Tire company's buyout worries Chinese workers

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Tire company's buyout worries Chinese workers

By Jin Zhu in Beijing and Zhao Ruixue in Jinan (China Daily) 13:18, August 02, 2013

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Fears of being laid off and losing their benefits have nearly 5,000 Chinese tire workers up in arms in Shandong province over a US-based company's takeover by an Indian firm, a Chinese labor expert said on Thursday.

Cooper Tire and Rubber said last month it would be taken over by Apollo Tyres of India for $2.5 billion to create the seventh-largest tire company in the world. Chinese workers at Cooper Chengshan, a joint venture between Cooper and the Chengshan Group, protested the move on July 12, saying it would put their jobs at risk. The strike is ongoing.

Feng Xiliang, deputy dean of the school of labor economics at Capital University of Economics and Business in Beijing, said the workers' demands and complaints are symptomatic of today's labor environment as the global economy develops.

He said the recent surge in mergers and acquisitions around the world has thinned out workforces. He also said today's workers are more aware of their labor rights.

"Several strikes (of this nature) were already held at joint ventures and in domestic businesses in China's economically developed areas between 2010 and 2011, including the Yangtze River and Pearl River delta areas," he said.

The Shandong strike is the latest at a foreign joint venture. In late June, workers in a plant in Beijing's Miyun district held an American factory executive captive in protest of a plan by the executive's US-based medical supply company to lay off 30 workers.

Feng said strikes in China are often triggered by fear of layoffs following M&As and because of the recent flurry of M&As, "such strikes will not decrease".

After the takeover was announced, investors expressed concern that Apollo Tyres would not be able to repay debt acquired in the highly leveraged acquisition, AFP reported on Wednesday.

"Apollo does not have sufficient strength. The $2.5 billion price tag was being funded mostly through bank loans with annual interest of $100 million to $200 million," Yue Chunxue, head of the labor union at Cooper Chengshan, said in the AFP report.

Yue confirmed on Thursday that the strike was ongoing. But he said workers will not suffer loss of their incomes, as the strike is a kind of move to safeguard their rights and interests.

Workers were also worried that cultural differences with Indian bosses could create conflicts, he said.

"I definitely oppose the takeover," said Deng Zhigang on Thursday. Deng is an employee of the company's marketing department in charge of sales in Liaoning province. "When (Cooper Tire and Rubber) joined us, the different ideas in management and the cultural differences had an effect on our business for a long time. I am afraid similar problems will come up again after the takeover."

Dong Zhaoqing, deputy director of the administrative office of Chengshan Group, also expressed dissatisfaction with Apollo Tyres, complaining that the Indian company has yet to show an "intention to negotiate with us".

Feng said more guidelines and regulations about the organization of strikes should be introduced in China.

"Rational strikes can help workers protect their rights and interests and solve problems better. Many details, such as a time limit and designated areas during a strike, as well as an advance notice or warning before a strike, are needed," he said.