In China, Auto Boom Fuels Workers’ Aspirations

Shanghai,  July 1st, 2014


Ford engineer Johnny Wang says, ‘The things that were totally impossible as a child are now within reach.’ Tim Franco for The Wall Street Journal

Ford, GM and Foreign Car Makers Find it Harder to Attract and Retain Skilled Chinese


NANJING, China— Johnny Wang grew up in a small town in the poor Anhui province in rural, eastern China, where even riding in a car, let alone owning one was a dream. Landing a job in China’s booming auto industry changed all that.

Mr. Wang, 32, is a voice recognition engineer at Ford Motor Co.’s research and engineering lab in neighboring Nanjing. His wife, Xiang Jun, 32, works for Chery Automobile Co. some 56 miles away in Wuhu, where the couple owns an apartment. Mr. Wang rents an apartment nearer to his workplace and drives to the couple’s home in his Ford Focus at the weekend. Later this year they plan to take Mr. Wang’s parents to Southeast Asia on their first overseas trip.

“All the things that were totally impossible as a child are now within reach,” said Mr. Wang.

A century ago, when Henry Ford began paying his assembly-line workers $5 a day, the equivalent of $116 a day today and double the manufacturing norms of the time, he triggered a social revolution in America that transformed low-paid workers into middle-class consumers. Much the same has happened in China.

The explosive growth of China’s auto industry during the past 20 years has helped to lift tens of thousands of Chinese like Mr. Wang into the middle class. Though below that of other major car-producing nations such as Germany, Japan and South Korea, wages for factory workers and engineers in China’s auto sector are typically higher than average here.

Research by consultancy Mercer LLC, for example, shows wages for automotive engineers and factory workers in Shanghai in 2013 were between 15% and 17.6% higher than the average manufacturing wage in the area.

But now auto makers are confronting in China what U.S. auto makers discovered decades ago: Workers’ aspirations rise with their pay. China is no longer a low-wage workshop for auto companies. It is increasingly a center for engineering, and research and development initiatives.

Foreign car companies are finding it increasingly difficult to attract and keep engineering talent, as more Chinese car companies offer better pay packages and at times broader professional experience. At the same time, all auto makers face competition for skilled Chinese workers from certain other industries where the pay and professional prospects are better.

Ford declined to reveal salary figures for its research and development engineers, but Chinese engineers with experience at foreign car firms command top pay in China.

Engineers with under 10 years’ experience in research and development for foreign auto makers in China earn between 180,000 Yuan ($29,200) and 300,000 Yuan a year including bonuses, according to recruitment consultancy Robert Walters PLC.

Chinese auto companies usually offer around 30% more in salary to attract top talent from foreign brands, the consultancy said—more when employees are asked to relocate cross-country to newly emerging industry centers such as Wuhan, Changsha and Chongqing.

Vanessa Moriel, managing director of Human Capital Partners, a recruitment firm specializing in the auto industry, said engineers with specialized knowledge or leadership skills could earn as much as 500,000 yuan.

Chinese auto engineers typically want to fast track their careers and seek opportunities that allow them to expand their skills into high-tech, specialist areas, she said. Companies must pay market price salaries, she said, and interpersonal relations are key. “Chinese don’t work for a company, they work for a leader,” Ms. Moriel said.

Ford’s Mr. Wang is content with his career advancement and has no plans to switch to another car company, Chinese or otherwise. “I have a long way to go in my career—and right now, I think I have a lot to learn at Ford,” he said.

He also said he plans to stick with the auto industry. “I do desire an overseas experience to expand my horizons,” said Mr. Wang. As to where that might be? “My first choice would be America—it’s a country on wheels.”

Keeping ambitious employees like Mr. Wang satisfied could still require some changes. He and colleague, Shawn Ma, aspire to greater roles in auto industry R&D.

Mr. Ma, a 27-year-old engine component engineer, said his team mostly modifies existing Ford technology to fit Chinese market requirements. But he is hopeful that will change in the next five to 10 years and allow the group to design new parts that will be used globally.

“They are starting to take some leads on global products but we haven’t announced anything yet,” said Scott Chang, a spokesman for Ford in China.

John Lawler, chief executive of Ford Motor China, recently described the expansion of the center in Nanjing as one of Ford’s “top global product-development priorities.” The company has invested more than $200 million there and plans to invest another $100 million. Ford would increase the number of employees at the Nanjing complex to around 2,000 people by 2018 from roughly 1,300 today. When the company moved into the current facility in 2007, the center had around 300 employees.

To maintain and grow their engineering workforces in China, foreign auto companies are finding themselves battling for talent with Chinese auto makers.

“Five years ago, a lot of Chinese wanted to work for multinationals, now that pendulum has swung,” said Mary Thornton, formerly human resources director China for General Motors Co. until the end of April. The attrition rate at GM in China is around 12% a year, she said. Some other companies in the industry have rates of around 20%, according to Human Capital Partners.

If Chinese car makers evolve into national or even international champions, more Chinese engineers working for foreign companies may switch allegiance to homegrown companies.

“The auto industry is almost 100 years old, but I think for China we’re just at the start,” says Mr. Ma. “At this time we’re working for a foreign company. But in the future, more and more Chinese people are going to work in the industry and contribute to our own China automobile” industry.

Ms. Moriel said that trend could become more pronounced as ambitious Chinese employees realize that top jobs at foreign auto makers still go to foreigners. At Chinese companies, Chinese engineers have more chances to perform management roles beyond R&D and, she said, stand a greater chance of becoming chief executives one day.

Still, the auto industry remains a popular choice among engineering graduates. In a recent survey employer branding consultancy Universum Group AB said the car industry overtook heavy industry as the “most ideal” sector to work upon graduation for Chinese engineering students, something the consultancy said could be due to students’ perception of the industry as creative and dynamic.

But when Universum looked at specific companies, auto makers in China trailed leading technology companies such as Huawei Technologies Co. and Google Inc., Only one, BMW AG, appeared on the top 10, ranking at No. 8. China’s FAW Group ranked 14 and GM’s Shanghai GM joint venture ranked 20th.