HONG KONG - A power crunch in China's prosperous southern province of Guangdong has disrupted operations at a high-profile automaking venture partly owned by Honda Motor Co.
Guangzhou Honda, a joint venture between Honda and Denway Motors Ltd., said on Thursday that output had not been affected by a shift in its production schedule forced by the electricity shortage.
The company said it shut down operations on Fridays starting this month, and staff will work Sundays instead to avoid peak consumption hours -- when it could have faced a potential blackout.
"We're also taking measures to save electricity, for example by switching office lights off during lunch," said a spokesman for Guangzhou Honda via telephone from Guangzhou.
But he said the factory, which has ramped up capacity to meet heavy demand in China for Honda sedans and minivans, was still operating five days a week, 16 hours a day. Despite energy-saving measures, output levels should not be affected, he added.
Half of China is suffering power shortages as the country's economy grows in excess of 8 percent and analysts say the situation is worsening in the country's thriving industrial areas near Shanghai and in Guangdong.
That problem has been one factor behind the country's decision to try and slow investment in power-intensive industries such as automobiles, steel and aluminium.
"We believe the current power shortage could provide two near-term challenges to Guangzhou Honda: the Sunday wage could generate overtime expenses, and there is some risk of further power shortages requiring a slowdown in actual production throughput," Goldman Sachs said in a recent report.
The government of Guangdong, home to the carmaking joint ventures of two of Japan's top three automakers, has asked CLP Holdings in nearby Hong Kong to supply more power.
"Guangdong's demand has greatly increased, and for 2003 alone we supplied 40 percent more electricity to them than in 2002," said CLP spokeswoman Jane Lau.
"We are still in talks on additional supply," she said.
In addition to plants now making Hondas and Nissan Motor Co. cars, Japan's largest automaker Toyota Motor Corp. is setting up a joint venture engine plant with annual production capacity of 300,000 units in Guangdong.
Japanese steelmaking giant JFE Holdings Inc. is also building a power-intensive plant in Guangzhou that could cost more than $1 billion to make steel for cars.
More electricity from Hong Kong is not guaranteed.
A shortage of ships to carry coal, rising coal prices and record freight rates may force CLP, which buys most of its coal from Australia, to stop funnelling electricity to Guangdong, according to a recent media report.
CLP declined to comment on that report.
"We are still supplying to Guangdong," Lau said.
A Guangdong official said early this month that CLP had said it might stop power sales to the province due to insufficient coal supply, the Hong Kong Economic Journal reported.