China labor shortage worries factories

Dongguan, China— In a country with 1.3 billion people, it's hard to imagine a labor shortage. But that's what the furniture and other industries are facing in southern China and elsewhere in the country as they compete for skilled and unskilled workers.

It's a concern for

furniture retailers relying on quick and consistent delivery from China. Furniture plants that lose workers to other industries must constantly recruit and train new employees, and that can slow production.

In late August, Lacquer Craft, one of China's largest furniture makers with 7,000 workers, was running at 80% capacity. President Mohamad Amini attributed that in part to difficulty in finding workers.

"It's been a little challenging to have the right people in place to run (our factories) at 100%," he said. "It is taking longer to train and recruit."

The International Herald Tribune reported last March the government in Guangdong Province estimated 1 million workers were needed to fill jobs.

The squeeze has arisen largely because of the number of industries competing for workers in the Pearl River Delta in southern China. With new plants opening throughout the region, furniture companies often lose workers to plants willing to offer more pay or benefits.

Some blame the problem on the difficulty of drawing workers from rural areas for a mere $100 a month, a typical salary for a furniture production worker. For some, that just isn't enough to justify leaving family and friends in those areas.

The government reportedly is making it more attractive for farmers to remain in rural areas by offering them increased subsidies. Word also has spread about dirty working conditions and unfair labor practices in some plants, including furniture plants.

In early November, some 3,000 workers went on strike at a DeCoro leather upholstery plant in Shenzhen. The strike was in response to pay cuts and the alleged beating of three workers by foreign supervisors.

While perhaps extreme, the incident highlights the growing tensions between management and furniture production workers seeking better working conditions, pay and benefits.

"Improved working conditions and living conditions, these are the key things involved in recruiting or keeping employees," said Lacquer Craft's Amini.

He said Lacquer Craft is dealing with the labor shortage by offering workers better pay and other incentives such as overtime for longer shift work. The longer hours not only help meet production deadlines, they also help increase plant efficiency.

Amini declined to reveal specifics about wages. But he estimated that in the past couple of years, the monthly wage in the industry has risen about 10%. In the past five years, he said it has risen 20%.

Samuel Liu, senior vice president of case goods manufacturer Omexey Enterprise, said it was a lot easier to get workers four years ago. His company has hired an agent to recruit workers from central and western China.

"We try to get people from the same villages and towns so they have family and friends and will not quit their job that easily," said Liu, who estimated his factory's turnover rate for production workers at about 10%. The administrative side is more stable, he said.

Richie Chen, general manager of case goods manufacturer Passwell Wood Mfg. Corp., remembers how not too long ago people waited at his factory gate to fill out an application.

"Now it's not so many," he said, citing competition from other industries and the increased government farm subsidies.

Like Omexey, Passwell sends recruiters to rural areas, and tries to retain workers by improving working and living conditions, including better food.

Gary Gone, an assistant to Amini who works at the Shanghai-area Lacquer Craft plant, said that before this past May, there were about 100 people on any given day waiting outside the gate to fill out job applications.

Between May and August, the factory lost about 1,000 workers who returned to farms to take advantage of the higher subsidies. Today, the company offers workers bonuses if they help recruit a friend or family member.

Lacquer Craft also recruits students attending area vocational schools. New workers typically are trained in about four to six weeks, often starting out in delivery or courier roles before moving on to more technical production positions.

Younger, less experienced workers tend to leave sooner, while older, more experienced workers tend to stay longer.

Labor shortages and turnover are especially significant to producers such as Winny Overseas Ltd., which makes product for higher-end importers such as Sherrill, Hooker, Harden, The Platt Collections and Sansegal Home Designs. It can take months training workers to produce those higher-end goods.

But here, too, most of the turnover occurs at the entry level and not among more experienced workers, said Winny President Steven Lee.

Chen, of Passwell, said it takes about two months to get a worker ready to run machines in the plant, and about a year for them to get really proficient. He said the company tries to keep these workers on board by offering better living and working conditions.

Omexey tries to lower turnover through a training program called Omexey College, a three-month course that gives workers a chance to land supervisory jobs if they agree to stay with the company for at least three years.

Still, the company faces competition from area shoe factories, said Liu. Although the pay may be similar, workers leave because shoe factories are seen by some workers as better and cleaner places to work.

How long the situation persists is anyone's guess.

Some don't see an end in site because of demographic and other trends. Others are more optimistic, believing furniture makers can continue to compete for good workers.

"We don't see this problem as a long-term, serious problem," said Lacquer Craft's Amini. "Nevertheless, it is an issue everybody needs to pay attention to."