June 25, 2013 2:26 pm

Disgruntled factory workers in China hold their US boss hostage

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Chip Starnes is being held hostage by his workers©AP

Chip Starnes is being held hostage by his workers

The machines are all ready to go. But the lights are out at Specialty Medical Supplies, a small American company that has been making alcohol swabs and plastic parts in Qiaozi, a sleepy town at the foothills just north of Beijing, for 10 years.

Production has been halted as workers are busy guarding Chip Starnes, their boss. Since Friday, he has been a prisoner of his staff, who accuse him of owing wages and fear he will default.

In the same paisley-patterned blue shirt he has worn since Friday, the 42-year-old looks overtired and nervous during a visit by invited media. “This is not right. If we had unfinished work on some order, I wouldn’t keep everybody at the machines until everything is done,” he says. “But they are saying I can’t leave unless we have an agreement. We can negotiate, but I want to go back to my hotel room at night and take a rest.”

The stand-off is not too unusual for China. “The reason they do that is that it’s a foreign company, the boss has a foreign passport,” said Geoffrey Crothall at China Labour Bulletin in Hong Kong. “I presume [the workers] are concerned the boss would do a runner, that’s why they want to make sure he stays there until they get their money in their pocket.”

Such fears are fuelled by what happened to other factories during the 2008 financial crisis, when global demand for Chinese products dipped.

“A lot of factories closed down, the boss sold off all the factory equipment, stopped paying the workers for several months, and then just disappeared,” says Mr Crothall.

At Specialty Medical Supplies, machine tools in one of the three production halls sit wrapped in plastic foil and cartons. “They are selling everything,” says a janitor who gave his surname as Zhang. “Also, we haven’t received our wages since April.” The company’s general manager, surnamed Huang, says the injection moulding machines on another factory hall had been scheduled to be packed at the weekend.

Mr Starnes insists this is not true. He says that the plastics business, no longer competitive in China, is being relocated to India.

The company has gradually transferred staff to the swab production since last year. “Now that we’re laying off the remaining 30 people from the plastics unit and paying them compensation, the others [who were transferred] are demanding compensation as well,” says Mr Starnes. “But agreeing to that is business suicide. I’m not going to compensate people who still have a job.”

But the American stands alone against a crowd of angry people. Although restricting someone’s free movement appears at odds with Chinese law, Mr Starnes cannot count on the government’s help. His factory is surrounded by uniformed policemen and plain clothes government officials who say they will make sure he doesn’t leave.

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“In China, if this kind of situation happens, the police will not intervene, unless things get totally out of hand, but employees are usually smart enough not to to that, and the embassy is powerless to do anything, so people are pretty much on their own,” says Kevin Jones, head of the labour and employment practice at the law firm Faegre Baker Daniels in Shanghai.

The local workers think this is only fair. One woman surnamed Gao who has been at the company for six years was transferred from the plastics to the other production line last year. “Production has been suspended many times in recent months, so I’m getting nothing but the minimum wage, some Rmb1,000, no bonuses, no overtime,” says Ms Gao. She says she has been promised an extra payment of Rmb17,000, while a co-worker, also a six-year veteran at the plant, is getting Rmb30,000.

In many respects, the stand-off resembles disputes Foxconn, the Taiwanese company that makes the bulk of the world’s electronic gadgets in Chinese factories employing more than 1m, has seen in recent years. “They have been transferring people back and forth a lot to deal with shortages or slowing business,” says a union representative. “Once you do that, people compare packages and get angry.”

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