemies in the Fight For Federal Regulation - BNET
Oversight chief says Toyota withheld documents - CNN Money

Booming China Finds Workers in Short Supply - New York Times

Posted: 26 Feb 2010 04:37 PM PST

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GUANGZHOU, China — Just a year after laying off millions of factory workers, China is facing an increasingly acute labor shortage.

As American workers struggle with near double-digit unemployment, unskilled factory workers here in China's industrial heartland are being offered signing bonuses.

Factory wages have risen as much as 20 percent in recent months.

Telemarketers are turning away potential customers because recruiters have fully booked them to cold-call people and offer them jobs.

Some manufacturers, already weeks behind schedule because they can't find enough workers, are closing down production lines and considering raising prices. Such increases would most likely drive up the prices American consumers pay for all sorts of Chinese-made goods.

Rising wages could also lead to greater inflation in China. In the past, inflation has sown social unrest.

The immediate cause of the shortage is that millions of migrant workers who traveled home for the long lunar New Year earlier this month are not returning to the coast. Thanks to a half-trillion-dollar government stimulus program, jobs are being created in the interior.

But many economists say the recent global downturn also obscured a longer-term trend: China has drained its once vast reserves of unemployed workers in rural areas and is running out of fresh laborers for its factories.

Since China does not release reliable, timely statistics on employment, wages are considered the best barometer of labor shortages. And temp agencies here in Guangzhou raised their rate for factory workers this week to $1.17 an hour, from 95 cents an hour before the new year holiday.

The rate was 80 cents an hour two years ago, before the global financial crisis temporarily depressed wages and demand.

The dearth of returning migrants set off a desperate scramble this week to recruit the workers who did step off long-haul buses and trains returning from the interior.

At a government-run employment center in downtown Guangzhou, employers seeking workers outnumbered job-hunters Thursday afternoon.

Outside, Liang Huoqiao, a 22-year-old plastics worker, joined a small group of men and women studying a 40-foot-wide list of companies seeking workers.

"You can walk into any factory and get a job," he said.

The official China Daily newspaper said on Thursday that surveys of employers showed that one in 12 migrant workers was not expected to return here to Guangdong Province. Cities farther north along China's coast are also running low on labor; Wenzhou alone posted a shortage of up to one million workers.

Guangdong provincial officials announced on Wednesday that they were considering increasing the minimum wage, which varies by city and ranges from $113 to $146 a month.

Higher wages could ease labor shortages by prompting factories to reduce their work forces.

But many factories already pay well above the minimum wage. They are wary of further pay increases because it is not certain they can pass the increased costs on to their customers — in particular, strapped importers in the United States and the European Union.

Rising wages suggest the re-emergence of a worker shortage that was becoming evident before the financial crisis. A government survey three years ago of 2,749 villages in 17 provinces found that in 74 percent of them, there was no one left behind who was fit to go work in city factories — the labor pool was dry.

Mass layoffs in late 2008 and early 2009 because of the global financial crisis temporarily masked the developing shortage of industrial workers. But two powerful trends were still working to reduce the supply of young people headed for factories.

For one, the Chinese government has rapidly expanded postsecondary education. Universities and other institutions of higher learning enrolled 6.4 million new students last year, compared to 5.7 million in 2007 and just 2.2 million in 2000.

At the same time, China's birth rate has been sliding steadily ever since the introduction of the "one child" policy in 1977.

Labor shortages have returned quickly in recent weeks as these long-term trends have collided with a recovery in overseas demand for Chinese goods.

Far more jobs are available these days in China's interior. Government projects like rail and highway construction have absorbed millions of workers, particularly after Beijing allocated nearly $600 billion to economic stimulus spending in 2009 and 2010. Consumer spending is also rising briskly; auto sales more than doubled last month from a year before, and this has created many jobs in retailing, restaurants, hotels and other inland businesses.

Even before the holiday, companies were struggling to find the employees needed to keep assembly lines running.

At many factories, white-collar managers and engineers were forced to spend time on assembly lines to meet deadlines before the lunar New Year, because laborers were in such short supply. The managers often struggled with the tedious but intricate tasks required to make everything from toys to DVD players

"People working in the office, like me, have been asked to help on the factory floor," said Sky Niu, the sales manager at the Hengjia Electronics Company in Dongguan. "Of course, we can only help on the simpler tasks, such as packing."

The labor shortage is not benefiting workers just through higher wages. Personnel managers here say they are also abandoning the informal tradition of not hiring anyone over 35 — they say they are now hiring workers up to 40 years old, and sometimes older, despite concerns about whether they can keep up week after week with the rapid pace of Chinese assembly lines.

It remains to be seen if Chinese factories will learn from their hiring difficulties now and be less quick to lay off workers during the next global downturn.

The current system "is not stable, it's not healthy," said Han Dongfang, the director of the China Labor Bulletin, a Hong Kong-based group that advocates collective bargaining.

Though the wage boost increases the prospect of inflation, it may have another more salutary aspect. The Obama administration has been pushing China to let the renminbi rise against the dollar, which would erode some of China's formidable advantage in export markets. Rising wages in China have the same effect — while also giving Chinese families more spending power.

