Thailand : Two months shutdown for GM Rayong workers kept on but pay cut 25%

BANGKOK : November 21, 2008 - General Motors will temporarily close its automobile manufacturing plant in Rayong in the face of the difficult market facing the local industry and the US parent's severe financial problems.


Given that existing supply is in excess of demand, automobile production would be suspended in December and January, spokesman Chartchai Suwanasevok said yesterday.

"Since we foresee that the production until the end of this year through early next year is enough to meet the demand, we have decided to cease production temporarily," said Mr Chartchai, the outgoing director of public relations for Thailand and Asean.

The eight-year-old Rayong plant has an annual capacity of 130,000 units, manufacturing Colorado pickups, Captiva SUVs, Optra sedans and Aveo compact cars. Capacity utilisation this year was estimated at 100,000 units. Most of the output is exported.

For the almost 2,000 workers at the plant, their current status as GM employees will be intact but their monthly pay will be cut by 25% during the work suspension. About 1,000 white-collar staff working for GM and Chevrolet Sales Thailand will not be affected.

According to the industry figures compiled by Toyota Motor Thailand, Chevrolet Sales Thailand, the GM distribution arm, continued to perform well in local vehicle sales this year. The highest growth was seen in February when sales rose 71.3% from the year before.

But the sales fell in September by 3.2% year-on-year to 1,754 units and by 47.9% to 1,172 units in October. The Colorado pickup is Chevrolet's most popular model and its sales, like those of other pickups, were affected by record-high diesel prices earlier in the year.

Chevrolet hopes the Bangkok Motor Expo, starting at the end of this month, will help boost its vehicle sales.

Mr Chartchai said exports by GM Thailand were also healthy earlier in the year but the slowdown in the region and elsewhere had started to hurt shipments abroad. Currently GM exports Colorado pickups to Australia as its key market and Optra sedans to Asean.

He said GM Thailand also foresaw that GM's production next year would be reduced as a result of expected lower demand. As a result, the company announced on Nov 14 that it was laying off 258 workers at the Rayong plant.

Today is the deadline for workers to accept voluntary early retirement. The company said the attractive incentives meant the number of workers targeted was nearly met.

Toyota Motor Thailand, the country's biggest carmaker, also confirmed this week that its output next year would be lower than this year's estimated 570,000 units because of expected lower demand in Thailand and abroad.

The announcements by the two locally based companies come at a time when Thailand's automotive industry is starting to feel the increasing effects of the global recession. More pain is on the way, according to the industry consultancy CSM Worldwide.

Local production is expected to fall by 16% to 1.2 million units from 1.4 million this year as domestic sales decrease to between 580,000 and 590,000 units from 670,000 units, according to Hajime Yamamoto, director of CSM's Bangkok office.

In a paper prepared for the Thailand Automotive Industry Association (TAIA), CSM estimated Thai vehicle exports would fall by 15% to 650,000 units next year as orders from abroad fell.

"Thailand will be the hardest hit in Asean, as production will drop by at least 110,000 units for 2009 and it may have a long-term impact as some projects may be delayed or cancelled," Mr Yamamoto said.

Eco-car projects in Thailand were likely to go forward, although Toyota and Tata Motor may look to delay their investment plans.

Seven automakers have been vying to make eco-cars in Thailand with a combined capacity of 783,000 units starting from 2010.

Adisak Rohitasune, a vice-chairman of the Federation of Thai Industries, estimated local auto production would fall 12% in 2009.

"The local automotive industry has been affected by the global economic slump. But I am confident that the situation will not be as bad as the 1997 crisis, when local demand fell by more than half," said Mr Adisak, also a senior vice-president of Asian Honda Motor.

According to CSM, in the first 10 months of this year, light vehicle sales worldwide dropped by 1.9% year-on-year to 53 million units with North America losing 12.6%. In October alone, annualised sales in the US went down 28% along with the 16.9% decrease in the Thai market.

[Source : Bangkok Post]