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Jobs safe for now but costs a rising concern
SANTAN SANTIVIMOLNAT AND NAREERAT WIRIYAPONG
Toyota Motor Thailand, the country's largest automaker, will take a series of steps including cutting production to cope with falling automobile demand both abroad and at home.
With the global recession taking an increasing toll on Thailand, bringing down overseas vehicle orders, and with confidence low among domestic consumers, all automakers are considering how to ride out the storm.General Motors has made the most dramatic move so far, announcing on Wednesday that it would suspend production at its Rayong plant in December and January because vehicles on hand already have met projected demand. Its 2,000 workers will be kept on but at 75% of their normal pay.
At Toyota, a senior executive who asked not to be named said the company would cut its output during the last two months of this year, with production of pickup trucks and large cars affected.
The production cut will help eliminate inventory building up during the last two months of this year.
The company said earlier this week that output next year would be lower than the 570,000 vehicles estimated for 2008.
Toyota began feeling the slump in the automobile market in June when its sales fell 12% year-on-year to 22,499 units. Pickup truck sales were down 26% because of high diesel prices but passenger cars still performed well.
The slump continued until October when sales dipped 20.5% to 20,532 units with pickup trucks plummeting 30.6% and cars also down 2.5%.
The executive said it was notable that the pickup truck market remained poor even though diesel prices have fallen 60% from their July peak.
Another step, the executive said, would involve cutting overtime work to help reduce its expenses.
If the situation became worse, the executive said, the number of subcontract workers would be slashed. The company could offer them early retirement packages or terminate some contracts.
He insisted Toyota had no policy to lay off permanent staff or workers at the moment but the approach would be reconsidered if the situation became worse and started to affect operations seriously.
He said he believed all automakers would cut their production targets next year as falling demand continues.
Meanwhile, GM Thailand has announced various steps to adjust its inventory in the Thai market as well as across Asean.
Addressing GM Thailand workers at a recent staff gathering, Steve Carlisle, president of General Motors Southeast Asia Operations, said the company was building a winning automaker for the long term and would focus on building sustainable success, not short-term results.
However, amid the global economic crisis, the drop in sales has resulted in the necessity to reduce production to avoid an oversupply, he said.
"As communicated previously, the impacts of the global financial crisis have spread to virtually every country around the world including Thailand," Mr Carlisle said.
"This has resulted in a marked cooling in consumer sentiment and tightening of credit which has in turn reduced sales both domestically and in our export markets. As a consequence, we have to look into reducing production and granting leave to some of our colleagues in the December to January timeframe.
"Fewer than 2,000 staff will be granted paid leave during the period, as the plant reduces production levels to avoid oversupply. As soon as the plant resumes its normal levels of production, staff will be reporting back for duty."
Yongyuth Mentapao, chairman of the Federation of Thailand Automotive Workers Union, said parts suppliers had been informed by Toyota Motor Thailand that the automaker was cutting their production by 30% or 45,000 units over the November-April period, citing existing huge inventory.
As well, Isuzu is producing 10-20% fewer units, or 35,000 units less than its normal production during December to March, he added.
"So far automakers have cut overtime work shifts and told staff to take some days off and paid them less.This has threatened workers that laying off staff would be seen soon," said Mr Yongyuth, who works for NHK Spring.
The federation was set up after the 1997 financial crisis and now has a membership of 21,000 workers employed by assemblers and parts makers.
Mr Yongyuth said vehicles sales were not seriously hit until Sept this year, meaning that automakers are not really in the bad situation until they have to lay off staff.
"We are preparing to have discussions with the Labour Ministry to step in and monitor the moves of automakers [if they are] using loopholes in Thai laws to take advantage of their workers," he said.
Meanwhile, Ford said its operation in Thailand had not been affected by the financial troubles facing the US parent firm. Consequently, the existing 3,600 staff working at AutoAlliance Thailand are not threatened with layoffs.
"Our operations have been as normal partly because we have flexibility to adjust production for the 130 countries we are exporting to," a spokeswoman for Ford Motor's Thai unit said.
"Our expansion to produce small cars has been progressing as planned to start production next year."
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