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June 10, 2022

Toyota suppliers ask workers to take day off at reduced pay

By Graeme Roberts

Two Toyota Motor suppliers have asked employees to take a day off with reduced pay this month, spokespeople for the suppliers told Reuters, reflecting the impact of a global chip shortage and China COVID-19 lockdowns.

Toyoda Gosei , which makes air bags, brake hoses and radiator grilles, has asked domestic employees to take a day of leave in June following production suspensions by Toyota and other automakers, its spokesperson confirmed to Reuters, without naming the other automakers.

The parts supplier and its union are together considering whether similar measures will be needed in July or beyond, according to a Reuters source.

Toyoda Gosei is a major supplier to its top shareholder Toyota and supplies other automakers. It employs some 6,500 people in Japan, not including contract and dispatch workers, according to the spokesperson.

A Toyota spokesperson declined to comment to Reuters.

The second supplier, Fine Sinter, which makes engine and suspension parts, has had an extra holiday at all five of its domestic locations once in April, May and June, according to a spokesperson. It staggered holidays across those locations on 10 other days during the period.

The company was adjusting its production in response to the moves by automakers, a spokesperson told Reuters. Employees were paid 80% of their daily pay for the days off, the spokesperson added.

The moves are one of the clearest signs yet that recent factory suspensions and output reductions by Toyota and other automakers are starting to ripple across the supply chain, the report noted.

It also comes as sources told Reuters this week the Bank of Japan will consider downgrading its assessment on factory output at this month’s policy meeting due to the supply disruptions from China’s strict COVID lockdowns.

Toyoda Gosei ‘s request applies to its entire domestic workforce, including temporary and dispatch workers, according to three sources. It made a similar request last month, but that was limited to workers on its factory lines, two sources said.

According to terms Toyoda Gosei agreed with its union, workers will get 80% of their daily pay, the spokesperson said.

Managers will take a pay cut of 2.5-5% for the month, depending on rank and regardless of whether they take a day off, one of the people said.

Japan’s factories posted a sharp fall in output in April, according to the latest data, highlighting the fragile nature of the recovery in the world’s no.3 economy.

Toyota recently cut its global production plan for June twice in the same week and has signalled that its full-year output estimate could be lowered.

The automaker previously announced production suspensions at some domestic plants this week and for several days in May.

Last month Subaru warned its U.S. dealers had a record low stockpile of around 5,000 vehicles left while Honda has said it would slash production by 20% at two domestic factories.

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