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Baht/$ 35.50/54 (Bid/Ask)
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13,300
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AUTOMOBILES
SANTAN SANTIVIMOLNAT
General Motors will delay its US$445-million (15 billion baht) diesel engine project in Thailand by at least one year and halt the introduction of new products next year, according to Steve Carlisle, president of GM Thailand.
A groundbreaking ceremony for the engine project in Rayong took place only last August and was attended by GM chairman Rick Wagoner.
The deepening global economic crisis and local political unrest were to blame for the project delay.
Mr Carlisle said he hoped Thailand could weather the ongoing crisis and affirmed that GM would not scrap the project even if the situation got worse.
Engines produced from the Rayong plant were to supply Colorado pickup trucks, also built in Rayong. They would replace engines now supplied by Isuzu.
The engine plant will now begin production in 2010, making 2.5- and 2.8-litre engines for pickup trucks with output of more than 100,000 units annually. It would initially employ 340 workers.
The facility, GM's first diesel engine plant in Southeast Asia, will be located next to the assembly plant that opened in 2000 and now employs 2,000 people.
GM announced earlier this month that it would halt production in Rayong in December and January but keep its workers on at 75% pay. It said vehicles already on hand would be sufficient to meet demand, which has been declining worldwide.
Mr Carlisle said the economic slowdown, the need to conserve cash, lack of access to new financing and large financial losses were forcing car companies to shed employees for survival.
"I would like to tell you we are not affected in Thailand, but that is not true. But as I have said before, crisis also brings opportunities. We must stay robust and capitalise on any opportunities this crisis may bring," he said.
GM performed well in the first half this year, with impressive sales volumes for its Captiva sport utility vehicles and Optra CNG sedans as well as favourable exchange rates.
However, demand for the Optra CNG is declining because of the introduction of similar models by competitors, lower petrol prices and insufficient refuelling stations to meet demand.
GM is anticipating lower numbers in the second half than in the same period of 2007 due to the ongoing crisis, resulting in fluctuations in foreign exchange rates, unavailability of credit, increases in commodity prices and instability on the political front. All these depress consumer sentiment and lower demand.
"Next year will be very challenging for us as well, as we have held back on the introduction of new products until the following year. However, we will not remain inactive but will instead grab the opportunity to consolidate our position in this industry," said Mr Carlisle.
During the market difficulty, GM plans to improve its volumes and labour efficiency, eliminate all forms of waste, reduce costs, support flexible manufacturing initiatives like job rotation and assignment changes, improve quality performance and delay unnecessary spending where possible.
Antonio Zara, vice-president for GM Southeast Asia Operations, said the automotive industry in Thailand recorded a drop of 13% for two consecutive months since July due to political and economic concerns and the trend was expected to continue for a while.
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