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November 21, 2008

Output to go down at GM and Toyota plants in Thailand
General Motors Corp and Toyota Motor Co said they will cut production at their plants in Thailand, the latest move by global automakers seeking to slash costs in the face of weak sales and deepening economic gloom, reported Reuters.

GM Thailand said its 130,000-unit-a-year factory at Rayong would close for two months from mid-December, and it would cut 258 jobs at the plant 150 kms (90 miles) southeast of Bangkok.

"We plan to close the plant to help control costs and our 2,000 workers will be paid 75 percent of their monthly salary during the shutdown," spokesman Chartchai Suwanasevok told Reuters, without giving details on the production impact.

The plant produced about 100,000 pickup trucks, SUVs, sedans and compact cars for Thailand, Southeast Asia and Australia in 2007, representing only a fraction of the Detroit-based firm's global output of 9.28 million vehicles last year.

But the shutdown was the latest measure taken by international auto firms to stave off the impact of a massive slowdown in sales due to the global economic slowdown.

General Motors and its US rivals, Ford Motor Co and Chrysler LLC, are seeking a $25 billion US government bailout to avoid bankruptcy, but the prospects for a rescue package this week appeared dim.

Last week, GM's South Korean unit said it would halt production for two weeks, due to sluggish demand.

GM had no plans to halt production at its vehicle manufacturing ventures in China, a spokesman said, despite slowing growth in the world's second-largest auto market.

Japanese automakers, many of which had enjoyed steady to rapid growth in recent years, are also scaling back production and workforce in many markets due to a sharp, broad-based slide in vehicle sales.

Toyota also planned a cutback at its 200,000-unit-a-year plant in Thailand, a company spokeswoman said, without giving details.

Japan's top automaker is also seeking early retirement for 340 of its 1,850 temporary workers at the Gateway plant, which builds the Camry, Corolla, Yaris and other cars for Thailand and markets in the region.

Toyota is Thailand's top brand, but its sales fell 21 percent in October compared to a year ago, worse than the market's 15 percent slide as slowing economic growth and a long-running political crisis eroded consumer confidence.

"There are signs of a slowdown not just in Thailand, but in the markets of export destinations," the spokeswoman said.

Shares in Thai auto parts firms fell on news of the shutdown and the gloomy outlook for their sector.

"Thailand's auto industry is going to be put on hold until this global mess has cleaned up," John Bonnell of J D Power & Associates, said.

Most of the world's major automakers have plants in Thailand, which produced 1.29 million vehicles last year, of which 690,000 units were exported worldwide.

The total value of Thai vehicle exports last year was 306 billion baht ($8.7 billion), and the auto sector is a major contributor to the country's export-dominated economy.

Japanese truck maker Isuzu Motors Ltd, Thailand's No.2 brand, said it was constantly adjusting production levels to match sales performance and that it had no immediate plans to reduce its workforce or take any extraordinary steps.

Japan's Honda Motor Co, which has two plants in Thailand with a combined capacity of 240,000 units a year, said it had no plans to trim production or staff in the country.

Ford and Japan's Mazda Motor Corp are pushing ahead with their new $500 million plant announced last year, a Ford spokeswoman said. The factory will boost the annual capacity of their Thai joint venture to 275,000 vehicles.

Last month, India's Tata Motors Ltd said its planned Eco Car project would go ahead and it was seeking to buy land for a factory.

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