Letting wages rise benefits workers, said Jing Ulrich, the chairwoman of China equities and commodities at J. P. Morgan. Letting the currency rise benefits currency speculators, she said.

Mr. Liang, the 22-year-old plastics worker, said that he expected his pay to double in the next five years and added that he already had set his priorities.

"For sure, I want to buy a car," he said. "Car first, then maybe marriage later."

Hilda Wang contributed reporting.

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Congress panel cites evidence of Toyota concealment - Reuters

Posted: 26 Feb 2010 04:30 PM PST

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LOS ANGELES (Reuters) - A U.S. congressional panel has found evidence Toyota routinely withheld company records it should have turned over in court and settled personal injury cases to avoid revealing key engineering data dubbed the "Books of Knowledge," the panel's chairman said on Friday.

Barack Obama

A paper trail of Toyota's alleged misconduct in defending itself against personal injury suits was revealed in documents subpoenaed from a former in-house Toyota lawyer, said Edolphus Towns, chairman of the U.S. House of Representatives Committee on Oversight and Government Reform.

The documents "indicate a systematic disregard for the law and routine violation of court discovery orders in litigation," Towns wrote in a letter to Toyota Motor Corp's North American chief, Yoshimi Inaba, demanding an explanation.

Moreover, the documents "raise very serious questions as to whether Toyota has also withheld substantial, relevant information" from U.S. auto safety regulators, Towns wrote.

The disclosure represents a potential bombshell for Toyota, whose top executives testified under oath before Towns' panel that the company was fully cooperating with investigations into safety issues, including sudden, unintended acceleration, that have led to a worldwide recall of some 8.5 million vehicles.

In a statement issued on Thursday in response to Towns' letter, the company defended its legal conduct, saying, "It is not uncommon ... for companies to object to certain demands for documents made in litigation."

"Consistent with that philosophy, we take appropriate steps to maintain confidentiality of competitive business information and trade secrets," Toyota said. "We are confident that we have acted appropriately with respect to product liability litigation and our discovery practices and look forward to addressing Chairman Towns' concerns."

'BOOKS OF KNOWLEDGE'

The committee's review of the subpoenaed documents found multiple references to a secret cache of data called the "Books of Knowledge" and kept in electronic form by Toyota engineers, consisting of design and testing data for all vehicle lines and parts, Towns said.

According to his letter to Inaba, the documents "indicate that Toyota entered into multimillion-dollar settlements in tort cases where they feared the plaintiff's lawyer was getting close to discovering the existence of the Books of Knowledge."

In one of those cases, the documents show, Toyota agreed to pay $1.5 million to settle a lawsuit stemming from a rollover accident in Texas that left a young woman, Pennie Green, a quadriplegic.

The material Towns cited was obtained by his committee under subpoena last week from Dimitrios Biller, who headed Toyota's U.S. products liability legal team from April 2003 to September 2007.

Biller took the 6,000 pages of documents with him when he left the automaker and has since offered them as evidence in a lawsuit he filed against Toyota under U.S. racketeering laws, as well as for wrongful termination and emotional distress.

In the Green case, Biller said that Toyota Motor Sales -- the automaker's U.S. sales arm -- had agreed to settle for up to $2 million to avoid disclosing key engineering information.

"Plaintiff's discovery efforts ... were getting too close to requiring (Toyota) to produce the 'Books of Knowledge,'" Biller wrote, according to a copy of the correspondence obtained by Reuters.

In one internal memo dated September 1, 2005, referring to the engineering data, Biller wrote: "Clearly, this information should have been produced in litigation before today." He added that Toyota "is clearly not producing all of the relevant information/documents in its possession," Towns said.

Toyota, which has sued Biller for breach of contract, has sought to discredit him while battling unsuccessfully to get back the internal documents he took, arguing that their disclosure would violate attorney-client privilege.

Biller's lawyer, Jeffrey Allen, told Reuters his client gained a "sense of vindication" from Towns' finding that there was evidence of Toyota withholding information in defiance of court orders.

"For the congressional committee ... to come to such a conclusion in such a public manner, based on what appears to be an initial review of only some of the documents, it certainly gives a certain sense of validation of what we've been trying to do for so long," Allen said.

In his letter, Towns asks Inaba a number of pointed questions raised by the Biller documents, including whether Toyota has disclosed the existence of the Books of Knowledge to U.S. safety regulators and whether the data had ever been produced in response to discovery requests in litigation.

The Biller memos also touch on broader issues widely seen as being at the heart of the automaker's current problems.

In one November 2006 email provided to congressional investigators, Biller warned that the secrecy of Toyota's headquarters was creating new risks for the automaker.

"Toyota is no longer a small company on the island of Japan thousands of miles from the United States," he wrote. "Toyota is a global, multinational corporation. ... We all understand this situation, but so do the plaintiffs' counsel and judges in the United States. They read the newspapers about Toyota and its expansion. The world has become incredibly small."

During two days of testimony before congressional investigators this week, U.S. lawmakers had criticized Toyota for not sharing safety information fully enough with its U.S. operations.

