Toyota supplier asks staff to take a day’s leave on reduced pay as lockdown bites

A major Toyota Motor Corp supplier has asked employees to take a day off with reduced pay this month, a spokesperson for the supplier, Toyoda Gosei, said on Wednesday, reflecting the effect of the chip shortage and Chinese lockdowns.

Toyoda Gosei, which makes air bags, brake hoses and radiator grilles, asked domestic employees to take a day of leave in June after production suspensions by Toyota and other carmakers,  the spokesperson told Reuters, declining to name the other carmakers.

Toyoda Gosei and its union are together considering whether similar measures will be needed in July or beyond, according to a person familiar with the matter who declined to be identified because the information hasn’t been made public.

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

Toyoda Gosei’s request applies to its entire domestic workforce, including temporary and dispatch workers, according to the person and two others. It made a similar request last month, but that was limited to workers on its factory lines, two of those people said.

The move is one of the clearest signs yet that recent factory suspensions and output reductions by Toyota and other vehicle manufacturers are starting to ripple across the supply chain.

It also comes as sources told Reuters on Wednesday 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-19 lockdowns.

According to terms agreed with the 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 third largest 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.

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

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

Reuters