Honda’s little labor mess

Bill Regardie Founder, Regardie's Magazine
Font Size:

When I heard that Murray was back, I called immediately. He told me to come on over for he had a wonderful story to share. We settled into is his den with large tumblers of Talisker scotch, the drug of choice of in our part of the Capital city.

“I hear you’ve been in Tokyo,” I said after we both finished the first two fingers. Murray was the crisis management guru of choice for presidents, CEOs and coal company barons.

“Damn, straight, boy. Helluva trip. Those Japs may build damn fine cars, but when it comes to labor relations they’re still back fighting WWII.”

“Must have been working on Honda’s little labor problem,” I said having read the weekend papers.

“Been there for the last 10 days. They kept it all hushed up, just like I told ’em to when they called and said they had a G-5 waiting for me at Dulles. Had to miss both of kids’ college graduations, but when they talked seven figures, I went.

“Anyway, 15 hours later, I’m sitting in the chairman’s office and he’s going nuts. China’s their best emerging market. 500,000 cars a year, and this stupid parts factory had gone on strike which shuts down all four of their assembly plants there.

“Honda’s never had a strike. Not in Japan. Not in America, either. No unions in either country. So they go to China where the government has a reputation for breaking heads if the workers even take a pee break. So what happens? All of a sudden, the government got so many other labor problems, it’s hands off time. And they got a strike.

“Well, Murray, I did read in the New York Times, that Honda fired 80 of those workers for turning down a raise of $1.60 a month. Very generous.”

He ignored that. So I asked how he cleaned up the mess.

First, I explained they couldn’t just shoot the plant’s managers and send their families off to work in a rock quarry. Western women, a key core market segment, believed strongly in human rights . So we compromised. The plant’s GM was sent to the Gaza Strip, the labor relations manager went to Iceland and the production manager was last seen in the Sudan.

The strikers were another matter. While the chairman might liked to have shipped them to Mongolia, they were skilled machinists not common labors, and were desperately needed. Without them, 2,000 Honda’s a day couldn’t be built.

The time had come for some serious negotiation. Murray and the chairman retired to the executive teahouse. The “Do Not Disturb” sign was hung on the door.

For the first two days, the whiskey ran like rain. The boys bonded. The chairman came to understand that the world had changed. That even China’s goons couldn’t be counted on to beat up his workers. That western woman wouldn’t tolerate Henry Ford’s 1930s labor tactics.

On the third day, the whiskey was finished, and the chairman summoned an aide who announced a 24 percent wage offer to strikers.

Murray flew home on the G-5.

“So what about the chairman, I asked. Didn’t he threaten to kill himself over the loss of face?”

“I asked him the same thing,” Murray said.

“Are you nuts?” the chairman told me,” I make $25 million a year plus options. Why would I want to do something stupid like that.”