Chip Starnes, a US company executive, speaks to the media from a window after being held hostage by angry workers inside his plant in Huairou district in Beijing on Tuesday. Andy Wong / ASSOCIATED PRESS

Trade union authorities are mediating a dispute in which a US company executive is being held captive by his workers in a plant in Beijing.

Chu Lixiang, a spokeswoman for the trade union in northern Beijing's Huairou district, said on Tuesday that negotiations over a financial dispute between the executive, Chip Starnes, and his employees were continuing.

Chu said the negotiation has been difficult in the past three days as Starnes, president of the Beijing branch of Specialty Medical Supplies, a US company based in Florida, fired his lawyers three times.

New lawyers representing both sides arrived at the plant on Tuesday afternoon to prepare for final negotiations, as the deadlock entered its fifth day.

Starnes, 42, has been trapped in his office at the plant in an industrial park in Huairou since Friday after workers blocked him from leaving.

Starnes arrived in Beijing a week ago to lay off 30 people from the plastics department, all of whom were given compensation packages.

He said because of cheaper labor costs in India and the exchange rate, he decided to move the department to India.

Rumors spread that the entire plant would move to India, despite Starnes' promise that other departments would stay. Some workers from other departments, who said they had not been paid for two months, started demanding similar severance packages on Friday.

The workers became angry when they found many trees at the plant had been cut down and two senior managers had resigned. They also found equipment in other departments had been evaluated by an independent engineer from India.

Chu, from the trade union, said the case was a labor dispute but because it involved a foreigner and affected all employees at the plant, it was attracting a lot of attention.

Starnes told media who gathered outside his office window on Tuesday he was not free to leave the plant.

"I need to go back to my hotel, I need to take a shower, and I need to change my clothes," he said.

He also said that he will continue to invest in China and the jobs of workers in departments other than the plastics department were "secure".

Several suppliers of the plant also came to demand payment when they heard the factory was going to close.

A worker surnamed Wang said the company owes more than 10 million yuan to its suppliers.