(Additional reporting by Kevin Krolicki in Detroit; Editing by Todd Eastham, Gary Hill)

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Automakers and the EPA: Frenemies in the Fight For Federal Regulation - BNET

Posted: 26 Feb 2010 02:28 PM PST

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U.S. automakers and the EPA have become frenemies in the fight for — get this — more federal regulation. It's an odd alliance born out of Republican Sen. Lisa Murkowski's campaign to prevent the EPA from regulating greenhouse gas emissions under the Clean Air Act.

It's not that automakers have suddenly embraced regulation of their industry. On the contrary. They're simply afraid of several states, including California, that have much more ambitious and stricter guidelines waiting in the wings.

The Department of Transportation this week — and automakers last year — warned if the EPA can't regulate greenhouse gases it would likely kill a historic deal on new national standards for increased fuel economy and reduced tailpipe emissions. Without the joint DOT-EPA deal, California and other states would enact their own regulations of auto emissions, creating an expensive and rather chaotic welter of rules for the industry.

Of course, the DOT could still regulate the mileage/fuel economy portion of the agreement, but that wouldn't help automakers. Manufacturers would still have to contend with a variety of different state tailpipe standards.

The auto industry has historically fought any attempt by the EPA or the DOT to regulate fuel economy or emissions. But now automakers now want — and need — federal regulation to avoid economic disaster. Which is ironic, because Murkowski uses the same argument.

The EPA declared last year that greenhouse gases such as carbon dioxide are a threat to public health and welfare, a ruling that opened the door to direct regulation of emissions, specifically those from cars. Major industries including oil, gas and coal have criticized the EPA decision and continue to argue regulation will "chill job growth and delay business expansion." Murkowski believes Congress — not the EPA — is the only agency that can be trusted to responsibly deal with climate change.

Murkowski's previous attempts to take away the EPA's power may have failed, but she hasn't give up the fight. The EPA has even backed off its plans to regulate greenhouse gases until 2011 and Murkowski is still gunning for them. Next week the Alaskan senator is expected to seek a motion of disapproval in Congress, which would reverse the EPA's endangerment ruling.

Photo by Flickr user Simone Ramella, CC 2.0

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Oversight chief says Toyota withheld documents - CNN Money

Posted: 26 Feb 2010 01:38 PM PST

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by Peter Valdes-Dapena, senior writerFebruary 26, 2010: 4:39 PM ET

NEW YORK (CNNMoney.com) -- A key lawmaker on Friday leveled new accusations that Toyota Motor hid evidence regarding vehicle rollover cases.

The Committee on Oversight and Government Reform, headed by Edolphus "Ed" Towns, D-N.Y., held a hearing this week on complaints of uncontrolled acceleration problems in Toyota (TM) cars. Toyota President Akio Toyoda testified.

As part of its investigation of Toyota's handling of safety defects and recalls, the committee had subpoenaed documents from former Toyota attorney Dimitrios Biller.

Biller has been engaged in litigation with Toyota for years. He alleges that the documents in question prove the automaker was aware of and hid safety defects in its vehicles and that he was unjustly terminated.

"We have reviewed these documents and found evidence that Toyota deliberately withheld relevant electronic records that it was legally required to produce in response to discovery orders in litigation," Towns wrote in a letter Friday to Toyota North America President Yoshimi Inaba. "Many of these documents concern 'rollover' cases in which the plaintiff was injured."

Among the documents, the letter said, was a memo sent by Biller in September 2005. In the memo, Biller reminded his supervisor of the need to turn over information from an internal Toyota database regarding known design flaws and countermeasures to deal with them. Such sharing of information is required by law as part of the "discovery" process in a lawsuit.

"Clearly, this information should have been produced in litigation before today." Biller wrote in the memo, as quoted in Towns' letter, "[Toyota] is clearly not producing all of the relevant information/documents in it possession." Finally, Mr. Biller concludes, "We need to start preserving, collecting and producing e-mails and electronic discovery."

Some information from this database was kept in secret "Books of Knowledge" maintained by the company, Biller asserts, according to the letter.

Biller's documents indicated that Toyota entered into multimillion-dollar settlements with plaintiffs whenever the plaintiff's attorneys seemed to be close to uncovering the "Books of Knowledge."

The documents also indicated that Toyota had long known about problems with unintended acceleration, according to Towns' letter.

"Toyota takes its legal obligations seriously and works to uphold the highest professional and ethical standards," Toyota has said previously regarding Biller. "Mr. Biller continues to make inaccurate and misleading allegations about Toyota's conduct. Toyota believes it acted appropriately with respect to product liability litigation."

Toyota spokespeople were not immediately able to respond directly to Rep. Towns' letter.

In a separate action, the National Highway Traffic Safety Administration announced it had purchased a Lexus ES350 once owned by Rhonda and Eddie Smith, a couple who testified at Wednesday's hearing regarding sudden acceleration.

Rhonda Smith said she experienced a frightening episode of unintended acceleration in the car in 2006, and that Toyota had failed to adequately respond to her complaints.

"The Smiths' former car is being taken to NHTSA's Vehicle Research & Test Center (VRTC) in East Liberty, OH, where it will be thoroughly studied," the auto safety agency said in its announcement.